June 2017 Newsletter
While speaking to consumers at client symposiums, at some point in the presentation I introduce them to the IRMAA (pronounced Ehrma). It’s not a pleasant introduction, as the IRMAA stands for Income Related Monthly Adjustment Amount and is basically a tax on Medicare Parts B and D premiums. Those with higher incomes pay higher premiums. The chart below provides the income levels and corresponding premiums.
Medicare Part B Premiums
|2015 Single Modified AGI||2015 Joint Modified AGI||2017 Annual Part B Premium*|
|$85,000 or less||$170,000 or less||$1,308-$1,608|
|Above $214,000||Above $428,000||$5,143|
Medicare Part D Premiums
|2015 Single Modified AGI||2015 Joint Modified AGI||2017 Annual Part D Premium|
|$85,000 or less||$170,000 or less||Plan Premium|
|Above $214,000||Above $428,000||+$914|
One important fact with the IRMAA is Social Security/Medicare use income from two years prior to determine current Medicare Premiums. For example, 2017 premiums are based on 2015 income.
As individuals digest this information, recent retirees will realize that two years ago they were often in a peak earning year, generating a robust income. The picture often changes with retirement and a corresponding drop in income. The premium determined by income levels two years prior will create a much higher premium compared to the premium that would be created by a current retiree income level. The logical question which follows is whether the Social Security Administration, who calculates the number and provides it to Medicare, will recognize this fact and lower the Medicare Parts B and D IRMAA.
The good news is they usually will. You must, however, request them to do so. To make this request, one must file form SSA-44 also known as the life changing event form. A quick look at the form reveals the most common, acceptable reasons one may file the form.
- Work Reduction
- Death of a Spouse
- Pension reduction or elimination
Documentation will be required to validate both your selection as well as your current income level. The goal is to lower your Medicare Parts B and D premiums by having them based on a lower income amount. The change can even be retroactive. It is prudent to file the form and follow up. The Social Security Administration is not obligated to respond to your request. The squeaky wheel often gets greased.
The information in this presentation is provided as a general overview. It is derived from the Internal Revenue Code, Medicare.gov and other government publications, all subject matter sources reasonably believed to be reliable. Tax law and the laws governing Medicare/Medicaid are complex and subject to change. Clients should consult with their attorney and/or qualified tax advisor when making decisions regarding these matters.
PO Box 8151 | Wayne PA 19087 | USA