[Updated on November 10, 2021. My projections for 2022 matched the official numbers 100%.]
Seniors age 65 or older can sign up for Medicare. The government calls people who receive Medicare beneficiaries. Medicare beneficiaries must pay a premium for Medicare Part B that covers doctors’ services and Medicare Part D that covers prescription drugs. The premiums paid by Medicare beneficiaries cover about 25% of the program costs for Part B and Part D. The government pays the other 75%.
What Is IRMAA?
Medicare imposes surcharges on higher-income beneficiaries. The theory is that higher-income beneficiaries can afford to pay more for their healthcare. Instead of doing a 25:75 split with the government, they must pay a higher share of the program costs.
The surcharge is called IRMAA, which stands for Income-Related Monthly Adjustment Amount.
I haven’t seen any numbers that show how much collecting IRMAA really helps the government in the grand scheme. I’m guessing very little. One report said 7% of all Medicare beneficiaries pay IRMAA. Suppose the 7% pay double the standard premium, it changes the overall split between the beneficiaries and the government from 25:75 to 27:73. Big deal?
The income used to determine IRMAA is your AGI plus muni bond interest from two years ago. Your 2020 income determines your IRMAA in 2022. Your 2021 income determines your IRMAA in 2023. The untaxed Social Security benefits aren’t included in the income for determining IRMAA.
As if it’s not complicated enough for not moving the needle much, IRMAA is divided into five income brackets. Depending on the income, higher-income beneficiaries pay 35%, 50%, 65%, 80%, or 85% of the program costs instead of 25%. The lines drawn for each bracket can cause a sudden jump in the premiums you pay. If your income crosses over to the next bracket by $1, all of a sudden your Medicare premiums can jump by over $1,000/year. If you are married and both of you are on Medicare, $1 more in income can make the Medicare premiums jump by over $1,000/year for each of you.
* The last bracket on the far right isn’t displayed in the chart.
So if your income is near a bracket cutoff, see if you can manage to keep it down and make it stay in a lower bracket. Using the income from two years ago makes it a little harder.
2021 and 2022 IRMAA Brackets
The IRMAA income brackets (except the very last one) started adjusting for inflation in 2020. Here are the IRMAA income brackets for 2021 coverage and 2022 coverage. Before the government publishes the official numbers, I’m able to calculate based on the inflation numbers and the formula set by law. Remember the income on your 2020 tax return (AGI plus muni interest) determines the IRMAA you pay in 2022. The income on your 2021 tax return (to be filed in 2022) determines the IRMAA you pay in 2023.
| Part B Premium | 2021 Coverage (2019 Income) | 2022 Coverage (2020 Income) |
|---|---|---|
| Standard | Single: <= $88,000 Married Filing Jointly: <= $176,000 Married Filing Separately <= $88,000 | Single: <= $91,000 Married Filing Jointly: <= $182,000 Married Filing Separately <= $91,000 |
| Standard * 1.4 | Single: <= $111,000 Married Filing Jointly: <= $222,000 | Single: <= $114,000 Married Filing Jointly: <= $228,000 |
| Standard * 2.0 | Single: <= $138,000 Married Filing Jointly: <= $276,000 | Single: <= $142,000 Married Filing Jointly: <= $284,000 |
| Standard * 2.6 | Single: <= $165,000 Married Filing Jointly: <= $330,000 | Single: <= $170,000 Married Filing Jointly: <= $340,000 |
| Standard * 3.2 | Single: < $500,000 Married Filing Jointly: < $750,000 Married Filing Separately < $412,000 | Single: < $500,000 Married Filing Jointly: < $750,000 Married Filing Separately < $409,000 |
| Standard * 3.4 | Single: >= $500,000 Married Filing Jointly: >= $750,000 Married Filing Separately >= $412,000 | Single: >= $500,000 Married Filing Jointly: >= $750,000 Married Filing Separately >= $409,000 |
Higher-income Medicare beneficiaries also pay a surcharge for Part D. The income brackets are the same. The surcharges are relatively smaller in dollars.
2023 IRMAA Brackets
It’s too early to know what the 2023 IRMAA brackets will be. Still, you can make reasonable estimates and give yourself some margin to stay clear of the cutoff points. If inflation is 0% through August 2022, these will be the 2023 numbers:
| Part B Premium | 2022 Coverage (2020 Income) | 2023 Coverage (2021 Income) |
|---|---|---|
| Standard | Single: <= $91,000 Married Filing Jointly: <= $182,000 Married Filing Separately <= $91,000 | Single: <= $94,000 Married Filing Jointly: <= $188,000 Married Filing Separately <= $94,000 |
| Standard * 1.4 | Single: <= $114,000 Married Filing Jointly: <= $228,000 | Single: <= $119,000 Married Filing Jointly: <= $238,000 |
| Standard * 2.0 | Single: <= $142,000 Married Filing Jointly: <= $284,000 | Single: <= $148,000 Married Filing Jointly: <= $296,000 |
| Standard * 2.6 | Single: <= $170,000 Married Filing Jointly: <= $340,000 | Single: <= $177,000 Married Filing Jointly: <= $354,000 |
| Standard * 3.2 | Single: < $500,000 Married Filing Jointly: < $750,000 Married Filing Separately < $409,000 | Single: < $500,000 Married Filing Jointly: < $750,000 Married Filing Separately < $406,000 |
| Standard * 3.4 | Single: >= $500,000 Married Filing Jointly: >= $750,000 Married Filing Separately >= $409,000 | Single: >= $500,000 Married Filing Jointly: >= $750,000 Married Filing Separately >= $406,000 |
Because the formula compares the average of CPI numbers in a 12-month period over the average of CPI numbers in a base period, even if inflation is 0% in the following months, the average will still be higher than the average in the previous months. If inflation is positive, the IRMAA brackets for 2023 may be higher than these. If inflation is negative, which is rare but still possible, the IRMAA brackets for 2023 may be lower than the numbers above.
If inflation is 5% annualized in the following months through August 2022, these will be the 2023 numbers:
| Part B Premium | 2022 Coverage (2020 Income) | 2023 Coverage (2021 Income) |
|---|---|---|
| Standard | Single: <= $91,000 Married Filing Jointly: <= $182,000 Married Filing Separately <= $91,000 | Single: <= $96,000 Married Filing Jointly: <= $192,000 Married Filing Separately <= $96,000 |
| Standard * 1.4 | Single: <= $114,000 Married Filing Jointly: <= $228,000 | Single: <= $121,000 Married Filing Jointly: <= $242,000 |
| Standard * 2.0 | Single: <= $142,000 Married Filing Jointly: <= $284,000 | Single: <= $151,000 Married Filing Jointly: <= $302,000 |
| Standard * 2.6 | Single: <= $170,000 Married Filing Jointly: <= $340,000 | Single: <= $181,000 Married Filing Jointly: <= $362,000 |
| Standard * 3.2 | Single: < $500,000 Married Filing Jointly: < $750,000 Married Filing Separately < $409,000 | Single: < $500,000 Married Filing Jointly: < $750,000 Married Filing Separately < $404,000 |
| Standard * 3.4 | Single: >= $500,000 Married Filing Jointly: >= $750,000 Married Filing Separately >= $409,000 | Single: >= $500,000 Married Filing Jointly: >= $750,000 Married Filing Separately >= $404,000 |
The standard Medicare Part B premium is $170.10/month in 2022. A 40% surcharge on the Medicare Part B premium is about $800/year per person or about $1,600/year for a married couple both on Medicare. In the grand scheme, when a couple on Medicare has over $182,000 in income, they are probably already paying a large amount in taxes. Does making them pay another $1,600 make that much difference? It’s less than 1% of their income but nickel-and-diming just makes people mad. People caught by surprise when their income crosses over to a higher bracket by just a small amount are angry at the government. Rolling it all into the income tax would be much more effective.
Oh well, if you are on Medicare, watch your income and don’t accidentally cross a line for IRMAA.
IRMAA Appeal
If your income two years ago was higher because you were working at that time and now your income is significantly lower because you retired (“work reduction” or “work stoppage”), you can appeal the IRMAA assessment. The “life-changing events” that make you eligible for an appeal include:
- Death of spouse
- Marriage
- Divorce or annulment
- Work reduction
- Work stoppage
- Loss of income from income producing property
- Loss or reduction of certain kinds of pension income
You file an appeal by filling out the form SSA-44 to show that although your income was higher two years ago, you had a reduction in income now due to one of the life-changing events above. For more information on the appeal, see Medicare Part B Premium Appeals.
Not Penalized For Life
If your income two years ago was higher and you don’t have a life-changing event that makes you qualify for an appeal, you will pay the higher Medicare premiums for one year. IRMAA is re-evaluated every year as your income changes. If your higher income two years ago was due to a one-time event, such as realizing capital gains or taking a large withdrawal from your IRA, when your income comes down in the following year, your IRMAA will also come down automatically. It’s not the end of the world to pay IRMAA for one year.
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FinancialDave says
Harry,
Nice article.
One of the major reasons for many investors problem with IRMAA resides with the size of their taxable account and the investing strategy they use there. Also, in most cases, the first time this shows up is 2 years after they decided (or someone decided for them) it was a good idea to put all their high dividend-paying stocks in the Brokerage account not even realizing that there is an “IRMAA,” let alone that it will add thousands of dollars to their expenses if they go over it.
dennis says
how is the irmaa figured if you were married in 2018 but will be single in 2020? income will be less in 2020 with only person get social security and pension
Harry Sit says
Death of spouse and divorce are two of the qualifying events to appeal the IRMAA assessment. See link in reply to comment #2 below.
Tanya says
Question: In 2019, my husband and I took a large amount from a 401K to purchase our house in cash, so we wouldn’t have a mortgage now that we are retired. We retired in 2016. As a result, we are now in our 2nd year of IRMAA charges, totaling over $800 a month together. Our total income for 2020 was below the threshold for an IRMAA surcharge, and it will also be below the threshold for 2021. Do we have a case to appeal?
Tanya says
I forgot, we also took money in 2018 to pay for a family event. Yes, yes, I know; we did not know about IRMAA, and ignorance is no excuse. But 2 years of this?
Coral King says
Why do people think they want “Medicare for All”? They must not know that Medicare is very expensive by the time they collect here and collect there, and has big holes in the coverage. There is no out-of-pocket max and you can go broke on Medicare. It is so bad that most folks have to take out a policy to cover what Medicare doesn’t.
Drewmcg says
Coral King: Assuming ur not just trolling, then:
—there are still millions of Americans with no health insurance ,
—there are plentiful Medicare Advantage plans with zero additional premium with annual out-of-pocket caps (nb: I’m not recommending them if you can afford original Medicare + medigap),
—@ 64 with private (non-group) “high deductible” insurance, I’ll pay at least $150/mo. less for original Medicare + medigap with far, far better coverage/exposure, and
—logically, adding younger people to Medicare should REDUCE senior’s Medicare and medigap premiums, b/c they are healthier as a group. Its the hospitals/doctors who hate the idea, b/c lower reimbursements associated with Medicare ….
Hope this helps.
Charles Romer says
A very good analysis of this (the tone of the introduction is especially welcome)
BTW if you find yourself about to go over one of the bracket cutoffs and can not reduce enough, go the other way and make an additional distribution to get near the next higher cutoff. This will greatly reduce the marginal cost and reduce your IRA balance in the future. (Assumes IRA required distributions are what drives this).
DrewMcG says
Agree (and thanks).
Ralph says
I think the reason IRMAA exists is to hide the simple fact that it is an income tax. Most voters are too busy working and dealing with life to understand how their own government is setting them up for a future shakedown. Everyone who votes for bigger government will get what they deserve, but by the time they wake up it will be too late. This is one more reason to get as much as you can into a Roth IRA.
KK says
Harry;
Recent COLA has been announced to be 5.9%. Does this mean the first IRMAA cutoff for 2023 (based on 2021 income tax filing, MAGI, and MFJ status) will be $188,000 X 0.059 = $11,092 added to the $188,000 you consider to be the number for 0% inflation? Thus ending up be a total amount of $199,092? Please let your readers know if this is correct.
Thank you.
Paul says
KK, IRMAA is not calculated from the same COLA used for Social Security. See my post #164 below for a description of the algorithm.
Luis says
This IRMMA stuff is one of the most infuriating thing I have seem: if you are high income you pay more while working 2.9 % in all your income( no cap like social security), but then double penalized in medicare premium AND medicare part D, when begins in the Medicare plan, the final number could be incredibly high.Besides they go back two years( by contrast in Obamacare is enough your word regarding income). Good look when you call social security and medicare to explain that you retire and your income is well low. Everything thanks to the liberal politics to penalized the successful people.
Harry Sit says
If your income two years ago was higher because you were working at that time and now your income is significantly lower because you retired, you can appeal the IRMAA assessment.
“You had a major life-changing event that significantly reduced your income” is listed as one of the reasons for appealing, and “work reduction” and “work stoppage” are two life-changing events among others.
https://www.hhs.gov/about/agencies/omha/the-appeals-process/part-b-premium-appeals/index.html
Roger says
Actually, the IRMAA law was passed in 2003, when Republicans controlled the House, Senate and Presidency. However, I agree with your point about tax rates. What makes it more confounding is that you probably had a bunch of tax lowering deductions while working, which are no longer available. To add insult to injury, if you contributed to your IRA (or other retirement plan) regularly, you may find that your retirement income is greater than your working income, with few ways to reduce it due to the Required Minimum Distribution rule.
Rosalie Thomson says
Just be glad you make enough to pay.
Bobby Fischer says
I appealed my IRMAA premium in late 2019 after the new rates were released because I had retired at end of 2018. Income in 2018 was very high but dropped well below the first IRMAA threshold in 2019. I filled out the paperwork, called the local SS office, got an appointment, met with the agent and won the appeal. The agent was nice and did a great job.
Blaming your problems for paying your fair share on those left wing liberals or the radical right wing-nuts doesn’t do anything but show your own ignorance and intolerance. Grow up.
David Karchensky says
Not exactly liberals doing. It started in 2007, when George Bush was president. That was for part B. It continued in 2009, under O’Bama, for part D.
ernie says
this is thanks to conservatives do not fool yourself. they think surcharges are great so they can say they did not raise taxes
powderriver says
At least “liberals” know how to spell.
Jon says
IRMAA is pathetically complicated. Only by raising awareness can the public learn what is being done to our elderly who have worked hard to save and invest in order to fund their retirement. IRMAA is a well hidden cost to until one approaches retirement. Each Presidential candidate should be individually questioned and tested on their detailed knowledge of what IRMAA is and how it is calculated. That way voters can determine if each candidate understands what the policies of liberal politics have done…or if the candidate is simply ignorant which is the likely situation. What a wake up call this would be!
FactsPlease says
Liberal Politics? You shouldn’t be allowed to vote. This was part of a Republican (Conservative) bill passed in 2003 and signed into law by George HW Bush:
Medicare Prescription Drug, Improvement, and Modernization Act
Tom Terwilliger says
Yes, it was enacted under the Bush administration, but it wasn’t nearly so bad as long as the threshold was being indexed. That stopped in 2011 when we all know who was in the White House and who had ironclad control of Congress. And “W” was hardly the model conservative; no, anytime the liberal press and others barked, he jumped, and this was one sad example.
But the really immoral aspect of this is the idiotic way “married filing separately” are treated. There is no conceivable reason why they should automatically jump to tier 4, again, just for going $1 over the limit. At least all others only jump 1 tier where the penalty isn’t that great.
d says
indeed a liberal policy; person was correct that this started under Bush (also responsible for Medicare part D) – but if you think Bush was a conservative instead of a flaming liberal you are sadly mistaken!
I pay IRMAA, and as bad as this policy and tax is, wait and see how bad it gets when the liberals take charge.
Read history — when SS started under Roosevelt, the Progressive argued that we “needed” it, and that it was only a 1% tax — now it is a 15% tax!
Laurel says
I’m all in favor of both presidential candidates being “questioned and tested on their detailed knowledge of what IRMAA is and how it is calculated.” Does anyone seriously think the current incumbent has a clue about IRMAA, or that he even cares if you have Medicare coverage?
Patti_G. says
$$$$ rip offs like IRMMA is the least of it for decent older Americans. The only way doctors can keep their Medicare designation is that Medicare forces these doctors to prescribe pills and medical devices to keep Big Pharma in business. If a Medicare doctor is trying to keep their patients well, that is not the goal of Medicare, and they are kicked off. It is beyond diabolical. But, yes, Democrats scour doctors notes moreso to kick them off.
Kenneth Setter says
Patti G. : This has to be one of the most uninformed posts I’ve seen in quite a while. Medicare DOES NOT push prescribing pills and medical devices. Medicare physicians DO NOT get “kicked off” for trying to keep their patients well. And Democrats DO NOT have access to medical records to scour them for anything. This is pure rubbish.
Patti_G. says
To Kenneth,
You must be a Democrat or else not old enough to be on Medicare yourself. Another thing Big Pharma in connection with medical scoring is doing is decreasing the range of what is deemed in the ‘healthy range’ when getting blood tests….just so they can give you a pill for your cholesterol. And now with corvid, the whole medical field has become totally corrupted.
Kenneth Setter says
To Patti_G.: I am old enough to be on Medicare for over 5 years. Yes, I am a Democrat, and judging from your unfounded criticism of Democrats in your original post, I assume you are a Republican. That should not matter if we are discussing differences of opinion, not alternate sets of facts. My concern was that you were making statements about Medicare that are not true.
I am also a physician and I can tell you that the changing of normal ranges for blood tests is something that happens all the time. It is not due to a conspiracy by “Big Pharma”, but part of changes that occur in medicine all the time as additional research refines our knowledge. I have my share of criticisms for the pharmaceutical industry but this is not one of them,
Patti_G. says
To Kenneth,
Have you ever been a Medicare provider? Then you would know. And no, I do not consider myself a Republican. But alas, this thread is about IRMMA and we’ve strayed OT.
Lucy Yore says
This is a great article and I wish I’d had this information available to me when I started challenging my own IRMAA. The IRMAA premium “adjustment” came as a surprise to me, too. After working for fifty years, paying taxes, and never using unemployment insurance or disability benefits, I never expected that my reward for paying my way was to be assessed higher Medicare Part B premiums. I retired in 2018 and became eligible for Medicare in July 2019. In 2019, the “look back” income used to determine whether or not I would owe IRMAA was my adjusted gross income on my 2017 tax returns. Because I retired in 2018 and my 2019 adjusted gross income would be significantly less than it was in 2017, I appealed the original decision to raise my Medicare Part B premium. I am a firm believer in dealing, whenever possible, with matters like this face to face. I skipped asking for help by phone and went to my local Social Security office. The first person I met with didn’t use the correct amount of after-retirement income I expect in 2019, and my first appeal was denied. So I made a second trip to re-submit my appeal. The person I met with the second time recognized immediately the mistake the first person had made, corrected it and re-submitted the appeal. Within a week I received a letter from Medicare notifying me that my appeal had been accepted and that I would only owe the ordinary Medicare Part B premium. My perseverance has saved me over $200 a month. If you have been unfairly assessed an IRMAA increase in your premium, appeal the decision in person, and don’t give up until your appeal has been granted.
Kenneth Setter says
In 2020 with the COVID problems, the local offices are all working online – no face to face meetings. I retired the first of this year and made application to have IRMAA removed once I knew pretty closely what my 2020 income would be. The phone experience was MUCH better than going and sitting in the SS office half the day. The agent I dealt with was very knowledgable and told me exactly what they needed – mainly just the SSA-44 forms, documentation to establish that I had retired, and an estimate of what my 2020 income would be. They take your word for it but you have to send a copy of your 2020 tax return when it is filed to document that you were actually below the thresholds. I sent the documents and a letter of explanation. The approval of the removal of the IRMAA happened within 5 days (the agent thought it might take 1-2 weeks). I was due refunds for the 6-7 months of IRMAA we had already paid in 2020 and these were deposited in my checking account within another 2 weeks. All in all a very easy process. I hope they never go back to face to face meetings.
Lucy Yore says
Kenneth Setter – thanks for your thoughtful reply. My experience was pre-COVID. I initially tried to handle my situation by phone, and the person I spoke with was clueless, didn’t know the IRMMA appeal procees, and told me that I owed based on prior income. Not helpful at all. Once I spoke person-person at the SS office, the matter was settled quickly.
Roger says
I had a similar experience, but a phone call worked fine for me. One call to say my wife and I retired and they refunded the IRMAA that had already been collected.
IRMAA Needs to Go says
To be excruciatingly precise, can we state that the bracket amounts (when finalized) for calendar year 2020 will be used with the calendar year 2018 income amount to determine the amount of IRMAA, if any, a medicare recipient would be assessed by CMS/SS during calendar year 2020? Similarly, the CY 2021 bracket amounts would be used with CY 2019 income to determine IRMAA to be assessed/paid during CY 2021?
Harry Sit says
Yes your AGI plus tax-exempt interest reported on your 2018 tax return (filed in 2019) will be checked against the bracket numbers in the 2020 column to determine the Medicare Part B and Part D premiums you will pay starting in January 2020. My table only showed Part B. Part D uses the same brackets but different surcharges.
sscrla says
Since the August, 2019 CPI numbers were announced on September 12 and the law says the inflation adjustment is based on “the percentage (if any) by which the average of the Consumer Price Index for all urban consumers (United States city average) for the 12-month period ending with August of the preceding calendar year exceeds such average for the 12-month period ending with August 2006 (or, in the case of a calendar year beginning with 2020, August 2018),” you now know all the numbers. Therefore, there is no need to use the word projected, unless you expect the BLS to revise an already published CPI figure.
Ken says
The ability to not take the 2020 RMD will also affect your IRMAA calculation for 2022.
Rob says
Looking at your 2022 projections you seem to assume bracket inflation of 3%. However latest July 2021 CPI is running at 5.4%. Do you expect the final brackets to increase further before end of this year?
Harry Sit says
Rob – The calculation doesn’t just use the latest month over the same month a year ago. It also includes lower numbers from the previous months. We’ll have the last missing number used in the calculation on September 14. Although we can always be surprised, I don’t think this last number will change the projections for 2022.
Harry Sit says
This was posted on September 3, before the latest CPI release, which now confirmed all the numbers in the table.
CHRIS KELLY says
What about the 2 years we went from 104 dollars to 136 dollars ? This is monthly. That is 32 dollars a month for 2 years. Do we get reimbursed.
gary says
i have seen 2 articles that used the cpi and have different results. another article used the same 1.7% and showed the first bracket increasing to 86,000 not 87,000 because 85,000 with a 1.7% increase is 86,445.xx so the nearest number rounded down. So it is already rounded up (87,000) or is it rounded to the nearest 1000 which would mean it shouldbe 86,000?
Harry Sit says
It is rounded to the nearest $1,000 but the 1.7% number used in the other article isn’t correct. The correct CPI increase to use is 1.9%. When you raise $85,000 by 1.9%, it rounds to $87,000.
gary says
I check the gov’t cpi website and it is showing annual for august of 1.7% is it a different month that is used sep 2018 cpi was 252.146 and aug 2019 256.558 which is 1.7%. is it a different indicator or timeframe?
Harry Sit says
See comment #6 above.
Marcia Mantell says
There is a typo in your bracket for single filers: second row. Should be above $85k up to $107 (not $170). That also throws off your 2020 estimate. Please correct. Thanks!
Harry Sit says
The table is correct. $170k is the threshold for paying 1.4x standard premium for married filing jointly. $107k is the threshold for paying 2.0x standard premium for single.
Bob says
I have been paying irmaa for three years and I understand the concept and I can manage my income. I file married/joint tax return. I am currently projecting MAGI of $212,000 for 2019 tax year. How much higher can I push my income before moving to the next irmaa bracket?
Harry Sit says
The next bracket starts at $218k in 2020. If you add 1.5% inflation, you get $221k for 2021. If you’d like to avoid surprises, you may want to stay below $220k.
Sammy III says
When will medicare come out with the final part b premiums and irmaa surcharge for 2020?
Harry Sit says
Hopefully soon. They announced on October 12th in 2018.
BobH says
We have kept my future wife income below 85K. She will be retiring in Jan 2020 because she has PPO time that will bump her above 85K so we delayed the retirement to Jan 2020. So, could I do a 70K Roth conversions in 2019 which would cause her income to be about 85+70= 155K. Then file the life changing event of not working SSA-44. Her IRA withdrawal in retirement will be about 60K a year normally. If they throw out her salary then we would be below 85K.
The Wizard says
Nothing wrong with higher income oldies paying a little more for Medicare; I always will be under current law. But it’s good to project your AGI into your 70’s and then not do Roth conversions in your 60’s that are TOO big for your present IRMAA bracket. I call this Levelizing your AGI…
Rich Tedoni says
Approximately when will the IRS send the 2018 agi to medicare/SS to determine if there will be an IRRMA
Harry Sit says
No idea, but if by the time they charge you the Medicare premium for January they still haven’t figured it out, they will eventually bill you the difference when they determine you are subject to IRMAA.
Joe Pereira says
November 2020 I turn 65 I been getting social security pay from 62, my total income is lower than the normal threshold bracket, however in 2018 I received money from my 401K causing a high income for the year 2018. for 2019 I’m back to a normal income, according to social security my Medicare start in November 1st 2020, I’m a little confused if medicare irmaa
part B and D surcharge going to apply for the whole year 2020 or year 2021
Cynthia Siebert says
I was notified that I will be paying an IRMAA fee starting January 2020 due to us withdrawal from IRA… This was a one time withdrawal! Can I go to SS office in March and show them my income from 2019 is MUCH lower now and get rid of the IRMAA?
Harry Sit says
Just showing it was one-time IRA withdrawal isn’t enough. You need to show one of seven qualifying life-changing events:
– Death of spouse
– Marriage
– Divorce or annulment
– Work reduction
– Work stoppage
– Loss of income from income producing property
– Loss or reduction of certain kinds of pension income
MRO says
I recently started with Medicare and am paying IRMAA adjustments for Parts B and D. I am healthy and do not take any prescription drugs. My premium for Part D just increased as will my IRMAA for Part D as well I imagine. I do not believe in paying the IRMAA penalty (for Part D knowing that I have no choice with Part B) and only wanted to be compliant by taking Part D but am planning on dropping it as my premium increased and my tolerance decreased. My question is if I am not participating in Part D am I still responsible for paying the IRMAA penalty or does it go away as well?
Harry Sit says
Medicare Part D IRMAA basically means a higher price for Part D. If you drop Part D you don’t pay it any more. However, if you re-enroll in Part D at a later time, you may pay a permanent penalty based on the number of months you went without it.
https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/part-d-late-enrollment-penalty
IRMAAA Need to Go says
Maybe I missed it in the comments here, but doesn’t the “2020” table at the bottom of this web page https://www.medicare.gov/your-medicare-costs/medicare-costs-at-a-glance prove (finally) that the IRMAA threshold has been announced as $174K for the first bracket above baseline?
IRMAA Needs to Go says
Sorry, forgot to mention that you have to click on the Part D in the page to see the rest of the text which includes the tables.
Harry Sit says
Yes! All the other bracket cutoffs match what I had here as well. No idea why they buried them so deeply.
Robert Burger says
IRMAA is not just determined by AGI plus muni bonds. It is actually AGI plus all un-taxed income.
Harry Sit says
Not all untaxed income. Untaxed Social Security benefits are not included in the definition of Modified AGI for Medicare. See Table I starting on page 5 of this PDF document:
The Use of Modified Adjusted Gross Income (MAGI) in Federal Health Programs
Ann Brown says
If the CPI used to determine the percentage increase (CPI-U?) were to show a negative number, would the brackets stay intact or would they be adjusted downwards? I can manage my income but the underlying question is whether I can be assured that the $87K threshhold for single filers would at least remain the same in future years.
Harry Sit says
The law only talks about “increase” and “exceed.” I assume it means if the change is negative they will just freeze in place until inflation catches up. We haven’t seen a real example of negative inflation since IRMAA went into effect though.
Ann Brown says
Thank you for your prompt response. I agree we haven’t seen a real example of negative inflation since IRMAA but we are seeing other unexpected financial developments (increasing talk of negative interest rates in the US, for example). The fact that the thresholds are based on events 2 years in the past means that there could be an unpleasant surprise in store at some point.
We can rail against IRMAA (and I agree with all the comments) and it would certainly be frustrating to fall into the next higher threshold by a few dollars. On the other hand being impacted by IRMAA signals that we have some meaningful/above average level of income. As a 16 year old, I remember complaining to my father about the deductions and taxes in my first paycheck. His question to me: “Would you rather have the income and pay taxes on it or not have it and not pay taxes on it?” In my volunteer work I see seniors who are just keeping their heads above water (for various reasons) so I feel grateful to have an IRMAA concern.
Thank you again, I appreciate all the great information.
Han Ngo says
IRMAA is so confused.
I am paying IRMAA for my medicare part B. My wife will be eligible for medicare next year, will she pay the same amount of IRMAA as I do? I think for a married couple, they should only pay IRMAA once, not both husband and wife have to pay IRMAA because it counts and is calculated for a married couple. If both husband and wife have to pay IRMAA on each account, is it a double dip?
Thank you.
Harry Sit says
If you are married filing jointly, when the joint income exceeds the threshold, both of you will pay IRMAA.
Sharon Wallace says
Why can’t I find out ANYTHING about the Part D IRMAA surcharges for 2020?? I find all kinds of info for the Part B…but not Part D.
Harry Sit says
Click on the link in comment #19. Then click on the link at the bottom of that page for Part D.
Bob Land says
What happens if your MAGI drops 2 brackets? Will the tax brackets be lowered two steps at once or one at a time/year in the reduction of the additional insurance premiums?
Harry Sit says
At once. Whichever bracket your income two years ago belongs, you pay the corresponding premium.
Dave says
To clarify please.Is the 15% of my total SS that IS NOT TAXED,still included in my MAGI total along with the rest of my income to determine if I have to pay more for IRMMA?Thank you!
Harry Sit says
Dave – The portion of your Social Security that’s not taxed isn’t included in the MAGI for Medicare IRMAA. See comments 20, 73, 108, and 131.
John Tenfelder says
If I get married in Dec 2019 to a woman who earned less than $80,000 annually in 2017, 2018, and 2019, but I made enough to put me in the IRMAA B/D 320%/574% bracket in each of those years, will she still be charged zero IRMAA or will she be charged in my bracket retroactively for 2019 (based on my 2017 AGI) if we file jointly in 2019? What about 2020 and 2021? Are our then single incomes used?
Harry Sit says
Not retroactively. She will pay IRMAA starting in 2021 based your joint 2019 tax return to be filed in 2020, but your IRMAA in 2021 may drop a tier or two based on your married status.
Caught in the Middle says
One thing not mentioned here is if you are married but file separately (and are over the lowest bracket) you have to pay the 3.2 rate regardless of your individual MAGI.
Planning Stage says
What if you downsized in retirement and found selling your house left you with enough taxable capital gains to push you into the next IRMAA bracket? I don’t see any option in the appeals process link for such a situation. Would both my wife and I both be penalized for life?
Harry Sit says
Not for life. Your higher income in one year only triggers IRMAA for one year. When your income falls back down the following year, you will stop paying IRMAA.
Tony Frank says
Medicare is worse than private industry. Increase monthly social security payments by 1.6% versus 7% increases in Parts A, B and D medicare premiums.
No wonder so many retirees are or will be eating spam, assuming they can afford it.
A bunch of predators in dc.
Linda Somma says
My husband died in May 2018 and We filed married that year. My Part B/D premium for 2020 will be in the second tier (twice as much as the standard tier) due to higher income.
In 2019 my MAGI is half of what my husband and I earned in 2018. When I file SINGLE for 2019, I’ll still be in the second tier. is there any reason I should appeal?
Anna Carlucci says
the first qualifying life-changing event listed to file an appeal of the IRMMA is death of a spouse……seems you can appeal
Thomas Schamp says
There are seven life changing events that can be the basis for an appeal. It’s not clear that you qualify for any of them…
Sherry Wiser says
I turned 65 in Oct 2019…I was charged an IRMAA because in 2017 I went over the $85000 AGI. However, that was because I withdrew $50000 to purchase a new vehicle which I had been saving for while I was working. The 2 years before and the 2 years after 2017 my AGI was/is approximately 45,000. Does the Medicare/Social Security Dept. look at your AGI each year? If you are accessed an IRMAA the first year you get Medicare, will you always be charged that IRMAA in the future years? Will my IRS Tax Returns be looked at again for the year 2018 for 2020 Medicare payments and the IRMAA not applied…Or do I need to go to the Social Security office and appeal?
Harry Sit says
Your income is looked at each year. When it comes down you will stop paying IRMAA.
The Wizard says
This is why it’s usually a good idea to “Levelize” your AGI from year to year in retirement, including withdrawals from tax-deferred for Roth conversion…
Sherry Wiser says
Harry
Thank you so much for taking the time to answer my question and all of the other questions as well.
SBW
Sherry Wiser says
The Wizard
Thanks for your input…I now realize that I should have done that…25000 in 2017 and 25000 in 2018…However, I was NOT aware that there was a additional charge (IRMAA) if you went over a certain amount. And had no idea that they would go back two (2) years for your AGI.
Thank you
SBWiser
Joe P says
You charged irmaa for 2019..did you received another letter from SS for the normal amount for 2020 since you income dropped to $45000..
I’m in the same situation they charge me irmaa for the month of November And December 2019, because I sold some stock in 2017 to buy a home..I hope they look again at my 2018 my income was around $60000 I dont want pay irmaa for 2020 since my income is $60000 ..any suggestions what to do..thank you
Sherry Wiser says
Joe P
I just read my letter from SS and beginning in Jan. 2020, my SS deposit will NOT have the IRMAA deduction. YAY!!! Everything is back to normal.
Joe P says
Great that’s good news
Richard Persram says
I would appreciate any guidance on IRMAA determination. Is the information SSA provided this morning correct?
I retired in April of 2019 and started Part B in May 2019. I was immediately hit with IRMAA which I expected and my initial determination was based on 2017 taxes. My income for 2017 through 2019 places me above the IRMAA MAGI limit.
I called Social Security this morning to gain a better understanding of the IRMAA appeal process.
I was told that since 2020 would be the first year in which my income falls below the IRMAA limits, I would have to wait for 2021 to file form SSA-44 and if my income was below the IRMAA limit, they would then retroactively credit me my IRMAA payments for the entire year of 2020.
I thought previous to my call, that I could file SSA-44 now or early 2020 and they would use my 2020 income estimate from SSA-44f for the 2020 IRMAA determination.
The Wizard says
That info sounds correct and was what I did. I had $35,000 of part-time W2 income in 2016 on top of retirement income which put me in a higher IRMAA tier for 2018.
I did my taxes for 2017 (with zero W2 income) in February 2018 and then sent in form SSA-44 with a copy of my 2017 form 1040. They accepted that and put me back in a lower IRMAA tier for 2018, refunding the overcharge for the first few months…
Winston Bowen says
Harry Sit writes that if your income drops to lower IRMAA brackets you will automatically be dropped into the new category and pay that rate for Parts B and D. I just got my 2020 earnings summary, and while they show the lower MAGI they have kept me and my wife in the previous, higher bracket and show our IRMAA payments at the higher amount. How do we appeal?
Ken says
I have purposely stayed under the MFJ $170k MAGI to avoid and IRMMA surcharges the past few years of retirement. In 2019, I want to make a larger than usual IRA withdrawal that will bring the MAGI into the IRMMA surcharge category, and I would like to come close to the ceiling for the first level (of 40% B, & D surcharge), which for MFJ has been $214K for several years. It is now dawning on me that there is no place to lookup what the IRMMA $$ brackets will be in 2021, since my reading is telling me that the 2019 one that is published, is not for tax year 2019 MAGI, but is being used for current 2019 year IRMMA surcharges on 2017 MAGI. Does it even make sense that we don’t know the ceiling that will apply in 2021 when they penalize us for our 2019 MAGI, or do I have this wrong???? IF that is true, am I safe, if I stick with the $218K that is announced for 2020 (to be used for 2018 MAGI brackets)? It seems that one should know the different ceilings prior to making a mistake in a current tax year that could bump you into an even higher bracket when assessed 2 years later, or make you go over the ceiling for no surcharge, which has been $170k for me the past few years. I guess I am just figuring out that it is more confusing than I thought. ANY THOUGHTS WOULD BE APPRECIATED!
Harry Sit says
Yes the 2021 brackets will be for your MAGI in 2019. The numbers should be slightly higher than those for 2020. If you keep your 2019 MAGI under the published numbers for 2020 you should be OK in 2021.
brian birner says
I submitted the form SSA-44 to my local Social Security office about three weeks ago. Do you know how long it takes to process this form?
I had a recent reduction in income. This was in reference to my IRMAA.
Thank you
Bob L. says
I am curious that the incremental increase for the top bracket(>750,000) is significantly less the lower ones. I’m guessing that may be because the total amount cannot exceed the average cost of each program. Is that correct?
Harry Sit says
The shares of program cost paid in each IRMAA bracket are 35%, 50%, 65%, 80%, and 85%. Congress could’ve made the top bracket pay 90%, 95%, or 100% of the program cost but they stopped at 85%.
Songbill says
Yikes! I just learned about the existence of the IRMAA surcharge. We have had our joint MAGI stay under the IRMAA threshold every year since I retired over 5 years ago. However, this year we get to enjoy a one-time-only, unusually massive capital gains on a particular stock we’ve owned for the past 15 years. (Our NYSE-listed firm was bought out by a much larger NYSE firm that paid a total cash buy-out to shareholders rather than offering stock shares conversion, thus we’re experiencing the capital gains — whether we wanted it or not.)
I’ve looked at your chart and done some computations and can see that I and my wife’s monthly Medicare premiums (+IRMMA) will rise from the standard basic deduction from Social Security benefits ($135 per month per person) to at least $462 per month PER PERSON starting in 2021. Not happy with this discovery but OK, I understand that is what the IRMMA calls for. HERE IS MY CONCERN: After our annual AGI drops back down, for 2020, to the level of just a standard basic Medicare premium, how do I get the SS & Medicare folks to NOT keep taking out $462 per month out of each of our SS benefits during 2022? They do a “two year look back” in doing their calculations, not an annual one, so who should I talk to or what should I do after I file my Federal taxes in 2021, for year 2020, in order to prevent them from taking out the $462 each month for a second full year (2022)?
The Wizard says
They do the 2-year lookback thing Every Year.
So you should just have a single year of elevated IRMAA payments…
Doron Steger says
Do IRMAA Medicare part B charges apply to families in Medicare Advantage Programs?
Do IRMAA Medicare Part D charges apply to families receiving drug coverage in Medicare Advantage Programs?
Thanks!
The Wizard says
Yes and yes. This is exactly what I have and I will be paying IRMAA “forever”…
b. lolr says
I am so confused with IRMAA this year. I want to do a Roth conversion again in 2019, (next 2 weeks) which will put me in Tier 2 of IRMAA in 2021. I am trying to figure out what the MAGI cutoff is for my 2019 tax return so I can determine how much I can convert from Traditional to Roth without going into Tier 3 in 2021. Should I stop at $213,999 or 217,999?
Any help will be appreciated!
The Wizard says
We won’t know the tier thresholds for 2021 based on 2019 MAGI until 11 months from now.
But you can safely get your MAGI up to $218k, MFJ, which is this years threshold.
Any higher and you’re betting on what next year’s inflation percentage will be. Not good to lose that bet…
b lolr says
What does MFJ stand for?
Ken Fitzgerald says
b lolr, MFJ = Married Filing Jointly (for tax return)
Bev Lolr says
If I can safely get the MAGI to $218K for tax year 2019 and remain in Tier 2, that answers my question. Now instead of staying at $214K for Tier 2, they are going to be inflation adjusted, right? Thanks again.
Gail says
Can you explain why people collecting social security who are married but file separate returns are penalized with a substantially higher irmaa? For married filing separately, there is no tier 1-2-3, irmaa starts at tier 4? Isn’t this actual discrimination?
Harry Sit says
When they do something to collect revenue, they don’t want to see it easily defeated by couples rearranging their income and filing separately. Suppose a married couple’s income is $300k. If they file jointly, they will pay $376/month each in 2020. If the couple split their income to $80k for one and $220k for the other, they will pay $144.60 plus $462.70, which is already less than $376 * 2. If Congress didn’t make the higher income person go to tier 4, IRMAA will be defeated even more.
Gail says
In my case, i was over the limit by 4000.00, I asked that be used to pay irs taxes on a roth conversion. When they wanted to add almost 400 per month to my medicare costs, i was angry. I do understand your explanation, but I don’t agree. My spouse barely made 50000. So we filed an amended return jointly whech fell well below the limit.
Thus, instead of collecting an additional 4665.60 (388.80/month) from me they ended up getting no irmaa at all.
I wish to add that if they had fairly assessed the irmaa at 66.50 per month, I would have paid without question. Social security has always been based on individuals, earning etc, never before has my marital status been used against me.
There are reasons for filing separate returns that have nothing to do with avoiding taxes. So, I still feel that the assessment of excessive payments to people who file separately to be severely discriminatory.
The Wizard says
Looking forward, it’s generally better to withdraw amounts from tax-deferred each year to keep your AGI just slightly increasing and below the next IRMAA tier threshold. As opposed to withdrawing a lump in one year for a large purchase like a new car.
Good news is, your additional IRMAA amount is for only the twelve monthly payments in 2020, after which it should go away, assuming your 2019 MAGI was low enough…
IBM says
Don’t forget to thank President Obama for adding in the Part D IRMMA
Harry Sit says
See reply to comment #3. IRMAA came about in 2003, as a part of the law that created Medicare Part D. President George W. Bush signed it.
David Taylor says
In their booklet “Medicare Premiums: Rules For Higher-Income Beneficiaries” the Medicare folks claim that only 5% of Medicare recipients quality for IRMAA. But every independent survey of personal income that I can find claims that at least 20% of all seniors make more than $87,000! So, is the government just lying to us, or am I missing something?
Kenneth Fitzgerald says
Perhaps many of the over $87K retirees you have seen cited in those counts have a spouse who is not in the same category (in the other 80% of retirees), and together they stay under the now $174K Married Filing Jointly limit before IRMMA affects them?
The Wizard says
I’m not sure how this matters. My AGI is way over the starting point for IRMAA and always will be. So I pay a bit more for Medicare than lower income folks do.
I’m perfectly okay with that…
Ed says
I’m not. Let’s make it voluntary for all you people who feel good because paying IRMAA means you earned more.
Marilyn Hitesman says
Big difference between “way over” and “barely over”.
David Taylor says
You might be right. On the other hand, you shouldn’t be. Those counts just say “individual” income, and to me that means unmarried. If they are indeed including individual incomes within married couples, then that is very confusing. Sigh. That’s the trouble with the three-word data descriptions you find on-line. You are never quite sure what assumptions they are making.
David Taylor says
To The Wizard: If the percent of seniors affected by IRMAA is really 20% rather than 5%, then the government should admit it. A government that lies is not a good thing. The IRMAA booklet almost apologizes for IRMAA by implying that it is not a big deal because “only” 5% pay it. Is this Truth? Or propaganda? Or imaginative accounting? I’d like to know.
Ed says
Doesn’t matter what the percentage is, it’s an abomination of a success penalty. Standard government garbage. Does anyone think a private business could charge wealthy people extra for their product?
The Wizard says
Yes, I completely agree that we want truthful info. The lower IRMAA tiers are x2 for MFJ vs Single so not so hard for them to report.
But my impression is that Medicare is underfunded, rather than generating a surplus each year. So an IRMAA-like scheme for higher income oldies seems to make sense…
Larry Burdick says
I have had a two-year stepdown in terms of retirement and income reduction. I have filed requests for IRMMA reconsideration a couple times and after some hassle, have had both approved. Here is my problem, I filed the paperwork in early 2019 so my wife (the only one of us getting Medicare that year) would have here IRMMA based upon an estimated 2019 income instead of our much higher, preretirement income from 2017. Well, my estimated was between the $170,000 and $214,000 bracket. I was sloppy last year relative to income, and when I did my taxes last week, my 2019 income was $214,023!! Now, not sure what to do. Do I report this or just let it “catch up” to me in the future for the expected payback for the IRMMA required for the next higher bracket. And, I just got them to adjust our premium for 2020 for the estimated much lower income we will have, which I worry will be all fouled up again. Ugh.
Larry Burdick says
From Harry (above):
Yes the 2021 brackets will be for your MAGI in 2019. The numbers should be slightly higher than those for 2020. If you keep your 2019 MAGI under the published numbers for 2020 you should be OK in 2021.
So Harry, am I okay? Is the $214,000 or $218,000 what is used for 2019 AGI? So confusing . . .
Harry Sit says
In late 2020, Medicare will announce a new number, which will be used to measure against your 2019 MAGI, to determine how much you will pay IRMAA in 2021. If the inflation is positive, which is usually the case, that number for the second tier should be slightly higher than $218,000. If the inflation is negative, it can also be lower. We don’t know what that number will be until later this year.
Tom K. says
More lame fake news from the right. It was during W’s reign, not Obama’s that IRMAA was added. With Trump driving us further into debt, and Congressional republicans too afraid of him to find their spines, be prepared for even more increases in the future, and not just to IRMAA. True facts matter…
Marilyn Hitesman says
True facts do indeed matter. Trump followed Obama’s lead, to be sure, and dramatically raised the national debt by trillions due to the China virus. Now we have Unemployment as a career, wide open borders, massive “bailout” programs that further the dependence upon government, and nothing to look forward to but the demise of a once great Democratic Republic. This is bigger than politics.
The Wizard says
I’m not sure we care about when or under whose admin that IRMAA got started.
It’s a good way for us wealthy folks to help the poor people.
What’s wrong with that?
Ria jensen says
I personally worked hard to put as much income away as possible in my 401K. I’m a single parent and tax status is the same. My retirement income from former employer plus social security has my earnings at less then 40% of my pre retirement income. I never asked nor received any government assistance, etc during the 48 years I worked. But now that I can fix my home, make travel plans etc I find Im going to pay the IRMAA because I was smart in saving. The amount I’m going to pay has taken away a good portion of my plans. So yes, I have a problem with paying this. I’m not rich, I saved and now I cannot live as I planned in retirement. Not fair to middle class citizens like myself I also pay for supplemental insurance and a drug plan Based upon calculations, I’ll be paying over $700 a month for insurance; that’s insane.
Ed says
Do you really think this helps poor people? You’re fooling yourself.
Kenneth Fitzgerald says
Tom K- I think the earlier poster ‘s comment was that that Obama added the newer Part D surcharge to (the already existing) IRMMA, and not that Obama created IRMMA.
David Walton says
I retired in 2019 at 65. I am married and my wife and I had enough income to be affected by IRMMA. My wife is younger and continued to work until mid year 2019 when she retired but she is not 65 and is not eligible for Medicare. Our income for 2019 was more than in 2018 due to significant bonuses. In 2020 however we will have significant reduction in income. If I appeal IRMMA now, because of our retirements, would I likely be eligible for a reduction in the premium? In other words would my Medicare premium for 2020 likely be adjusted based on our estimated 2020 income?
Ken says
My brother had the same problem when he retired in Jan 2018, and it straddled two tax years, in terms of high income in 2017, and again in year he was was retired for 11 months at age 70. He appealed it two times, (for 2019 and 2020 surcharges) and got relief on both. I don’t think you can appeal it until you get the letter telling you that IRMMA has kicked in. For him, it was December of the year before the hike was taking effect, so for you, I guess your first letter will be in Dec 2020, for 2021 IRMMA surchange based on 2019 tax return income. If they already assessed a surcharge for 2020 Medicare cost, based on your 2018 income, before retirement, you should certainly appeal that now, and should have gotten a letter about Dec 2019. No expert here, just going on what I read and heard about it.
CathyKate says
I agree with Tom T.
I don’t understand why married filing separate jumps from the Part D first tier to tier 4. If you make a dollar over $85,000 you are put in a category that goes up to $415,000. If someone could explain that I would surely appreciate it.
Thank you
sscritic says
There is an ACA subsidy. When you make too much, you lose your subsidy. No one calls it a surcharge.
IRMAA is no different; it is a reduction in your subsidy. All you have to do is read the law:
“(i) Reduction in Premium Subsidy Based on Income.—
(1) In general.—In the case of an individual whose modified adjusted gross income exceeds the threshold amount under paragraph (2), the monthly amount of the premium subsidy applicable to the premium under this section for a month after December 2006 shall be reduced (and the monthly premium shall be increased) by the monthly adjustment amount specified in paragraph (3).”
V.F. says
My spouse died from Covid 19 this year but I will file joint tax return. If I convert a large sum from IRA to Roth IRA it will make my MAGI approach 213K. What will my premium surcharge be in 2022 when I will file as single? Is it $60 if my income as a single taxpayer is less than $109K in 2022 or is it $144.60 because 2 years earlier joint income was 213K, assuming Medicare premiums and surcharges don’t change between 2021 and 2022?
Ken Fitzgerald says
I found this article had a lot of info about IRMMA. It may help you. Note the IRMMA APPEAL section that may work for you once you get the surcharge notice.
https://thefinancebuff.com/medicare-irmaa-income-brackets.html
Vince Pellettier says
Was your column updated for new cpi-u figures on August 12,2020? You said 2021 brackets should be $88k/$176k because of rounding up each $1000 but I’m thinking there maybe won’t be an increase from $87/$174. Someone said they are now using chained (c-cpi-u) instead of cpi-u. Do they also use seasonally adjusted cpi? I guess there’s one more month of figures so nothing is definite but we are at $174,174 for income 2019 so I’d like to see a little increase. I wish it wasn’t rounded up by $1000 because they may not adjust anything is there is just a small increase.
Harry Sit says
The July CPI released on August 12 didn’t change the projections. Even if the August CPI goes back to the low seen in April, the first bracket for 2021 will still be $88k/$176k.
MJM says
When during the year do IRMAA adjustments occur (January 1 or based on my initial Medicare sign-up date)?
Ken says
The IRMAA surcharges are by calendar year starting in January. Tha date you started is immaterial.
Eric says
Is the non-taxable portion of social security benefits included in MAGI? I see contradictory information on the internet.
Harry Sit says
The non-taxable portion of Social Security benefits is not included in the definition of MAGI for Medicare. See reply to comment #20.
Vince says
The CPI-U figures came out an hour ago at 1.3% so can you know calculate exactly what the new high income brackets will be for 2021? Would you take $87,000 x 1.3% = $1131 and $88,131 ($88,000 rounded down)? And thus $176,000 for joint?
Or do you have to wait for more info from the government? Thanks Harry
Harry Sit says
The latest CPI data point confirms the numbers in the blog post. The first tier for IRMAA in 2021 will be $88k for single and $176k for married filing jointly, based on income in 2019.
vince says
I was reading about this on another blog and they said something about comparing the 12 month August 2020 inflation figures released on 9/11/20 to a different 2018 baseline for the true income tier levels that will be released next month. Harry do you know about the inflation adjustment code they are referring to? Are you 100% confident on your $88k/$176k figures?
Harry Sit says
I’m confident in the numbers. See comment #6 for the calculation method.
Carl Widerquist says
So will the MFJ 2020 income bracket of $272000 definitively go to $27200 X 1.3% = 275536 and then be rounded up to $276000 for 2021? Thxs
Harry Sit says
It’s not exactly calculated that way, but yes the limit for the third tier in 2021 will be $276,000 (based on 2019 income), as shown in the table.
Regina C. says
Why are IRMAA surcharges based on cliff thresholds, rather than going along the lines of IRA marginal tax rates? Just because you went over $1 and now you are in the next IRMAA bracket for Medicare Part B as well as Part D Premiums is TOTALLY shocking. even though it is for one year!
Any chance of this being changed in the future?
Songbill says
It’s because you are wealthy and can afford it. Politicians who passed the IRMAA law demand that you pay your “fair share”. Very, very few people are affected so that’s why the cliff is “fair”. My wife and I (in our 70’s) are having to fork over 40% of our total Social Security payments this year (through automatic deductions) because we just missed an IRMAA cutoff level. If the Federal Income Tax rates had these cliffs, taxpayers would go bezzerk. But Congress would never enact them because they’d get run out of office.
Will Congress get rid of the IRMAA cliffs? No.
Terry says
As a Medicare broker, I consider this a penalty to those who’ve worked hard, saved, invested and provided a wonderful lifestyle for themselves and their families.
It’s so hard to explain to people that it’s anything other than a “good job!” penalty.
Ed says
How true. Nothing like penalizing success.
Walt says
Good points, other than the “working hard” part. People here in Houston who put roofs on houses in the hot summer sun work as hard, or harder, than people who make considerably more money. It is definitely not a tax on “working hard.”
Ed says
The whole IRMAA thing infuriates me. The concept is just so much bull excrement and the execution (the $1 trigger) just adds insult to injury. Only a government bureaucrat could have dreamed that one up. If a person is subject to IRMAA they probably had high earnings while working and therefore paid far more than average in a Medicare taxes. Seems like double taxation or a good imitation of it. The only silver lining is when you turn 70 1/2 you can make your charitable contributions with Qualified Charitable Distributions, QCDs, from your IRA. They don’t increase your MGI. My great conservative Congressional delegation isn’t interested in doing anything about it. Neither is AARP or AMAC. So much for supporting their membership. Nor is my former union which has a lot of members who will ultimately be subject to this ridiculous law/theft. For those who are happy to pay it as it means they had a high income my tax accountant friend had a stronger term than bull excrement.
Carl says
Thank you for the response to #75. You stated that the number $276000 is correct but the calculation used was not correct. Since I will likely be going through this exercise every year, would you please give me the correct calculation. FYI, I reviewed point 6 several time but frankly I still do not understand what I did wrong. Thanks in advance.
Harry Sit says
Get 12 monthly CPI-U numbers (not seasonally adjusted) from September last year to August this year. Add them up and divide by 12 to get the average. Get monthly CPI-U numbers from September 2017 to August 2018. Add them up and divide by 12 to get the average. Find the increase between the two averages. Find the 2019 IRMAA thresholds for single – $85,000, $107,000, $133,500, $160,000, $500,000. Adjust those (except the last tier) upward by the increase. Round the numbers to the nearest $1,000. Double the numbers for Married Filing Jointly (again, except the last tier).
Vince says
So if you calculate the 9/17-8/18 average it’s 249.28 and the 9/19-8/20 average is 257.72 the difference is 8.44 which is 3.38% increase. $87,000 would increase 3.38% doesn’t seem right. It would be nice to see the proper calculation using this year’s numbers so we know what to expect next month when they release the written statement.
Harry Sit says
$87,000 is the first tier threshold for 2020. You need the numbers for 2019.
Vince says
So you would use the $85,000 from 2019 and multiply it by 3.38% which gives $2873. That means rounding up to $3000 and adding it to $85,000 gives $88,000 for 2021 not your figure of $87,000.
Carl says
Harry,
I got it now! Thank you very much for taking the time to explain this. It will make future years much easier to forecast and plan.
Vince says
Harry I’m sorry you had $88,000 for 2021. My fault.
Vince says
Does anyone know when the government will officially announce the lowest brackets will be $88,000/$176,000? And also, when they will announce what the 2021 medicare premiums will be? Last question, does anyone know if the brackets could ever go below $85,000/ $170,000 in the future with deflation?
Debbie says
I am relatively new to Medicare. I understand it to be a National Health care program for people over 65. Single or married should be the only two factors in determining the monthly fee. Apparently either the govt or Medicare decided that people over 65, who make over a certain salary must get sick more often, therefore, are being charged an addl fee called IRMAA. This is a disgrace. Someone’s salary should not even come into play when determining the cost for health care. Would love to know what medical Dr. made that decision (ha)!!! Basically the Medicare book should read that people making over a certain salary are required to help pay medicare costs for others since that is what is actually being done.
Grumpy says
IRMAA is assessed on your income tax filing. If you file married/ joint then the income threshold is 2X the single threshold. So if one spouse has 90K of income, and the other has 84K (or less) then neither hits the IRMAA; as on average each has an < = 87K income.
vince says
Looks like Medicare just announced the irmaa income brackets for 2021 and Harry Sit was exactly right $88,000/ $176,000. I’m still waiting to do Roth conversions and/or stock capital gains this year until I get more info on future irmaa bracket possibilities. Not sure if they can dip below $85,000/ $170,000. It would be nice to know that 2022 would be above the 2021 brackets $88,000/$176,000.
Very frustrating not knowing the figures until it’s too late to adjust income.
Vince says
One financial advisor said the 2022 brackets could vary from $168,000- $178,000 for joint filers. That’s a big difference and makes it hard to plan income this year (2020).
Harry, can you provide any input to this? Is $170,000 the floor and brackets can’t go lower?
Harry Sit says
Right now we only have one data point out of 12 to calculate the brackets for 2022. It’s way too early to have an accurate projection. If I must guess, the range for the first tier will be between $88,000/$176,000 (no change) and $90,000/$180,000, with the most likely scenario in the middle, i.e. $89,000/$178,000.
Eric says
Is it possible for the brackets to go down from one year to the next?
Harry Sit says
It’s possible to go down if we have bad enough deflation. If inflation is lower than -3%, the 2022 numbers will go down from the 2021 levels.
Songbill says
In reading about the COVID-related “hold harmless” provisions for new Medicare premiums for 2021, as enacted by Congress and signed by the President last month, my understanding is that premium annual adjustment is limited to 25% of what it otherwise would have been for 2021. However, I can’t find any articles that answer the question of whether this applies to all brackets, including the IRMMA ones, or just the basic premium tier. Anybody know?
Harry Sit says
The 2021 Medicare Part B premiums for different brackets are here:
https://www.medicare.gov/your-medicare-costs/part-b-costs
I suppose these published numbers already took the new law into account. In other words, the premiums would be higher otherwise. Because the premiums for higher tiers are a multiple of the standard premium, when the standard premium is lower, the premiums for the higher tiers are also lower proportionally.
Wizard says
This probably means that Medicare premiums for 2022 will be going up 75% more than normal.
Tighten your seatbelt a year from now…
Songbill says
@ Harry,
Yes, looks that is the case. Basic tier is rising 2.8% and IRMMA brackets are also at 2.8%. Before the “hold harmless” enactment last month, the increase was going to be $20 instead of $4 at the basic tier. That a 75% reduction to your rate increase for 2021.
Rick Craven says
Advise needed – In Sept. of 2018 I retired and started taking social security benefits. In 2019 I took out a large amount of money from my mutual funds that I had saved throughout my working career to put a down payment on a house to live in when I retired. Before that I was living with my sister. My taxes return for 2019 of course reflected an inflated amount of income which in turn flagged Social Security that I must pay The IRMAA Medicare B and IRMAA Medicare Drug costs (Approx. $270 additional charges being deducted out of my social security check each month). This additional amount will start being deducted in Jan. of 2021 for a full year. This has caused a large financial hardship on me that jeopardizes me from keeping my newly purchase home. My true income is really approx. $51500 gross per year. Wanted to know if I can have them waiver this IRMAA from being charged to me because of the one-time purchase of a home to live in? This seems so unfair and unethical of what the government are imposing on me. Thank you so much for your help in this matter.
The Wizard says
Sorry, you’re SOL on this one.
It would have been much better to have taken out a modest mortgage on the property instead…
Songbill says
If it’s any consolation, you are not alone. I think there are probably many retirees with modest incomes who get unexpectedly smacked by a huge IRMMA because they experience a one-time only large gain event. Sometimes the gain was built up over a period of a life time. I had never even heard of IRMMA. My wife and I live on income from Social Security and a modest monthly pension. Last year, a company in which we had owned stock for several decades was bought up by a large conglomerate. We bought shares years ago when the stock was very cheap and the firm then had great success. Unfortunately, the conglomerate paid out cash in a lump-sum rather than issuing equivalent shares in their firm. We had no say in the matter. Now we are faced with losing over $700 PER MONTH in Social Security next year. I don’t think Congress intended for modest income retirees to have a life time of saving get whacked by IRMMA….. but that is exactly what is happening to a number of us.
Harry Sit says
Think of it as part of the capital gains tax. $270/month for 12 months is $3,240. It’s 4% on say $80k worth of capital gains. If you borrowed extra $80k in your mortgage you would pay about that much interest in the first year. If you had to pay that $3,240 as part of your capital gains tax, maybe you would’ve been OK with it. You pay the tax after realizing gains from many years of investing. Framing it as an additional Medicare premium two years later just makes people mad.
Roger says
It can’t hurt to file with the SSA for an appeal. In the year (2018) we retired, our income put us in an IRMAA bracket (by getting paid for a lot of unused vacation time). We appealed and explained it was a one-time “bump” and our income was below the IRMAA limit without it. They agreed and refunded the IRMAA overage. This year, thanks to the elimination of the Required Minimum Distribution, we lowered our income to below the IRMAA limit. So, I guess we’re safe until 2022.
Katherine says
Hello, I had a higher income in 2019 because I sold a rental house. I reported on my 2019 income tax and I submitted to IRS before April 15, 2020 (even though the IRS extended deadline due to COVID). As of today, Nov 11, 2020, I haven’t received any notification of my IRMAA premium increase for 2021. I also looked on line at Social Security site and it did not have my 2019 income. Is IRS behind in reporting and processing? Can this IRMAA increase for 2019 income not be reflected until 2022 instead of 2021?
Harry Sit says
If you filed on paper, the IRS is backlogged. You can check the IRS Where’s My Refund site to see the latest status. Eventually, they’ll catch up and bill you. They won’t push it to 2022.
Katherine says
Hi Harry,
I did TurboTax and filed 2019 electronically. I did not have a refund coming. I did over estimate my 2019 taxes but ask that the overage be applied to 2020 not refunded. I still am not understanding why I haven’t received IRMAA notification because in TurboTax it says my return was accepted by the IRS just a day after it was filed back in April 2020.
I guess I don’t want any surprises and thought I would have been notified by now about the increase in the premium that will come out of my social security starting Jan 2021 for both part B and D.
I am like many people, I feel this is an injustice to the hard working people who have scrimped and tried to save….never had a vacation because could not afford it. Tried to take care of what money I made and prepare for the future. Never on the government dole and now penalized for trying to be responsible and take care of myself. Never made over $48k a year when working. Sorry for the soapbox but I am very unhappy with this unfair tax on seniors.
Harry Sit says
Even though you aren’t getting a refund, you can still use the “Where’s My Refund” tool to check on your tax return processing status. You can also use the IRS Get Transcript tool to confirm the return they received matches the one you filed. I filed in April and I have 2019 income in my Social Security earnings history already. Something went wrong if you don’t have yours.
The Wizard says
Perhaps don’t think of IRMAA as a tax on us, but rather, as a discount system for poor seniors.
Are you ok with giving low-income seniors scrimping by mostly on SS a discount?
I pay around $380/month for Part B and am ok with it…
Katherine says
Mr. Wizard, I would rather have the option to opt out of Medicare all together. I would like to be able to make my own decisions on how I handle my healthcare. Yes, I believe in helping those less fortunate but when I see the abuse and corruption of the system, it makes me sick. Clean it up and get those off the system that are exploiting it.
Ed says
“ I am like many people, I feel this is an injustice to the hard working people who have scrimped and tried to save….never had a vacation because could not afford it. Tried to take care of what money I made and prepare for the future. Never on the government dole and now penalized for trying to be responsible and take care of myself. Never made over $48k a year when working. Sorry for the soapbox but I am very unhappy with this unfair tax on seniors.”
I agree, both in what it is and especially the way it is implemented. $1 of income can trigger the entire penalty premium. What can be fair about a system with taxes over 100% of marginal income?
ed 2 says
Just looked at my 2021 benefit statement. It says IRMAA was based on 2018 income tax form, not 2019 as you suggest. Why?
Harry Sit says
Log in to your Social Security account and see if they have your 2019 income. Also see comment #88.
Ken says
I downloaded my 2021 report yesterday, after getting email from SSA that it was ready, and it said 2019 income and quoted the income figures from that 2019 tax return. I am paying IRMAA in 2021, as I had expected.
CathyKate says
I agree with Katherine and Ed. I too am not poor, but certainly not rich. I filed Married Separate one year because my husband and I are both retired teachers in Missouri and our state tax break is better if we file separately. I was shocked when I was just a bit over the $85,000 limit and found myself skipping all of the tiers down to the last tier that put me in the same category as people making over $400,000. The explanation is that a couple can manipulate their income between the two of them, but we didn’t try to do that. We both have a set retirement. So now we file joint but have to pay more in state income tax. I wish that “file separate” would have the same incremental tiers as the other brackets.
Katherine says
CathyKate, it is very disheartening. If I had known about IRMAA I would have sold my rental house prior to going onto social security. That rental property was for my retirement and I was really surprised about the Part D IRMAA. I am not on any medications (and very fortunate that I am healthy) but feel penalized that trying to maintain a healthy lifestyle, so now I have my notice from Social Security that they will be taking 51.20 for Part D besides the Part B increase. I know that there are comments that we are helping the less fortunate, but there are many ways to help without taking our hard earned money. The waste and fraud is infuriating. For 2021 I am going to have to watch everything I spend because of the decrease in my Social Security. Someone suggested that I file an appeal for the one-time bump in our income, but my letter from Social Security said if it is capital gains, there will not be any adjustment made. So my husband and my income will be reduced total of $577.60 a month.
The government is slowing trying to do away with the middle class…..
Bev Lolr says
I am trying to figure out a Roth conversion amount for 2020 tax return. How high in AGI can I go and stay in the second tier for 2022? Thank you!
Harry Sit says
It’s not possible to have an accurate projection for 2022 at this time. It’s safer to use the 2021 levels as estimates for 2022 (even that isn’t 100% safe in case we have large deflation).
Bev Lolr says
Does the government provide these tiers by the 2020 tax year end? Sure makes tax planning a gamble. What were the 2021 levels that may or may not be safe. Thank you so much for any guidance you may provide. I’m not the only one in this pickle barrel. Thank you
Harry Sit says
The government provided the 2021 numbers only in early November 2020. The numbers are in the table in this post, and also in the link in the first sentence. The official 2022 numbers will come in late October or early November 2021. I’ll have a good projection for 2022 by summer 2021.
Ken says
I posted this link a while back as comment #70. It shows the brackets for 2021 surcharges from 2019 income levels. https://thefinancebuff.com/medicare-irmaa-income-brackets.html
Ed says
Aren’t 2022 numbers in 2021 of no use since we are trying to budget for 2020?
Harry Sit says
If you must have the precise numbers for 2022 before the end of 2020, no one can provide them. I see comments from summer 2020 when I had the projection for 2021 numbers. They must have found the numbers of some use.
Ed says
Ultimately the only thing that can be said is this is absolutely ridiculous? Only a damn bureaucrat could come up with IRMAA and it implementation.
The Wizard says
It’s true that we don’t know for sure if IRMAA thresholds can decrease in years with deflation rather than inflation.
SS payments cannot, so that gives me a bit of hope.
Anyhow, in reply to Bev on figuring how much to Roth convert for this year, 2020, I’d recommend looking at the threshold amounts for next year, 2021, based on 2019 income.
2nd tier goes from $88,001 to $110,000 for 2021, so I would be comfortable Roth converting up to a MAGI of $108,000 this year, about $2000 less than the threshold.
This is basically what I’m doing for the tier I’m in…
RL says
My problem is that due to a one-time capital gain in 2018 we paid a large IRMAA this year…..Our income returned to normal and we filed a 2019 paper return in July, but since it’s still not processed and is missing from our transcript, the IRMAA is still based on the 2018 return….How hard will it be to appeal without the processed return?
The Wizard says
Very easy to appeal with SSA-44, just include a copy of both sides of your 2019 form 1040…
TwoGeezz says
Harry Sit:
In post 21 you state “The law only talks about “increase” and “exceed.” I assume it means if the change is negative they will just freeze in place until inflation catches up. ”
In post 61 (and subsequent posts) you state specifically that deflation can result in a reduction in the tier thresholds.
Did you come upon more recent information that indicates a reduction in the tiers with negative CPI?
Thanks for a great thread!
Harry Sit says
My interpretation of the wording in the law is that they can go down year to year but they can’t go below the 2019 IRMAA thresholds, from which all the increases are calculated. See comment #79. If there’s deflation, as long as the numbers are still higher than those in 2019, it’s still an increase from the base levels. Of course because we haven’t seen deflation no one knows how the government will do it when it really happens. Maybe they won’t let them go down year to year. I say prepare for the possibility the numbers will go down. If they don’t, be pleasantly surprised.
TwoGeezz says
Great explanation! Didn’t catch that baseline number.
bev lolr says
IRMAA is so confusing. Can you please tell me what the 2019 tier numbers are for me to safely use in calculating a Roth conversion to take now for tax year 2020. The deflation scare is real. I looked at #79 but still unsure. Thank you.
Harry Sit says
The 2019 numbers were:
Single: $85,000, $107,000, $133,500, $160,000, $500,000.
Married Filing Jointly: $170,000, $214,000, $267,000, $320,000, $750,000.
Ken says
Harry,
I think Bev is asking for advice on her current tax year 2020 with an eventual 2022 surcharge, and wants you to relist the recently announced (which you estimated in July and were correct as I recall in your post 79?) tax year 2019 and IRMAA surcharge levels for 2021 medicare year came out from Soc Sec, which are the newest real levels to go by when guessing what they will be for the year 2020 in advance. These figures you just quoted look like 2017 tax year and surcharge levels for 2019 medicare year. I thought level 1 surcharge peak (in 2021 for 2019 income) for MFJ category was $222K as one example, and not $214K. I could be wrong.
Harry Sit says
The 2021 numbers are already in the main body of this post. The very purpose of this post is to keep track of the numbers for next year. The 2021 numbers are probably good enough as a floor for 2022 but you never know how inflation or deflation plays out. The 2019 numbers are the baseline from which all future increases are calculated. If someone wants to be extra safe, use the 2019 numbers.
Ken says
https://www.medicare.gov/your-medicare-costs/part-b-costs
Bev says
Are these from the 2017 AGI numbers on income tax return s for the 2019 IRMAA subsidy, or, are these the 2019 AGI income tax numbers for 2021 IRMAA. Are you saying that the tiers are the same as 2017 used for 2019 IRMAA? That is my question. Thank you.
Ken says
Bev,
If you click on the link I posted above in #105, it lists the levels by year, noting the tax year and the related surcharge for Medicare year. Pick the one you want to review. I think it is the second table, with the green 2021 (surcharge year) for 2019 income tax returns.
bev says
Thank you so much Ken. I checked it out. Here is another relevant link but still confusing. https://www.investmentnews.com/medicare-irmaa-surcharges-to-be-adjusted-for-inflation-in-2020-81325
David JOEL says
You didn’t mention that IRMAA MAGI includes untaxed social security income. In our case that is over $6000 per year so one needs to be careful not to cross a IRMAA bracket because of that MAGI add-on
Eric says
What do you base that on? I don’t think that is accurate.
Harry Sit says
The MAGI for IRMAA does NOT include the untaxed Social Security benefits.
Ed says
I think the confusion comes from there being more than one MAGI. The Medicare one is different from the one used for the Affordable Care Act. ACA uses the untaxable SS income but Medicare does not. It would help help if when they are discussed it would be stated as “Medicare MAGI” or “ACA MAGI”.
Ken says
Thank you, Harry! That put a scare into me after making a year end withdrawal that took me up close to max of MFJ surcharge level 1. I used the same logic of what is said in this 2020 SSA doc last year to compute MAGI for 2019 tax year, when I also did year end withdrawal that took me close to the max on surcharge level 1 on my 2019 tax year return. This SSA website page restates method I used for MAGI calc for 2019 and 2020 tax years.
https://secure.ssa.gov/poms.nsf/lnx/0601101010
George says
if 2020magi would mean you be in a higher irmaa bracket for 2022 year because of a gambling one that put you just over the limit. but if taxes are filed really late for example in November, would medicare still use the 2019 return and if so, once the 2020 was filed (for example in december of 2021) would medicare still adjust for irmaa for 2022?
The Wizard says
Bobby!
Long time no see!
How’s chess going lately?
Good times with Boris or this new guy Magnus?
Let us know; we’re cheering for you as always!!!
Vince Pellettieri says
Glad for your comical response. My response would have been different but I made a New Year resolution to eliminate political statements.
Ed says
Bobby Fischer, please define “fair share”.
Seattle Sue says
Thank you for a terrific and informative column. I retired in 2019 and appealed
our IRMAA income for 2020 and again for 2021 due to the drop in income due to retirement. Both appeals went smoothly (the first was an in-office visit and second was by mail this past December) and were granted. The 2020 appeal was based on our declaration our income would be under the 2019 threshold of $170,000. Although I carefully controlled taxable income to fall under that level, I forgot a taxable state tax refund that raised it to just over $170,000. Although we can use an IRA contribution to lower our joint income below $170,000, I’m trying to figure out if the government will use 2020’s newer $174,000 threshold for confirming we really qualified? Or whether we still have to stay under 2019’s $170,000 threshold which was used for the appeal? Any thoughts on this? And again, thanks for a great column and further support of your readers.
Paul says
Does anyone know of some good IRMMA calculators that will allow me to include all income and assets that will cause an increase in Medicare cost; one that gives me a total estimate to say age 90?
The Wizard says
It depends partly on your present age.
I’ve just been using a spreadsheet, customized to my own situation, which projects my AGI year after year. I update my spreadsheet with actual numbers each January.
I expect to be in the middle of the IRMAA tiers forever…
The Wizard says
Wait. Watch out!
We could be dealing with a Republican here!
Gaey says
Folks stop acting like children. What nonsense on a finance thread. Just unsubscribed to this post because of all the bs. Both are right and wrong as both are corrupt parties that act like cults. And you just proved it
The Wizard says
Replying to Tanya, your 2018 withdrawal set your IRMAA tier for last year and your large 2019 withdrawal set it for this year.
So it’s quite possible you will revert to a lower IRMAA tier next January.
Be smart and learn how to play the system. Taking a mortgage and paying it off over four years might, I say MIGHT, have been a better idea…
Art says
I retired in the middle of 2019, but an accrued annual leave payout + partial pension meant my income didn’t drop significantly that year. The WEP (“windfall profit”) penalty kicked in when my pension started, so I also lost 56.5% of my social security in late 2019. Should I include both of these as 2019 “lifetime events” when submitting a request for recalculation of my IRMAA ? I believe the monetary recalculation should be based on my 2020 MAGI ( which is approx 20k less than 2018’s, and approx 13k less than 2019’s MAGI).
I started medicare B in Jan 2020 and paid the IRMAA based on my 2018 (working) income. Now, even tho my 2019 income is lower than 2018, it appears my 2021 IRMAA assessment has gone up by approx $600 … not sure why, as I’m still in the same tier. I was about to inquire about this discrepancy, but realized it may be moot since my 2020 income — the first to significantly reflect my retirement— is low enough to put me into the next lower tier. I think I need to ask them to base my 2021 IRMAA on my 2020 MAGI … but my “life events” took place in 2019 — even tho they didn’t significantly affect my IRMAA income until the following year. I’m confused about whether I should submit proof re retirement from the year prior to my filing for Medicare, or if I should submit 2020 info, since it was the first year my income dropped me to a lower tier. I also don’t know if the drop will affect 2021 IRMAA only, or if it will be retroactive to 2020 and generate a refund . My estimated 2021 income will be slightly lower than 2020’s, but not enough to move me to an even lower tier).
Hard to get SS on the phone, and I find the form confusing, so any pointers you can offer would be appreciated. I’d like to have info prior to speaking with SSA , so as to have a better idea as to whether they’re telling me the right thing.
Very helpful column, thanks!
Art W says
Just an update: reached my local office by phone and after a few attempts, ended up speaking with a specialist who was able to take my updated 2020 MAGI info over the phone ( after I had to swear I wasn’t lying!). I didn’t need to submit forms, just a copy of my 1040 tax return for 2020. There was some confusion about a part D IRMAA ( I don’t have part D medicare coverage, so ultimately medicare said it didn’t apply). All told, it was a relatively painless process and I’m very impressed by their efficient and speedy resolution. Within 10 days I got a refund of the overpayments in 2021 and the calculated adjustment to the IRMAA will save me approx $90 a month.
Thomas Settefrati says
I’ve been retired for 8 years and my wife is still working. I spend all day at a local Casino to play slot machines with the “Free Play Cash Coupons” they send me, out of boredom. So, many times during the 2019 year I hit Jackpots of several thousand dollars but never left the Casino with the money. I always put it back in until it’s gone. An example is , if you win an average of a thousand dollars a day like I did, but played it all back in everyday and lost it, My IRMAA shot up to the $365,000 AGI bracket. After deducting my losses, which exceeded my winnings shown on the WIN/LOSS report you get at the end of the year from the Casino , my income was just social security, 18,000 a year. Now my MEDICARE costs are over $1,250.00 a month, not including an additional $400.00 a month for supplemental Insurance., (my wife gets penalized too ) which is much more than we have coming in. Tried to appeal it, SS / Medicare denied it. Never knew that playing Slot Machines would affect Medicare Premiums. They shouldn’t go by your AGI, they should look at your income AFTER DEDUCTIONS. I’m going to have to refinance my home just to pay Medicare B and D premiums.
Calwatch says
Since you play enough and try to advantage mailers you might be considered a professional gambler. You would have to pay SE tax on your net winnings but you could have those deductions done above the line. Look into the qualifications and see if that works for you.
The Wizard says
Wow, this is a neat one!
You’ll need to contact your Congressman and have them change the law on the definition of Medicare MAGI.
Or the definition of net gambling income. Should be a slam dunk, I think…
Harry Sit says
A mid-year update. With the latest CPI number, it looks like the first tier IRMAA in 2022 will go up to $90,000 single, $180,000 married filing jointly.
Paula Thompson says
Any newer info for 2022, oh great procrastinator? I’m just a retired biologiy teacher, but I watch this stuff.
Harry Sit says
I gave an update on April 17 in comment #120. I also updated the post under the heading “2022 IRMAA Brackets.”
Ken Fitzgerald says
I think you meant to say “prognosticator”!
Harry Sit is surely that to me and others who follow this thread.
Ken
BARBARA CARSWELL says
What is the impact for filing your return on extension?
I have a client who is convinced their IRRMA is based on the incorrect year because they filed their return October 15th.
Harry Sit says
Normally Social Security has the tax return information already by the time they send out letters in December for the following year even if you filed in October. 2021 was special because the IRS had a huge backlog in processing paper returns filed in 2020. Filing the return on October 15 shouldn’t affect 2022 IRMAA, especially when the return is filed electronically.
BARBARA CARSWELL says
Thank you!
Thomas N. says
With the June inflation numbers in, do you have estimate for the range of the IRMAA tiers for 2022?
Harry Sit says
I updated the post with projected numbers for 2022.
Sha says
Thank you for your June 14, 2021 post providing the 2022 IRMAA estimates based on 2021 income.
So, here we are in 2021 wondering what the 2023 IRMAA cutoffs will be based on our 2021 income, which we may be able to control.
You wrote: “Now in 2021, you don’t know where exactly the brackets will be for 2023. Still, you can make reasonable estimates and give yourself some margin to stay clear of the cutoff points.”
Aw, come on Harry, help a guy out. What are your reasonable estimates for 2023?
🙂
Sha says
First sentence corrected to read “2022 IRMAA estimates based on 2020 income.”
Harry Sit says
Using 2022 numbers for 2023 will be reasonable estimates. You will have a buffer of a few thousand dollars.
Steve says
Sha, Check out comments #140 and #141.
Thomas N. says
Typically, I use the “buffer” each year (the difference between the two-year-old IRMAA estimate and what it actually turns out to be) to make a year-end Roth conversion, paying the taxes out of another account. This not only keeps us below the AGI level for the next IRMAA tier, it also slightly reduces the traditional IRA balance for RMD purposes, and allows us to manage AGI above or below the 22% or 24% income bracket. To be specific, I am using $180-224k as the first IRMAA tier in 2022, $180-226k in 2023, and $182-228k in 2024. (Yes, I have already modeled my 2024 taxes!)
bev lolr says
With inflation growing so much, surely this is a conservative estimate.
Certainly would like to see this annual estimate available earlier in the tax planning year. ObamaCare S__ks.
Drew M. says
You write that untaxed social security benefits are not included in income used to calculate irmaa. Is this right?
Irmaa is based on magi (modified adjusted gross income), nor AGI. Per this (perhaps dated?) website, http://www.healthreformbeyondthebasics.org/wp-content/uploads/2013/12/Modified-Adjusted-Gross-Income-FAQ.pdf ,
“ How are Social Security benefits counted in Modified Adjusted Gross Income (MAGI)?
Social Security benefits received by a tax filer and his or her spouse filing jointly are counted when determining a household’s MAGI. For people who have other income, some Social Security benefits may be included in their AGI. One of the modifications to AGI to get to MAGI adds in any Social Security benefits that have not already been included in AGI.”
Can you confirm one way or the other? Thanks.
Harry Sit says
There are many flavors of MAGI for different purposes. The one you quoted refers to a different flavor of MAGI, not the MAGI for IRMAA.
Drew M. says
Here’s another indication that MAGI includes untaxed SS benefits: https://www.healthcare.gov/glossary/modified-adjusted-gross-income-magi/
Harry Sit says
That’s MAGI for ACA health insurance, not MAGI for IRMAA. Medicare is not run by healthcare.gov.
Drew M. says
Got it. So you say that “untaxed” SS benefits are not included, right? To determine what percentage of one’s SS benefits are taxed, the following “MAGI” definition applies, as I understand it:
“Modified AGI is AGI plus nontaxable interest income plus income from foreign sources plus one-half of Social Security benefits.”
If THIS magi puts you over $25k but under $34k (filing single), then 50% of your SS benefits are taxable (and therefore that same 50% are included in the IRMAA magi calculation). If your magi under this definition is over $34k, then 85% of your SS benefits are taxable, and therefore included in the IRMAA magi also.
So, for many with substantial SS benefits and other income (dividends, pensions, capital gains, side hustle), 85% of SS benefits will be included in IRMAA . . . .
Thanks, again, for you insight and help.
Harry Sit says
How much of your Social Security benefits are taxable is determined separately by its own rigmarole. By the end of that exercise, an amount goes into the AGI. You see the AGI on your tax form two years ago. When you go from AGI to MAGI for IRMAA to determine whether you have to pay a higher amount for Medicare, you don’t have to do anything *extra* with regard to Social Security to modify your AGI further. That’s all.
Ed says
Where did you read about the “one-half of Social Security benefits”?
Chazz Jones says
I’m a retiree who’s just been introduced to Premium Bracket Shock. In April, my wife decided to retire from a job with a health insurance plan that covered me, and we both applied for Medicare Part B. It took SSA until now (late June) to process the enrollment and inform us that the $148.50 premium we thought each of us would be paying was now $207.90 each based on our 2019 MAGI. We would have paid that much extra anyway because our 2020 MAGI, though lower due to not having to make my IRA RMD, also exceeds the $176k threshold. But the two-year lag apparently means another full year at what looks like a $1,500 premium on top of what we’ll be paying for the rest of this year. Since we’re allowed a special enrollment because of the loss of employment income, I’m wondering if we shouldn’t terminate the current Part B enrollment, postpone my wife’s retirement until early 2022, and re-sign up for Part B afterward at a non-adjusted rate because her loss of income should get us below the 2020 threshold. Or is there a better way to avoid the hit? I know most of Harry’s readers wouldn’t sweat a year or two of $1500 hits, but not all of us are in that position.
Harry Sit says
“Work stoppage” is an eligible life-changing event for appealing IRMAA. Read the paragraphs under “IRMAA appeal” again and follow the links there.
Carl says
Hi Harry,
We communicated last year and you shared how to calculate the annual IRMAA changes – for which I am still very grateful. So for a 2022 forecast I used the US city average, all urban consumers, not seasonally adjusted data.
I averaged Sept 2018 to Aug 2019 monthly numbers and did the same for Sept 2020 to Aug 2021 ( I assumed the May 2021 number stayed the same for Jun, July, Aug). Doing this the percentage increase I calculated was 4.149% which seems to be higher than what you are forecasting? I believe you number is around 2.7%. Just wondering if you can shed some light on where I went wrong? Thanks again for all you do helping us navigate these uncertain waters!
Harry Sit says
Carl – That was comment #79. The base year doesn’t shift. You still compare with the 2019 numbers and the CPI-U numbers from September 2017 to August 2018.
Rosemary says
I found your site and this column from a google alert. Found it fascinating reading the comments, thought I have not read them all as yet. Grandson wants a sleep over. Cannot believe that the supposedly republicans don’t know at least some of tax law, at least some of Medicare law. Making a big decision to retire you would think they would find out about it before they made a decision. Can bet they decided to retire and let some other person make their decisions for them and then are stuck with what was done and just signed papers. My cousin has a son who is a financial planner and after the Medicare law was passed. He retired early, took a cash out on his pension told his son that he needed $110,000 a year to live on and every year he complains cuz he cannot change anything without penalties. You would think that a financial planner would know about Medicare.
I worked 2 jobs and took care of my disabled husband for 23 years and stayed at one for 30 years and had to retire at 65 when my husband needed even more care. I taped C-Span Washington Journal on a VCR and listened when cooking or doing bookwork on the weekends at home for the township or the bank for extra pay. I knew about Part D and also did google alerts since the 90’s and read about Judge Brody and her decision in the AT&T case. I think it was in Ohio and took on my husband place of business when they wanted to stop healthcare for all under and over 65 year olds that were disabled or on Medicare. I took a week of vacation off work, wrote a 5 page letter, was able to get addresses of 500 people to mail it to. Paid to have it copied at Office Max and stuffed the envelopes and put the postage on the envelopes then was told I could only write and send out letters even though I was POA if it had to do with an election. So I wrote vote on the 500 letters cuz luckily one of the people on the board forgot to pay his dues and was kicked off the board and an election was called for. Was able to have them make labels for the letter but could not do it myself. They wanted to put the labels on the letters. So on so the day I brought the letters in and took the labels in, I brought 5 other people with me and said I have helpers you don’t have to do it. I also threatened a class action lawsuit in that letter for those losing their benefits and said I was sure we could win it and surely a lawyer would take it on for all the publicity. I also put the home and cell phone numbers of everyone making the decision to take our healthcare away from us and asked them or their spouse to find the time to call each person at least once every day. It is now 2021 and we still have healthcare, that includes dental, prescriptions, physical therapy, medical appliances, hearing aids, mental treatments. Expensive but good benefits. The workers negotiate and vote for one of 3 plans the elected board chooses and the one with the most votes win. The workers play for 50% for retirees and we pay the rest.
I was told even though I was POA I could not send out a letter unless it had to do with voting on an election. Luckily some one on the executive board lost his seat because he did not pay dues. So I wrote VOTE on 500 envelopes in red. Then when I was told they would make labels for the envelopes if I bought the labels and I could not have the addresses. They were expensive and I bought cheaper ones and dropped them off. They said the would put them on and mail them. When I went to take the envelopes in I brought 5 other people with me and some of them were retirees and the disabled ones that would lose their benefits to help me. They let us put the labels on and then they said they had to take it down the street to the post office and I said why can’t the office lady that my husband had hired years earlier go with me. So they could not say no as she got up from her desk and said she would love to help me. So that was taken care of. I also in that letter asked everyone to call the cellphone and home phone number of everyone on the list at least once a day. We still have our healthcare.
I have 2 questions. 1. I do Roth conversions every year since the first year that we could. I also funded my husband’s IRA since 1978 or 79. Then my husband died and I cannot do as much now. I live on $20,000 a year since 1995 and so far it seems like it is enough. I have savings and money coming in each year that I do not spend. I use a part of it to pay the income tax on the conversions. I have a heart disease that I inherited and won’t live forever and my 2 children are near 60. Their wives are about 8 years younger so will perhaps continue to work perhaps after the husbands retire. One is a doctor and I want him to use the Roth so it won’t have to be included in their income. The other one is single but a professional also.
What I want to do it sign a 100% conversion paper that can be mailed before I die or shortly after and also the RMD be taken out for that year of death. Can this be done? Is it legal? The other question is I see that next year your projected the income may go up to $90,000 before the Medicare premium goes up. Is there any way to know if and by how much I can have convert this year and still stay below the amount so my premium will not go up in 2023? If it goes to $90,000 for next year can I plan on 2% increase at a minimum for the income ceiling over $90,000 in Dec before the Medicare premium will go up in 2023?
I think I know the answer for the second question. Should I just stick with the amount that is for this year? I think it is $88,000?
Carl says
Harry
Per post 133 thank you for the clarification. I believe I have it finally!
MARY WHITEHOUSE says
Thank you so much for posting potential 2022 IRMAA limits – Very helpful!!!! I just wanted to tell you about my situation. I am married (a second marriage), and my husband and I keep our finances separate as much as possible. His estate will go to his kids and my estate to my kids. We filed jointly as long as he was age 70 1/2 and I was under, but when I turned 70 1/2 in 2019 we started filing separately to make figuring taxes less complicated. I then received a letter from SSA that my premium was going up to $475.20 PER MONTH BECAUSE MY AGI WAS $88,264!!!!!!
Maybe I missed it, but I don’t think you have mentioned this provision that only applies to married filing separately. Luckily, I filed reconsideration with Social Security and was able to stop the increase by telling them I would not go over 88,000 in 2020 because I would be giving my RMD to charity and filing jointly with my husband.
DreeMcg says
I could be wrong, but I don’t think the charitable donation affects MAGI. It just focuses on the income side; not deductions.
Mary Whitehouse says
When you have your financial institution take out a Required Minimum Distribution (RMD) from your IRA and they send it directly to a charitable organization, you are not taxed on the RMD. If you are trying to keep your income below a certain level for IRMAA purposes, this is a good way to do it. Instead of giving my church a monthly donation, I have my financial institution send money once a year from my IRA that counts as an RMD, and I do not pay taxes on it.
From the IRS website:
Required minimum distributions – Qualified charitable distributions
What is a qualified charitable distribution?
Generally, a qualified charitable distribution is an otherwise taxable distribution from an IRA (other than an ongoing SEP or SIMPLE IRA) owned by an individual who is age 70½ or over that is paid directly from the IRA to a qualified charity. See Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) for additional information.
Can a qualified charitable distribution satisfy my required minimum distribution from an IRA?
Yes, your qualified charitable distributions can satisfy all or part the amount of your required minimum distribution from your IRA. For example, if your 2018 required minimum distribution was $10,000, and you made a $5,000 qualified charitable distribution for 2018, you would have had to withdraw another $5,000 to satisfy your 2014 required minimum distribution.
How are qualified charitable distributions reported on Form 1099-R?
Charitable distributions are reported on Form 1099-R for the calendar year the distribution is made.
How do I report a qualified charitable distribution on my income tax return?
To report a qualified charitable distribution on your Form 1040 tax return, you generally report the full amount of the charitable distribution on the line for IRA distributions. On the line for the taxable amount, enter zero if the full amount was a qualified charitable distribution. Enter “QCD” next to this line. See the Form 1040 instructions for additional information.
Ed Fogle says
If a taxpayer is 70 1/2 they can make charitable contributions from their IRA (I don’t know if this applies to 401(k)s) buy making Qualified Chartible Distributions (QCD). They are subtracted from the amount reported on your 1099R when reporting income on the tax form so AGI is not affected.
AnnaC says
Hi Harry,
While the final #s aren’t due to be announced till Oct am seeing articles the projected 2022 COLA may be 5.2% for SS benefits based on CPI data.
Today I see Garamendi/CA introduced the Fair COLA for Seniors Act of 2021 to switch from CPI-W to CPI-E to more accurately reflect the cost for seniors.
Any idea if this goes through (doubtful but we can dream…) how this may change the projected increase to 2022 SS benefits?
Thx, Anna
Steve says
I just did some spreadsheet calculations and was able to match your numbers. A couple of interesting observations from this exercise:
First, since the threshold values are first calculated for a single tax payer and then doubled, the threshold values for a married filing jointly will always be divisible by $2000.
Also, my calculations show that even if there is absolutely no inflation in the future, and the CPI-U remains unchanged from where it was for June 2021, the threshold values for 2023 would still increase to $93,000/186,000.
Harry Sit says
Agree with your numbers. We had high inflation numbers three months in a row. Now the 2022 numbers have a good chance to push to $91,000/$182,000 in the first tier.
Thomas N. says
Steve or Harry:
With your assumption that under a no-inflation scenario the first IRMAA tier in 2023 would begin at $93,000/$186,000, what would the upper end of that band equate to?
Steve says
My calculations show the second IRMAA tier starting at $117,000/$234,000 in 2023 (based on 2021 income) assuming the CPI-U remains unchanged through August 2022. I should note, however, that a slight decrease in the CPI-U of just 0.1-0.2% would be enough to drop these thresholds by $1000/$2000. If you remind me, I will try the update these calculations after the November CPI-U numbers are released.
Eric says
Why would 2023 brackets increase if there is “no inflation in the future?” Isn’t it the inflation data from Sept 21 thru Aug 22 that determines any 2023 adjustment from 2022?
Harry Sit says
Eric – Because if inflation is 0%, the average from Sept 21 thru Aug 22 will be frozen at the latest number, whereas the average from Sept 20 thru Aug 21 is dragged down by lower numbers in previous months.
Rosie says
I convert some to a Roth every year and am in late 70’s and my children are near retirement. I want to leave my IRA’s to them tax free. Should I try to stay below $88,000 or $90.000 in the 2021 filing in 2022?
Harry Sit says
The 2021 filing in 2022 will be compared to the 2023 threshold values. Unless inflation turns negative, the 2023 value for single will be at least $93,000 in the first tier. See comment #140 from Steve. Of course it’s still possible to have negative inflation. So leave some margin of error just in case.
The Wizard says
Yes!
Harry Sit says
Updated the 2022 projection for the first tier from $90,000/$180,000 to $91,000/$182,000 following the release of the inflation number in July 2021. The other tiers didn’t change from the previous update.
Bob says
Harry-
Could you please clarify exactly how the bracket inflation numbers are calculated. Some websites suggest that it is simply the annual CPI- U (adjusted or unadjusted??) increase over the prior year as measured at the end of August. If so, one would only need 1 number (the annual CPI-U increase) for the calculation, and the increase for 2022 would be on the order of July’s 5.4%. Your comments seem to suggest that an average of 12 CPI-U numbers is employed…one for each of the prior months. If one took the average CPI-U for the past 12 months, the increase would be on the order of 4.1% or so. Your numbers suggest that the first two brackets will increase on the order of 3.4% and 2.7% (which would include rounding errors, of course). So I’m confused!! Could you please explicitly clarify how the bracket inflation numbers are calculated, and give an example of the 12 CPI-U numbers (adjusted or unadjusted???) and how they would be employed for your bracket estimates for 2022. Thanks!
Harry Sit says
The calculation method is in the reply to comment #79.
Braden says
Are questions and replies numbered? Am I the only one having to count each one to get to what I want to read ?
If they are not numbered could this be an added compliment to your column?
Ken says
Braden, Your comment is number 145. To the left of your name above. You have to scroll back to find #79, and Harry’s reply.
Harry Sit says
Please use a desktop browser to see the comment numbers. The numbers don’t show up well on my iPad or phone. I’ll see if I can fix that.
Braden says
The only computer I use is a desktop Mac. IOS and use Safari with Google Chrome as the browser.
Thank you for trying to help. Where near the comment is the number? I would assume it is by the name
Ken says
#79 comment was by CARL and dated October 7, 2020 at about 5pm. Harry’s reply is after it.
Harry Sit says
I fixed the comment numbers. They show up on my iPad and phone now. Please delete browser cache and refresh if you still don’t see the comment numbers.
Thank you for bringing it up. I learned that Safari on Mac behaves differently from Chrome on Windows because Safari uses a different rendering engine.
Keith says
Until now, MAGI (for IRMAA surcharge threshold purposes) has been calculated as AGI + tax free interest.
Going forward, will Paycheck Protection Plan (PPP) loan forgiveness amounts be added to the MAGI calculation?
Harry Sit says
No. PPP loan forgiveness doesn’t add to income.
Braden says
Thank you so much. I see some of the numbers now. I really appreciate your help.
Thomas N. says
So I will be 72 next year and therefore taking my first RMD, 1/12 each month.
If I also wish to convert some of my traditional IRA balance in 2022 to a Roth, it is my understanding that I must first withdraw the full amount of the RMD before taking that conversion action.
My question is, is this also true for the qualified charitable distribution? Or can I donate to our church via the QCD process at any time throughout the year, regardless of how much of the RMD has been withdrawn?
Thank you.
Harry Sit says
If you’d like to have the QCD count toward your RMD, it needs to be within the first $X that comes out of the Traditional IRA. Say your RMD is $20,000 and you’d like to donate $5,000. You can do $15,000 RMD followed by $5,000 QCD and then your Roth conversions. Or you can do $5,000 RMD, $5,000 QCD, another $10,000 RMD, and then your Roth conversions. Of course you can continue with additional QCD throughout the year after you complete your RMD.
Retiree Dave says
I am questioning the 2022 Projection, which was in an August 11, 2021 update of the article. I was only looking at the IRMAA Bracket that would apply to me; specifically married filing jointly in the Standard*2 that lists the 2021 IRMAA as $276,000, and the projected 2022 IRMAA as $284,000. Virtually all recent projections of the COLA for 2022 are between 5% and 6%. However, this article appears to be using a 3% projected Cola for 2022. I assuming that all brackets use the same projection COLA percentage.
A more realistic projection would be an IRMAA for this bracket of $291,000 based upon 5.5% COLA for 2022.
As an aside, I have been managing my income to stay just within the 2X cost IRMAA by converting regular IRA’s to Roth IRA’s before the Required Minimum Distributions kick into my income stream. Sure, I am paying the extra taxes now, but reducing them in the future.
Harry Sit says
Social Security COLA uses a different inflation index and a different comparison period.
Bob says
Retiree Dave-
I sympathized with your question (see comment 144 above). Here are my numbers and methodology calculated for your bracket:
All the calculations for brackets are based on the CPI-U (not seasonally adjusted) numbers, which can be found at https://www.bls.gov/regions/mid-atlantic/data/consumerpriceindexhistorical_us_table.htm
1). Average the numbers for the period Sept 2019 thru Aug 2020 (257.721)
2). Average the numbers for the period Sept 2020 thru Aug 2021 (265.513 assuming an Aug 2021 CPI-U of 274.368..an increase of .5% from July)
3). Divide to get the increase ratio for the brackets (265.513/257.721 = 1.030)
4). Multiply the 2021 threshold for singles for your bracket (138,000) by this number (1.030) to get 142,173.
5). Round to the nearest 1,000 (142,000).
6). Double this number for married couples (142,000*2= 284,000). Note that this bracket estimate is the same as Mr. Sits. The only uncertainties are associated with the August 2021 CPI-U number, which will come out in mid September, although the number has to be substantially off my assumption to affect the calculations due to the averaging effects.
You can make various assumptions going forward for 2023 as to how the CPI-U numbers will increase, and calculate the 2023 bracket to help determine how much income you should take this 2021 year.
I hope that these comments and this example are helpful for you and others.
Dave Retiree says
Social Security Cola is based upon the CPI-W index comparing the average of the third quarter of 2020 CPI with the average of the third quarter of 2021 CPI. Most predictions are in the 5-6% range, with two months left to report.
The IRMAA Cola is based upon CPI-U, and compares the CPI number for September 2020 to August of this year, which will reported shortly. In the IRMAA calc, it appears that quarters are not used, just comparison of single months year to year. The ratio of the number CPI number for August 2021 compared to the number for September 2020(260.28) will then be the basis for the IRMAA adjustment. So, 11 of 12 months have been already been reported, and through July 2021, the CPI number is 273.003. If there were no inflation at all from July to August, the yearly increase would be 4.8%. If August increases the same as July, the yearly increase would be 5.8%.
In effect, these indexes although not the same, and the methodology is different, they give results that run pretty close together. Also, looking at the IRMAA COLA’s for 2020 and 2021; they tracked pretty closely to the Social Security Cola’s for those years. So, I still believe my earlier comment projecting 5.5% is closer to what we will see, recognizing that the IRMAA amount is rounded to the nearest thousand. I did not use seasonally adjusted information, but used the following table, link below for CPI-U data:
Consumer Price Index Historical Tables for U.S. City Average : Mid–Atlantic Information Office : U.S. Bureau of Labor Statistics (bls.gov)
I thank commenter Bob for the detail he provided, but I do not believe that a 12 month average should be used.
The real good news about this spirited discussion is that we will find out within a couple of weeks.
Rob says
I guess the good news here is the 2021 high CPI numbers will carry forward into the 2023 bracket increase calculation, as a lagging monthly index is used!
Harry Sit says
August 2021 inflation release came out today. All numbers for 2022 are final. No changes from the previous projections. Official numbers will come out in late October or early November. Also added projections for 2023 if inflation is 0% through August 2022.
BMG says
Hi Harry,
Thank you for these estimates, but why would there be any increase in the IRMAA thresholds for 2023 if there is no increase in inflation over the next 12 months? Thanks in advance for clarifying.
Eric says
Because 12 months frozen at the August, 2021, level would be higher than the average of the previous 12 months.
Jim says
Eric’s reply is partially correct, but in reality the comparison is not with the previous 12 months (Sep 20-Aug 21), but with the 12 months Sep 2017-Aug 2018. See Harry’s reply to comment #79, dated Oct 7, 2020. This would still be any increase in the 2023 IRMAA bracket amounts.
Jim says
Good afternoon,
I was a ong time widower that remarried earlier this year. Prior to my marriage I had an additional IRMAA amount as a single STD*2.6.
I appealed because of marriage , using my expected 2021 joint income.
SS reduced my IRMAA amount to the married STD*1.4 and sent me a refund. Nice!
Question: Since I used my 2021 expected income for this year’s IRMAA, what will SS use for 2022. Will they still use my (and my new bride’s) 2020 income?
Harry Sit says
I’m guessing they’ll use your 2020 tax return filed as single and you’ll have to appeal again when you receive their letter in November or December.
roger says
Projected thresholds for 2023 with no inflation after Aug-21 would be higher than 2022’s thresholds because the thresholds are based on AVERAGE CPI-U for the prior Sep-Aug. With no inflation from Sep-21 to Aug-22, that average would equal the Aug-21 CPI-U. The 2022 thresholds are based on average Sep-20 to Aug-21 CPI-U, which is lower than the Aug-21 CPI-U. (Inflation adjustment is described in 42 USC 1395r .(i)(5) )
Marty Yeager says
I’m not sure I am following the calculations. Regarding the 2023 Coverage (based on 2021 income), are those numbers for each category guaranteed (based on available data) to be the lowest number for each category, but could be higher if there is inflation after August 2021? Thank you for your help. In other words, can I count on them to adjust my AGI for 2021?
Harry Sit says
September inflation number released this morning prompted a slight increase in the 2023 projections for the first two tiers.
Allan R. says
What amount of income would you stay below in 2021, so that I don’t jump to the next IRMAA bracket for married 1.4* for 2023 MAGI projection of $236K? I would hate to go over the bracket by $1 and end up paying an additional $2400/yr in Medicare premiums.
I guess because your calculation is a minimum with no inflation for 2022 baked in, you would suggest to go right up to the $236K projection limit and still be safe.
Thank you for providing these projections.
SC says
I’ve never heard anything about the IRMAA from AARP. What is their position on this?
Ed Fogle says
Years ago I wrote AARP, AMAC, my Congressional delegation (I’m from Oklahoma so you would think my Senators and Representatives would be very receptive) laying out my objections to both the concept and implementation of IRMAA. Not a peep from any of them except boilerplate responses. I even wrote to the airline pilot unions since many of their members will be hit with IRMAA. Again nothing. You would think all of the above entities would be opposed to IRMAA but, sadly, they don’t seem to care.
Rosemary says
Updated December 24, 2020
From an article from AARP–
https://www.aarp.org/retirement/social-security/questions-answers/income-affect-medicare-premium.html
Steve says
Harry, thanks a bunch for the revised 2023 IRMAA estimates. I can use those for 2021 late year tax planning.
Marty Yeager says
You should be able to update up to the November CPI-U number released in December, assume no deflation through August ‘22.
AnnaC says
Jim
yes, SSA will let you appeal two years in a row for the same life changing event
Rosemary says
Yes thank you very much. For some reason I did not understand the info to get the new figures. I have shared the link with friends.
Giri says
This is very useful for tax planning for 2021.
You have given the brackets for 2023, assuming 0% inflation through August 2022. Does this mean that I will be safe to use these numbers, as in reality they will be higher?
Marty Yeager says
I’m guessing that is correct unless we have deflation, which is probably unlikely.
Paul says
Harry, thanks for publishing this info. I’ve been trying to figure out if I can adjust my IRA withdrawals at the end of this year to avoid pushing us over the first bracket threshold in 2023.
I read back through the comments about how you calculate it, and had a heck of a time replicating it until I looked at the actual law and had my “aha!” moment: each year the brackets are recalculated based on the increase from the average CPI-U over the 9/17-8/18 period (which is 249.28).
(1) Calculate the average CPI-U over the past 12 months (265.447 from 9/20-8/21).
(2) Subtract 249.28 from that average (resulting in 16.167 this year).
(3) Divide the remainder by 249.28 (resulting in 6.49%).
(4) Increase the 2019 brackets(s) (the first tier ends at $85,000) by that percentage.
(5) Round each to the nearest $1,000.
To reiterate for anyone reading this far: the CPI-U average (249.28) from 2018 and the brackets from 2019 are reused every subsequent year, except for the top bracket. And starting in 2028, the same algorithm will be applied to the top bracket.
Marty Yeager says
Well put, I got into the weeds myself, to understand how this works. Tedious, basic math involved. I think the closest we can get to the likely “floor” of the 2023 brackets, before Dec 31 of this year, is as follows: take the CPI-U values for each of Sept 21, Oct 21, and Nov 21 (last one not available not until early December 21), then multiply Nov 21 value by 9 to represent future unknown values from Dec 21 thru Aug 22 thereby assuming no inflation or deflation after Nov 21), add the values for the 12 months (3 plus 9 assumed), get the average, then follow your directions above. What do you think?
Paul says
Marty, I just picked an annual inflation rate, then increased each monthly CPI-U by 1/12th of that, until Aug-2022. As data becomes available, I’ll enter the actual monthly CPI-U’s.
By playing with various inflation rates, I found that up to 2.2%/year, the 2021 threshold for 2023 remains $94,000 (single). So, it’s close enough for me to make a decision this year to defer 2022 AGI into 2023.
Marty Yeager says
Got it. Nice to know we can get a grip on this mystery calculation!
Tom P. says
Technically, this is the correct method, but you can also do it year-to-year, which takes into account the previous changes in the CPI-U.
1) 2018-2019 compared to base year 2017-2018 is an increase of 1.0190 (254.016/249.280);
2) 2019-2020 to 2018-2019 is 1.0146 (257.721/254.016)
3) 2020-2021 to 2019-2020 is 1.0300 (265.447/257.721)
4) Multiply 1.0190 x 1.0146 x 1.0300 = 1.0649, or 6.49%, same as your result.
This way one doesn’t have to know the base year brackets, just the previous year brackets to make an informed estimate of future brackets.
The key thing for married filing jointly is the single bracket is adjusted and rounded to the nearest thousand first, then doubled to get the married filing jointly.
Example: new 2022 married lower limit is ($176,000/2)x1.030=$90,640 rounded to $91000 x 2 = $182,000
Bev L says
This is way too complicated for the average bear. I am hoping someone in the know will just reply with what they “think” the Tier limits will be for 2021 for your 2023 subsidy. Many thanks!
Paul says
Harry has provided an estimate in the article. Look for the title “2023 IRMAA Brackets”. I think it’s safe to say that’s the minimum tier limits, as it assumes there will be no inflation in the next 12 months.
If you want to see the effect of various CPI-U increases in the next 12 months, the algorithm I detailed above can be used. That’s what I wanted to do, and why I took the time to figure it out.
Steve says
I have seen a lot of discussions about predicting the IRMAA tiers for 2023 but very little on the risk versus reward of contributing the extra $1000 or $2000 that a higher bracket would allow.
For me, the risk of going into the next IRMAA tier is that I would need to pay about $1800 extra for Medicare in 2023.
The potential reward for taking this risk is that I would be able to convert an extra $2000 from a traditional IRA to a Roth IRA this year. This money would be taxed at a 22% marginal rate now versus what may be a 28% rate later when I am required to take minimum distributions. This would potentially save me 6% of $2000 or $120.
So in essence, I am risking a $1800 expense in 2023 to save $120 at some later date. Am I thinking about this correctly?
Marty Yeager says
I think you are correct to take a holistic approach to your particular tax situation in weighing how much taxable income is best. Barely stepping over the threshold feels very painful the higher the AGI and for a couple. Perhaps the marginal tax brackets are more important, one just needs make the calculations.
Ros says
I convert to a Roth every year since I was able to but stay within the same tax bracket. The tax brackets usually come out in the last quarter of the year.
Are you bringing into the scenario if you should become a widower and the higher tax brackets at that time? Also if you have children are you thinking about the taxes they would have to pay when the money would have to be spent within the 10 year span.
I am a widow and converting to a Roth for the children who are near retirement age themselves. A Roth is not included in the IRMAA if they are paying for Medicare.
Tom P. says
Today I sent my local SS office SSA-44 forms for my wife and I. We’ve been paying IRMAA the last two years, however I retired mid 2020 so now my 2021 income will be below the $182,000 lower limit for 2022 instead of Tier 3 based on 2020 income. I hope I filled these out correctly as I input year 2021 and my estimated AGI (which should be quite accurate since I’m not making any more withdrawals this year). I also estimated my 2022 AGI, which will be even lower than 2021.
Based on this we should not need to pay IRMAA in 2022, but will we also get a partial refund for 2021? Based on the published 2021 brackets our income for 2021 will be in the Tier 1 range instead of the Tier 3 we are paying now.
Tom P. says
Ok, I’ll answer my own question. If your income goes down or you have another qualifying circumstance that would reduce your IRMAA surcharges, IRMAA for the affected year will also change, not just the immediate follow-on year.
So, for me, my income dropped in 2021 due to a work stoppage in mid 2020, so I’ll be getting a refund on the amount paid thus far this year. To confirm, today I logged into “my Social Security” and checked the upcoming Medicare charges and SS has reduced IRMAA for November (payable in December) from the 3rd tier to the 1st tier. Wish I’d have known about this last month as I would have withdrawn a bit less from my 401(k) then to stay below the 2021 threshold. Oh well, I can’t complain as I’m still saving a lot this year and next.
Mark says
IRMAA is in fact a tax. Taxes are intended to incentivize certain behaviors. My gripe with the IRMAA is it fails to incentivize the right behaviors, which for us olders is to take better care of ourselves (maintain the proper weight, don’t smoke, drink little or none, exercise, eat right). There is no premium reduction for those efforts or penalties for bad practices, even though better health practices would mean less costs for Medicare. It only measures income and penalizes those who have saved. Our IRAs and paid-off mortgage were built by a lot of frugal living and deferred gratification during our working years. Hence we intend to respond to the government’s wishes as signaled by its disincentive — we are going to reduce our MAGI in any way we can. Prime example: as soon as we turn 70-1/2, we will donate our RMDs directly to charity. You should also look for tax shelters and other avoidance schemes, which I applaud. As for the lawmakers, I’m sure that they will be surprised once again by the “unintended consequences.”
Karen says
Thanks for this estimation – I guess :-). My rough estimate for taxes this year is $118,017. Now I have to bet whether the 2023 income levels will go up from your estimate, or decide it will be no higher that $118,000 and transfer more money out of my IRA to have the earnings be taxed at capital gains in the future. Guess I’ll go flip a coin….
Really appreciate the Information,
Tom P. says
Karen, the $118,000 figure for the upper end of the 1st tier surcharge bracket is based on inflation numbers through September 2021. This yields a current multiplier of 1.033 for the 2022 brackets. Numbers for October and November will be available about mid December, at which time we’ll have a slightly better idea of how the brackets might shift.
If the eventual multiplier changes from 1.033 (the highest since IRMAA inception) to 1.060 that would increase the bracket limit to $121,000 for 2023, so I don’t think we’re looking at a huge difference from the estimated number.
If you can, you might hold off on anymore IRA withdrawals until more data is available in December. Hopefully, the brackets will shift enough so your current estimate of AGI doesn’t tip you into the next higher bracket.
DrewMcG says
Karen: Did you include in your 2021 AGI estimate the continuation of the $300 charitable gift deduction even for those who take the standard deduction that Congress extended to 2021? If not, you could donate $18 to a charity and avoid the second-level bump in IRMAA for 2023 that way (e.g., even if inflation stays @ 0.0% through next August, which seems kinda unlikely ….).
Don G says
This site seems to be “best on the web” for projecting the IRMAA brackets ahead of their official announcements. Many thanks to Harry Sit.
What are some sites that reliably predict what the Medicare Part B and Part D premiums and IRMAA adjustments will be?
Tom P. says
Don, if you are familiar with spreadsheets it’s really quite easy to do your own predictions… you just need the data and methodology:
1) CPI-U data is at https://www.bls.gov/regions/mid-atlantic/data/consumerpriceindexhistorical_us_table.htm
For 2022 you just take the average of the Sep 2020 to Aug 2021 numbers (265.447) and divide by the Sep 2019 to Aug 2020 average (257.721) to yield a multiplier of 1.030. The monthly CPI data is published around the 10th of the following month. Oct data will be available Nov 10 and Nov data on Dec 10, so at that time we’ll have three of the 12 data points for 2023, which will give some indication of how things will go.
Multiply each single income bracket ($88,000 from 2021, etc.) by this number (1.030) and round to the nearest thousand, which yields $91,000. Do the same for the other tiers. To get married filing jointly, double these amounts.
2) The IRMAA Part D adjustment is based on the Part D Base Beneficiary amount, which for 2022 is $33.37 (this is on the CMS website; Google “medicare ratebooks & supporting data for the link), it’s published the end of July each year). Multiply this amount by the following factors for 1st thru 5th tier: 0.3725, 0.9608, 1.5490, 2.1373, and 2.3333. The first tier number is calculated as (35.0-25.5)/25.5. For the other tiers the first number is 50.0, 65.0, 80.0 and 85.0, meaning you pay 35% thru 85% of the cost. Thus, the Part D 2022 adjustment for the 1st tier is $12.40 ($33.37 times 0.3725, rounded to the first digit)
Enjoy 🙂
Harry Sit says
The second data point for 2023 came out this morning. It increased the 2023 0% inflation baseline numbers slightly in the middle tiers. I also added a new table with 5% inflation for 2023. I will update again next month.
Still haven’t seen the 2022 Part B premium yet.
Paul says
Harry, CPI-U is out for October, and it’s up 6.2% from a year ago. It’s the highest since the year ending November, 1990.
I plugged it into a worksheet I built to project the IRMAA brackets for 2023, and found that while the projection is still $188,000 for the beginning of the second tier if you assume inflation is 0% from now until August, 2022….
If I assume the annual inflation for the remaining months is 0.8%, that’s enough to boost the beginning of the second tier to $190,000. Before the October, 2020 CPI-U was released, the minimum remaining inflation to bump it to $190K was 2.3%.
A further increase of remaining average inflation to 3.5% will bump the beginning of the second tier to $192,000. I’m planning to use this for my AGI limit in 2023.
(Edit to note that Harry posted a comment while I was composing this!)
Paul says
Apologies for a late correction to an error I didn’t notice until now:
I’m planning to use $192,000 for my AGI limit in 2021 (current tax year), not 2023.
It will affect the IRMAA brackets in 2023, and I transposed the dates.
Becky G says
Please let me know if I am understanding this correctly. My 2021 MAGI should not exceed an estimated $94,000 to avoid incurring any surcharge in 2023. The threshold to be applied to my 2020 MAGI is $91,000. Is that right?
I wish to make a Roth conversion in 2021 without going over the IRMAA standard threshold for a single person. Thanks in advance for your response.
Tom P. says
Becky, you have this correct. The way inflation numbers are currently running the $94,000 for 2023 (2021 income) will most likely be higher by a few thousand, but $94,000 is certainly a safe number to use.
Dave says
And is it still $182,000 max in 2021 for 2023 for married couples?
Ros says
It is double over singles for married. If you think single will be $94,000 then married should be double. But you should wait to make sure what Harry says.
Jeff in delRey says
I started converting my and my wife’s IRA’s to Roths in 2018 and managed to the top of the 24% bracket. I was proud of myself until the school of hard IRMAA knocks hit me in 2020 and this year. I over-corrected last year and left $15k on the table. Do I understand the 2023 IRMAA (2021 tax year) correctly? That the cliff for the 2.6 tier is $354k?
Tom P. says
Jeff, you have it correct. Wish I had your problem of trying to stay under $354K,ha, ha. In reality it will probably be a bit higher as inflation doesn’t appear to be going away anytime soon.
Tom P. says
I have my own spreadsheet to compute the IRMAA brackets and for 2023 I have the same as Harry except I can’t get $119,000 for the 2nd single bracket… I get $118,000, which is the 2019 bracket multiplied by the overall CPI change from 2017-2018 to 2021-2022 (Sep & Oct), which is currently 1.105 (275.450/249.280).
Anyone else computing this on their own?
Giri says
Tom,
I believe Harry assumes 0% inflation from Oct 21 to Aug 22. which means the average Sep21-Aug 22 is (Sep 21 + 11* Oct 21)/12, which comes to 276.573. That will push it to $119,000.
Tom P. says
Thanks Giri. That does push the 2nd bracket to $119,000 ( but note that the correct average is 276.399).
Harry Sit says
Medicare announced the 2022 Part B premiums. The standard premium will be $170.10/month in 2022 (up from $148.50/month in 2021). All 2022 IRMAA brackets in this post matched the official announcement 100%.
bev l says
OMG…that is a 14.545% increase! That must not be factored in the inflation rate of 6% given to social security recipients. Seems highly out of whack.
Paula Thompson says
Yep. Highly out of whack. I guess we could pay the government back by all signing up for Medicare Advantage, which costs the gov’t about 100.30 for every 100 spent by traditional (Medigap) plans.
Don G says
Official CMS press release with the 2022 Medicare Part B and Part D premiums and IRMAA add-ons are at https://www.cms.gov/newsroom/fact-sheets/2022-medicare-parts-b-premiums-and-deductibles2022-medicare-part-d-income-related-monthly-adjustment
Paul says
Bev, Medicare premiums are based on projected medical costs for the next year. Inflation is only one of the factors.
If you follow the link provided by Don G (currently the last comment, just above this one), you’ll find an explanation. One factor is potential coverage of a new Alzheimer’s drug that was just approved by the FDA.
calwatch says
So many Medicare Advantage plans are now rebating to their policy holders. Even SCAN, Anthem, Humana, and AARP are doing give backs, up to $125 a month per policy holder. If one is not a heavy consumer of health care and doesn’t have any non-treatable chronic conditions this could be an option.
Marty Yeager says
Yes, Medicare Advantage premiums have been falling, not surprising, since these managed care plans function as gatekeepers but hopefully do not sacrifice quality of care as access and referrals for care are restricted and or limited to their network. The problem is, you never know when you will get that serious diagnosis, and want treatment by some specialist/surgeon/facility that is outside the network. Waiting for open enrollment to switch to original Medicare may not be possible. Everything I have read says if you can afford it, original Medicare is the better option. I agree.
Tom P. says
Until the “era of COVID-19” is over I’m keeping traditional Medicare plus my Regence Plan F. Most of the Advantage plans are crap, and once you switch and stay in for 12 months there is absolutely no guarantee you can switch back as Medigap plans can refuse to insure you.
That said, the hospitals must make more money with Advantage plans because all my local facilities are pushing them, probably because they can “cheat the system” and overcharge Medicare by manipulating illness codes.
Medicare is actually quite reasonably priced. When I was working my employer paid 3X for group coverage compared to what Medicare + Medigap costs me.
GeezerGeek says
Wow, I am very happy to have found this site with all of its valuable information, albeit it would be better without the political commentary. I’ve been doing Roth conversions since 2011 to help reduce the expected RMD I’ll have in a couple of years. Initially, I was taking a large enough Roth conversion to take me to the top of tax bracket I was in. However, after the Trump Tax cuts (The Tax Cuts and Jobs Act of 2017 to use the lesser known name of the law), it made sense to take the Roth conversion up to the first IRMAA bracket. Figuring out what the number will be has been problematic until I found this site. At least now I have some basis of figuring out what that number might be. Thanks to the valuable information on this site, I now have a spreadsheet that has all of the information I need to estimate the IRMAA brackets.
This year I’m considering taking a Roth conversion into the first IRMAA bracket all the way up to the second bracket. That would cause almost a 4% tax increase on the incremental income in the bracket (counting the IRMMA as a tax) but that may be better than the tax rate caused by the RMD and the loss of the Trump tax cuts. Of course I will be a bit conservative in my estimate since being $1 over can cost you over $2,000 in taxes (Not fair but that is the way it is.)
So, THANK YOU, Harry Sit, for this valuable site and thanks to the commentators (Paul, Tom P, and others) who have helped clarify the calculation process.
Tom P. says
I guess I need to do some research on Roth conversions because I don’t understand how it will save paying taxes since in retirement I expect to always be in the same tax bracket year after year.
Marty Yeager says
I’m guessing hospitals that push Advantage plans have negotiated higher reimbursement than what they get from CMS. If you are comfortable with managed care, you may save on premium costs. But old age is when the serious diagnoses are likely to appear, and I will keep by original Medicare/medigap with freedom to choose providers and no gatekeepers.
Paul Thompson says
Can you reconfirm that you have a 12-month period to bail back in to Medicare/Medigap, if you try out Medicaree Advantage? With this whopper increase in Part B for 2022 (mainly caused my a v unhelpful drug approved by Medicare for Alzheimer’s), I have to find funds somewhere. I find Medicare/Medigap (Plan F for me too) just too expensive.
Tom P. says
Paul, please see page 78 of the “Medicare and You Handbook 2022.”
Marty Yeager says
My understanding is that when you initiall qualify for Medicare B and Medigap, there is no medical underwriting. Guaranteed issue at that time for Medigap or Advantage. Basically, you choose the insurer you like with the price you like. But if you choose to change Medigap policies, as my husband and I did after 3 years (chose Plan N to save on premiums), you are subject to underwriting questions from the Medigap companies, and they may not issue you a policy. So, switching from an Advantage plan to a Medigap policy is not a slam dunk, depending on your health history.
Marty Yeager says
Roth IRA conversions save on taxes, after the first hit when you convert, because capital gains are tax free thereafter. According to the current law. However, I am not jumping on this bandwagon after Congress eliminated the “stretch” IRA. I do not trust Congress to keep their word on the Roth, especially with our current deficit and BBB spending plans.
GeezerGeek says
Yeah, you can never trust Congress. The tax on Social Security was implemented with what looked like a high threshold in both the 1983 law (50% taxable) and the 1993 law (85% taxable) but neither threshold was indexed so more SS recipients every year move over the thresholds as the COLAs increase their benefit.
I do think it is possible that Roth distributions will be added to the MAGI for IRMAA since they are already including non-taxable muni interest income. I think Congress would have a harder time justifying any tax on Roth distributions since the funds have already been fully taxed. I would not be surprised if Congress eliminated the back door Roth or curtailed future investments in Roths. However, the more popular Roths become, the harder it is for Congress to change them.
It was easy for Congress to justify the 50% tax on SS benefits since SS participants only contribute 50% of their already taxed income to SS and the company they work for contributes the other 50%. It was a bit harder to justify the tax on 85% of the SS benefits since 35% of that had already been taxed. Of course, Congress could justify that on the basis that the SS benefit is more than what the recipient paid into the fund, not that Congress has any need to justify anything they do.
Ros says
You never know what bracket you may be in during retirement. SS goes up and you either pay tax on 50 or
85% of your SS check depending on your taxable income. If you are married your tax bracket will change if your spouse dies before you. Congress can change rates. RMD’s change every year and it goes by your age and your balance of your IRA’s from the previous 12/31 and or other retirement plans. All income like Roth IRA’s do not count as income. Even the IRMAA law may change. You have to take advantage of the laws when they are in effect if you think they will benefit you.
Tom P says
Ros, your key statement is “You have to take advantage of the laws when they are in effect if you think they will benefit you.” Taking a quick look at my situation I don’t see a monetary benefit if I have to pull from my accounts to pay the tax on a $90K Roth in-plan conversion. If I do a smaller conversion and pay the taxes with cash on hand then I’m ahead. But either way the Roth would provide some added flexibility, so I will consider it next year after more spreadsheet modeling. I’ll need to decide before my first 1040-ES payment in April as that would need to be adjusted to cover the expected taxes.
CapeRetiree says
Tom P,
I have done a spreadsheet for a large ($128K) Roth conversion this year, then $40k per year after that, and the tax free money I can accumulate in the Roth using a lower investment return rate than I am averaging now, while only paying 22% Fed tax rate once for the conversions, and us both paying the IRMAA bump on Medicare in 2023 for our 2021 return MAGI being in the 1.4 surcharge is more than covered with all the tax free money that will build up in the Roth account, while giving me flexibility to use the Roth $$ if needed to stay within brackets on future returns when needed to avoid IRMAA or Fed bracket creep. Next year starts my RMD years, so I will need to do the big one now, to make more money available for the conversion.
GeezerGeek says
Hopefully, the SECURE Act 2.0 will soon get passed by Congress and you will get another year of Roth conversions, age 73.
I will consider continuing Roth conversions even after I start RMDs. Will need to run the numbers at that time. May consider a qualified charitable distribution to adjust where I fall in the tax brackets and IRMAA brackets.
If you plan to leave an inheritance, the Roth funds would also benefit the inheritors. There has been talk about eliminating the inherited step-up in basis on capital gains so I would think that Roth inheritances may be a safer way to pass a tax free inheritance.
Tom P. says
Thanks Cape. Considering the money I would need to pay the in-plan Roth conversion taxes would probably come from a withdrawal from my 401(k), I don’t really see how it would be that beneficial. Say I withdrew an extra $24K next year to cover a $100K conversion, that $24K won’t be making any (hopeful!) return, and all that extra “income” will push me into a higher tax bracket and require an IRMAA adjustment, something I avoided for 2021, 2022 and 2023 by filing the SSA-44 after I retired in July 2020 and my income dropped considerably this year.
Guess I’ll put together a spreadsheet to see if it might make sense in the long run… Lord knows I have spreadsheets for everything else, LOL. The good thing (I guess) is what little money I did put into my 401(k) as a Roth contribution in 2017 will hit the 5 year mark January 1, 2022, so whatever I choose to convert next year would be immediately qualified. Ain’t retirement fun!
GeezerGeek says
Tom P, you are right. Roth conversions are a wash if you remain in the same tax bracket but are an advantage if you move to a higher bracket in the future. However if you have to pay the taxes with funds from tax sheltered funds, IRA or 401k, then you also have to pay the taxes on money you withdrew to pay the taxes and, as you pointed out, you lose the future potential earnings of all of the money you withdrew to pay the taxes. A Roth conversion that would have been a wash can become a net loss when using tax sheltered funds to pay for the conversion. So the general rule is don’t use IRA/401k funds to pay for a conversion unless you were required to withdraw those funds because of an RMD. However, I say “general rule” because under some circumstances, it can make sense. You might have to do that spreadsheet to figure out what make sense for your situation: A smaller conversion or no conversion at all.
Excel is my friend. I created a spreadsheet that projects my future income over the next twenty five years including the RMDs that are going to put me in tax and IRMAA brackets where I don’t want to be. That is the reason that I’m trying to do Roth conversions as large as I can afford to do. However, everyone’s financial situation is different. You just have to figure out what make sense for your situation and it sounds like you have got a pretty good handle on that.
Tom N. says
Tom P, you wrote: “The good thing (I guess) is what little money I did put into my 401(k) as a Roth contribution in 2017 will hit the 5 year mark January 1, 2022, so whatever I choose to convert next year would be immediately qualified.”
By “qualified,” do you mean immediately available without another 5-year waiting period? I am new to all this and thought, perhaps incorrectly, that each Roth conversion amount has a 5-year no-withdrawal period associated with it, which needs to be tracked. Can someone clarify?
Tom P says
Tom N asked about the Roth 5-year taxable period. I don’t know how this works for an IRA but for my former employer’s 401(k) plan, of which I am still a participant, I have a table that outlines the scenarios. For source type: “In-plan Roth Conversion made within the last 5 tax years (including current tax year)” the table column for “> 5 yrs Roth participation & > 59.5 or other exception” the earnings are a “qualified distribution, no tax and no penalty. Qualified is 5 years of Roth participation AND paid after 59-1/2 or due to death or disability.”
There’s a footnote at the bottom of the table regarding participation: “The five taxable year period begins on January 1 of the first year in which you made a Roth contribution or a Roth conversion…”
You need to confirm how your own plan works.
GeezerGeek says
Tom P, I can’t predict the future but I don’t expect the Trump Tax cuts for individuals that expire in 2025 will be renewed. For the past two years, US deficit spending as a percent of GDP is higher now that it has been any time since WWII. A large part of that was due to COVID 19 but with the Infrastructure Investment and Jobs Act and no additional sources of revenue, that trend may continue.
Then there is the US national debt, which as a percent of GDP, is higher now than it was during WWII. The only thing that made such a huge debt more manageable is the historically low interest rates the US Treasury is paying. Now with inflation kicking, how much longer will those low interest rates be sustainable? If the Treasury rates return to the level they were in the early 2000’s that cost of serving that debt will double. If the Treasury rates return to the level they were in the 1990’s that cost of serving that debt will triple. Hopefully, the rates will never return to the level they were in the early 1980s, but if they did, the cost of serving the debt would be more than 5 times the current cost.
Then there is Social Security, which we all have know for years is under funded.
Then there is the continuing problem with supporting the costs of the Affordable Heath Act, which continue to rise.
So where will the money for these future needs come from? Many think it can be fixed by raising the tax on the one percenters but if you think that then read the following article. (I’ve seen this analysis by others but this is the first one I found now by Google.)
https://www.crfb.org/blogs/can-we-fix-debt-solely-taxing-top-1-percent
To me, it seems inevitable that tax rates are going up in the future, and not just for the one percenters. Just the expiration of the Trump tax cuts in 2025 alone will cause future rates to increase.
Vincent J Pellettieri says
This is all very frustrating to try to plan for those who have worked hard and saved all their lives. It seems like if you goof off the government has a bailout program for you. Any popular ideas that are used to try to limit excess taxation are criticized and then they try to eliminate it.
Ros says
Tom P,
I have done my Roth conversions since it was allowed and never have I used IRA money to pay the taxes. I always over pay my income taxes so I do not have to worry about owing at tax time.
I believe that is the only way that the conversion makes sense. I am not wealthy so I stay under the number to make my Medicare premium go up as I am retired. I am doing this for my kids as they are near 60. I want them to have a choice of money to use that is not taxable if they need it and it could delay the IRA distributions and perhaps Social Security if they retire early.
Larry L says
I can readily see Congress including T-IRA and R-IRA earnings, gains and distributions as part of a “means test ” for Social Security in the not so distant future when the program “runs out of money” (whatever excuse that means). Roth conversions make sense now for me and I’m continuing onward…
Jane J says
How risky it is trying to gauge the 2023 IRMAA brackets when they are not calculated/announced for another 12 months! Ordinarily, my MFJ tax household will qualify for no IRMAA premium, but for this tax year 2021, we have decided to substantially raise our AGI and move into x1.4. I turn 63 in 2022 and so IRMAA in 2023 will only affect my spouse. Thank you to Harry for creating this website and to the other contributors for the subsequent discussion. I feel confident that I have a plan for year-end which neither goes (just) over a threshold nor leaves too much money on the table.
GeezerGeek says
Jane J, If you know how the brackets are calculated, then there is very little risk. The data to calculate the brackets that will be announced in November 2022 will be the CPI-U from September 2021 to August 2022. We already have the CPI-U for September and October 2021. Next month we will get the data for November 2021 so we will have the data for 3 of the 12 months that will be used to calculate the brackets for next year. You can take that data, assuming there is no inflation at all for the other 9 months (unlikely), and calculate what the brackets will be. Assuming that there is no inflation for the next nine months is very conservative estimate so there is very little risk. I think the only real risk is if Congress changes the law about the IRMAA. That is possibility but I don’t think it is a probability since I have not heard of any discussion from either political party to do so.
Marty Yeager says
Deflation is the other, but unlikely, risk. And what Congress will do, retroactively, never ceases to surprise me.
Peter G says
I received an IRMAA notice for 2022, using my 2019 income, not 2020. (In 2021, I believe they used my 2018 income, presumably due to COVID.) I’m reluctant to appeal because my 2019 income situation did not meet any of the life-changing events they list. Do I have grounds to appeal anyway, given they are going back 3 years not 2? Thank you!
Harry Sit says
SSA says you should call or visit their local office if they used stale information. It’s not the same as appealing based on life-changing events.
https://www.ssa.gov/benefits/medicare/medicare-premiums.html
Tom P says
We also received our SS COLA and IRMAA letter for 2022 online today. SS really screwed up as they said we need to pay IRMAA based on my 2020 income, but we already filed a SSA-44 form October 15th due to retirement and major reduction in income this year, and we have already received a refund of our 2021 IRMAA based on our estimated 2021 income, which will be below the MFJ lower limit for 2022. So, why did the SSA say we have to pay IRMAA at the 3rd tier level based on 2020 info when they already had newer information? The whole point of filing the SSA-44 was to correct IRMAA for 2021 (which SSA did), but also to prevent IRMAA for 2022. Guess I need to call my local office Monday; might be a case of these auto-generated letters not taking into account newer information?
AnnaC says
I believe you need to file a new SSA-44 form for the 2nd year as they don’t carry it over to the next year. Once they review it you’ll be back on track with IRMAA being reversed for 2022.
I filed a form due to job loss and had to do it two years in a row to stick. While you would think it’s in your file & would be taken care of they must need to confirm it each year on an individual basis.
If being billed I would only pay the standard premium as the IRMAA will be reversed. If collecting SS with an auto deduction you will need to wait for their reversal for the excess charge.
Tom P says
Anna, could you be a bit more specific about having to file SSA-44 two years in a row? I don’t see what information we would change on the forms. On our forms for “STEP 2: Reduction in Income” I filled in Tax Year 2021 since that was the first year after retirement and drop in income, and SSA approved that reduction for 2021 based on my estimated income and we received refunds for 11 months two weeks after receipt of the forms by our local office… so pretty quick action.
It may be that the online SSA letters we received Saturday were generated before receipt of our SSA-44s. The reason I say this is the form says, “We ill use your estimate provided in Step 2 to make a decision about the amount of your income-related monthly adjustment amount the following year until: IRS sends us your tax return information for the year used in Step 2.” Based on this statement we should not have to pay IRMAA for 2022 as our income for 2021 is below the MFJ lower limit in 2022.
I’m going to call my local SSA office Monday and see what they say as I would like to get this cleared up before the end of the year.
AnnaC says
The 2nd year had to fill in new estimated income for the current year (would be 2022 estimate for you now) so they can use that number vs. actual MAGI on tax return as of 2020.
The life changing event was the same; the #s changed based on a new year.
When you filled out the form Oct 15th did that reflect estimated income for 2022? If so then things may have crossed in the mail. If this is the case then booking an appointment for a call re the topic is all that may be necessary. If call the general 800# they will create an appointment with your local office; if call the local office they too will book an appointment as the folks who do the review not the same as who answers the call and/or need a one-on-one appointment to discuss.
The first year I went in person (pre-pandemic) and the 2nd year I did a one-on-one call via appointment with my local office. If I recall correctly I had to fax the form in advance of our call. Regardless of what I filled out the rep reviewed every data piece on the form & the IRMAA reversal was done.
Hope this helps!
AnnaC says
Since you retired in 2021 your MAGI on your 2020 tax return falls into being assessed IRMAA.
They review income each year to make their excess premium charge decision.
If you fill out a new form of life changing event with the current numbers (estimated income for 2022) you should be ok.
Since its a two-year look back you go through the exercise two years in a row for the same life changing event.
Definitely book an appointment for guidance.
Tom P says
Thanks Anna. Actually, I officially retired July 1, 2020, but my retirement was also coincident with a layoff, so my income in 2020 was actually higher than 2019 because I was paid 26 weeks of severance pay in addition to many weeks of UI payments, so my income didn’t actually drop until this year.
I did provide an estimate on the form for my 2022 income, which was lower than my estimated 2021 income, however, I’m now thinking of making a 2022 in-plan Roth conversion which will raise that estimate.
I think I’ll wait a bit before calling the SSA to see if I get an updated IRMAA notice.
Ruffles says
This is just a precursor to the day when rich people no longer receive any Social Security. Which is as it should be when you live in a bankrupt country.
powderriver says
I am realizing that it isn’t so much that the country is bankrupt, but that the people who inhabit it are.
Rosemary says
I am near 80 and have everything I need or want. I add everything up in Jan or Feb that I spent the year preceding year and I have only gone over $20,000 once and that is when I spent $4500 on a dining room suite and only hit $22,000 that year. My taxes are $5700 a year and my medicare that pay for everything is $6300 a year. I live in Michigan and heat a 2100 square foot home with a heated walk out basement on the budget plan for $37 dollars a month. I have a big freezer and averaged $9.77 a week last year for groceries. I pay for mowing and snow plowing cuz my doctor won’t let me do it anymore, but may try to use the leaf blower on the driveway and sidewalk this year. I eat salmon and rib eye steak and buy when it is on sale and freeze it. I always have a full 30 foot freezer and only buy on sales and or coupons and when I am low on something and only go to the store to purchase fresh fruit, milk or bread and that is only 2 month and sometimes less. I even freeze grapes when they are on sale. I use steam fresh vegetables. This week I bought a 20 lb turkey 23 lbs of sweet potatoes, cheese it crackers for my grandson 5 lbs of russet potatoes and 2 pkgs of creme cheese for the potatoes for $3.57 after the sales and coupons. I have more money but just add up the following year to see what I spent. I no longer travel and do not care to as we traveled a lot when my husband was alive. We and now I continue to gift both boys every Jan 2 the limit the gov allows without more tax forms and I convert to a Roth since 2011 or 2012 and still pay the lowest for Medicare premiums. I think we live and die by the choices we make and I get pleasure in hiking, walking 3 miles a day and do it in the house during the winter and going to the free concerts at the colleges in town, and in the several parks in our city and in the cities all around us within 20 miles or less in the summer, in reading, and for the last week raking 5 hours a day and just bought an electric blower that blows 220 miles an hour. Wish I had it the first of the week. Just yesterday I now have a 50 foot line about 4 feet wide of leaves after bringing 19 tarp loads to the woods just from the side yard. Hate oak leaves.
We never made over $60,000 a year and my husband was put on 100% disability in 1995. We paid for both boys to go through college but they had to have a 3.5 in high school and college, never get in trouble, no car and stay on campus. If they could afford a car or an apartment they could afford to pay for college. Once in graduate school they could have a car. Once worked 96 hours in the summers and other worked 105 hours during the summer.
Rosemary says
Should have said property taxes are $5700 a year.
AnnaC says
Kudos Rosemary!
PS I have oak leaves too…..& acorns more…..
Stay healthy!
AnnaC says
meant hate oak leaves…..
Lynda says
I received an IRMAA notice basing my 2022 Medicare premium on my 2020 income tax, BUT I was not a Medicare beneficiary in 2020. I was not enrolled in Medicare until 2021…this year…which the tax year is not over yet. This cannot be right.
Tom P says
Linda, that’s the way the system works unfortunately. I didn’t sign up for Part B until I was 73 since I was still working and covered by my employer’s group policy. After I retired and Part B became effective in August 2020 my IRMAA charges for the rest of the year were based on my 2018 income. IRMAA adjustments, if any, are always based on income 2 years prior unless you have one of the qualifying events such as loss of income due to not working, change of filing status, etc.
Tom P says
So Linda, if you first enrolled in Medicare this year are you paying IRMAA in 2021 based on 2019 income or were you under the limit this year?
Lynda says
Thank you very much for taking the time to respond to my message. I have been seriously stressing over this since I received the notice 5 days ago. I wasn’t even eligible in the tax year they are using. It makes me feel as though I’m paying Medicare premiums for a year that I wasn’t eligible, receiving, getting any benefit from, or paying premiums for. 😤 Your reply did help me to stress less about it though. I appreciate you.
The Wizard says
Assuming your income from two years ago while still working was way higher than it is now, just file form SSA-44 with a proper explanation and you should be good…
Larry says
Harry, In your post 172 you mention that you will recalculate in December after the inflation numbers are released. Would you have some idea as to when in December we might see the results of that recalculation? Personally, we are holding-off making the 2021 conversion pending a final best-guess of 2023 IRMAA. Thanks.
Harry Sit says
The inflation data point comes out on Friday Dec. 10. I’ll update on the same day or by Monday Dec. 13 at the latest.
Tom P says
Larry, if you are planning on making an in-plan Roth conversion in December you should check with your plan and find out the drop-dead date for a 2021 conversion. I know my plan has one after which the conversion won’t be effective until the following year.
GeezerGeek says
This site gives you the release dates: https://www.bls.gov/schedule/news_release/cpi.htm
Here is what site lists as the dates for the next few months
Mth Data (MMM-YY) Released (MMM-DD)
———- ———————-
Nov-21 on Dec-10
Dec-21 on Jan-12
Jan-22 on Feb-10
Feb-22 on Mar-10
Mar-22 on Apr-12
Apr-22 on May-11
May-22 on Jun-10
Jun-22 on Jul-13
Jul-22 on Aug-10
Aug-22 on Sep-13
Sep-22 on Oct-13
Oct-22 on Nov-10
Nov-22 on Dec-13
Larry says
Tom, thanks for the heads up on the last minute conversion cut-off timing. Its Vanguard, will confirm with them…
Jack B says
I understand from many websites that MAGI for IRMAA = AGI + exempt interest. With that said, I’m unable to find the root source of this information, such as an IRS or Medicare rule; or something on their sites along the lines of sample calculations or IRS Pub references. If someone knows where I can find the actual rule or official direction on this matter I would appreciate it.
Harry Sit says
Social Security Act, Section 1839.
https://www.ssa.gov/OP_Home/ssact/title18/1839.htm
Look for “(4) Modified adjusted gross income.”