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IRMMA Part B & D Premium Brackets

Technical topics regarding tax preparation.
#1
Jake  
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In the old days this IRMAA threshold number was not adjusted for inflation. It started at adjusted AGI of 170,000 for married filing jointly.

The increased Part B and D surcharges started 2 tax years after this threshold was reached. I think the published IRMAA for joint incomes of $172,000 started with 2018 returns, with the increase beginning in 2020. For 2019 returns I think it is $174,000 with the increase in premiums starting in 2021. Projected number for 2020 returns is $176,000 for the increase in premiums starting in 2022. Many seniors can avoid these surcharges in 2022 based on 2020 adjusted AGI because RMD's are not required in 2020.

My take is that if the joint adjusted income in 2019 is under $174,000, there would be no surcharge in 2022.
If possible keep the adjusted AGI under $174,000 in in 2020 to do the same as we do not yet know for sure if the IRMAA will be increased to $176,000.

Am I on the right track?

As a recent article pointed out, a $1 increase in adjusted AGI can result in significantly higher Part B and Part D premiums.
If Congress had any brains, there would be a phase out. But that is asking too much.
 

#2
Joan TB  
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The IRMAA is a sliding scale, not just a one-jump then done. But it is not a % sliding scale, but stair-steps. However, from one who moved from paying self-employed health insurance premiums to paying Medicare, even with the IRMAA the extra premium is still a bargain.

Yes, that $1 over can put you into the first stair-step where the 2020 Part B premium would increase by $57.80 per month. But that is $693.60 per year so while it is "significantly higher" as a percentage, as a flat dollar amount it probably isn't going to head them into the abyss. I don't mean to take it too lightly, but there may be bigger savings elsewhere.
 

#3
Jake  
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Not saying it is not a bargain even with the first "stair step" - mainly wanted to know/confirm, for example, what the $174,000 first step threshold applied to. I think it applies to 2019 modified adjusted income, which would trigger the surcharge beginning 2 years later, in 2021. So if a married couple's 2019 modified AGI is less than $174,000, then no surcharge in 2021. [At some point on those stair steps it becomes not a bargain. Of course the real benefit of Medicare is the pricing - the hospital say that will be $50,000, the govt. shakes its head and says no, we will only pay 10,000.]
 

#4
Joan TB  
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Here is info on how the MAGI is calculated for the IRMAA.
Basically, I think it is AGI plus tax exempt interest income.

https://secure.ssa.gov/poms.nsf/lnx/0601101010

I think it applies to 2019 modified adjusted income, which would trigger the surcharge beginning 2 years later, in 2021. So if a married couple's 2019 modified AGI is less than $174,000, then no surcharge in 2021.


The first level is "$174,000 or less" which is used for 2018 returns which affect IRMAA (if any) for 2020. I don't see the stair-steps for 2019 returns yet (to be used for 2021 premiums), but I would think they would only increase, not decrease.
 

#5
Jake  
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My error appears to be that the $174,000 threshold is for 2018 returns, and the 2019 threshold, while expected to be $176,000, is not yet determined but will not be less than $174,000. So the reasonable expectation is that a 2019 modified AGI under $174,000 will not trigger any Part B & D surcharge in 2021. It will be easy for a taxpayer whose main income is IRA RMD's to keep 2020 modified AGI under the level that would trigger a 2022 Part B & D surcharge as the RMD requirement for 2020 is suspended.

So that leaves 2021 modified AGI to address. Will depend on 12-31-20 IRA balances. If the RMD pushed the taxpayer over the threshold one strategy might be to delay filing a 2021 tax return for a year. If estimated tax payments result in nothing owed there is no penalty. So the 2023 Part B and D surcharges would not be implemented as the SS Admin would not have the 2021 numbers. I wonder if SSA catches up retroactively. It seems that they do not.

Seems like a $1,500+ win for the taxpayer. All is fair in love and war as they say.
 

#6
Joan TB  
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Go to http://www.ssa.gov/pubs and look for publication number 005-10507 for the Medicare Annual Verification Notices FAQs.

Each fall, when we ask the IRS for information to determine next year’s premiums, we ask for tax information to verify our reports of changes affecting your income-related monthly adjustment amounts, if any. We also ask the IRS for your two-year-old MAGI if we’ve temporarily used three-year-old MAGI. When we find a difference between the IRS information and information we previously used, and the difference results in a change in your income-related monthly adjustment amounts, we notify you of the change.


This does not seem to preclude increasing the IRMAA at a later date. I know that there are prior year adjustments and the notice talks about owing past-due IRMAA.
 


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