IRMAA for 2022?

Any IRMAA experts out there?

Client retired in late 2021 and successfully requested reconsideration of IRMAA for 2022, estimating their income at $180K. They are currently paying the minimum rate. My understanding is that this is subject to review when the 2022 return is filed.

Looking at the estimated pension and social security, it appears that they will have an AGI of about $183K, pushing them into the first tier of increased rates. The difference between the initial estimate and current one is that a pension payment due 12-1-21 was not made until 2022 due to processing delays. This will result in them receiving 13 months of pension payments in 2022.

Assuming I am correct that they will be billed for the difference, being over the limit could cost them over $1,600. Ouch.

Is it possible to request reconsideration based on the fact that $4K of 2022 income was actually due to be paid in 2021, but was not? I know that would work for vacation payouts or wages attributable to 2021, but not sure about pension.

Can you find facts that would support that the 12-1-21 payment was constructively received in 2021? Could he nave pushed a little harder and actually received it then? Was part of the delay just slow transfer of the funds, such as slow mail service, but he could have chosen direct deposit and received it in 2021?

Not sure it meets the constructive receipt standard.

This particular pension system pays benefits on the first of the month for that month. Essentially in advance, as opposed to arrears which I have seen more often.

Client's first day of retirement was December 1, which qualified them for benefits for December. The system requires that all payroll payments be closed out before benefits start. Client received final pay and vacation payouts in December. They received their first pension payment via direct deposit in late January. That payment was for pension due on December 1, January 1, and February 1. They have received monthly benefits on time since. They will have received 13 months of benefit in 2022 and the 1099R will no doubt reflect that.

As previously stated, I do know that had they received a vacation payout in January it could be excluded from the IRMAA calculation in 2022, as it was attributable to the prior year.

2022 IRMAA is from the 2020 tax return.

2021 IRMAA is from the 2019 tax return. To change the 2021 premiums, you need to argue the 2019 income.

Facts don't fit your OP.

Major life change (retirement) allows relief from the general rules that 2020 determines 2022 etc.

Initial IRMAA notice had the client at $544 per month each, based on the 2020 return. Request for reconsideration was made, based on the estimated retirement income and IRMAA was eliminated. My understanding is that this will be reviewed based on the 2022 AGI as adjusted per the rules.

Given that, my original question stands. Can the pension payment for Dec 2021 be considered 2021 income for IRMAA purposes, not 2022?

We already know that the 2023 determination will have to be appealed as the client worked for 11 months in 2021 and the income would put them up the IRMAA tiers similar to the initial notice for 2022.

Which of the Life Changing Events enumerated in POMS HI 01120.005 are you relying on?

Observe the non-qualifying events listed in section D of this POMS. I see why you think this may be unfair. However, the event you describe is not "life changing," as far as I can see.

https://secure.ssa.gov/apps10/poms.nsf/lnx/0601120005#c

Major life change is retirement, otherwise described as #5. Work Stoppage.

As previously stated, the 2020 return, which included significant W2 income, would have put the client into IRMAA and cost them about $544 / month. Application for relief was made, based on the fact the client had retired and would received less income in 2022 as a result. Relief was granted by SSA.

Issue now facing them is that their income may be just high enough to put them in the first tier of IRMAA due to the receipt of 13 months of pension benefits. That would result in them having to pay in a lump, according to SSA as the relief was based on estimated income, not actual.

Client is a cheepass, which is an admirable trait in my book.

The only downside to requesting reconsideration is the cost to client of you assisting with it. If you win your argument with one letter, it should be a net benefit to the client. However, when you look at what SSA considers is not a Life Changing Event, I do not think success is certain.

Can the pension payment for Dec 2021 be considered 2021 income for IRMAA purposes, not 2022?

Was the pension collected in 2021? If so, it will be in the 2021 AGI, and possibly, bring IRMAA back into the picture. Why do you think in should be in 2022? Trying to change the cash basis rules?

Doug, per Post #1, pension was due to be paid in 2021 but was not received until 2022.

Direct deposit or paid by check? If it was via direct deposit, what was the date deposited. If by check, what was the date on the check?

Edit: Does this pension check make a difference, i.e. does that check put you over one of the IRMAA thresholds? If not, don't sweat the small stuff.

See post #3. Pension due Dec 1 was received via direct deposit in late January.

It appears the definitive answer will be if a request for reconsideration needs to be filed for 2023. If that is needed, we will see what SSA has to say on this subject.

You didn't answer my question. Does this one check change the IRMAA

Your client is a cash basis taxpayer.

The IRMAA for 2024 will be using his 2022 tax return. If his income for 2022 is $183,000 then he should be OK for his 2024 medicare premium. Tho the thresholds and rates for 2024 haven't been announced yet, one place is estimating that the MFJ first threshhold will be at AGI of $202,000. If that comes to pass, then seems like your client will be OK.

The 2023 medicare premiums (and iRMAA) will look at 2021. So it seems that pushing this one monthly pension payment into 2022 will work in your client's favor, because it will give time for the inflation-adjusted table to be increased.

Here is one post estimating the threshold amounts for 2023 and 2024. How accurate it will turn out to be is anyone's guess at this point.
https://thefinancebuff.com/medicare-irmaa-income-brackets.html#htoc-2024-irmaa-brackets

Lots of speculation here.

Let me recap.

2020 income (while working) put the client into a very high IRMAA category for 2022. Request for reconsideration was made based on estimated income of $180K for 2022. SSA granted the request and did not charge IRMAA for 2022, with a final determination to be made based on the 2022 tax return.

2023 will be based on 2021, again when the client was working for 11 months of the year. SSA has indicated that a request for reconsideration will have to be filed again for that year, once notice of IRMAA is received. Basis for both 2022 and 2023 requests is that income is reduced due to retirement effective 12-1-21. We expect that to be granted, assuming the estimated income is below the limits.

2024 and beyond will be determined under the normal process, as the change due to retirement will not be within the base years.

With that, lets let this horse die. We will see what happens as things play out down the road.