We do love it when someone refers a family member or friend to us. Sometimes the question is, “How can we introduce them to you?” Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage.
Here are this week’s items:
Portfolio Update: Murs and I have recorded our portfolio update for August 7, 2023
This Week’s Podcast – 2023 IRMAA Update – Will You Have a Surcharge for Medicare Part B and D?
We explain the modified adjusted gross income and the 2023 surcharges if you earn more than $97k single or $194k married filing jointly.
Listen in to learn about the income-dropping circumstances the IRS considers when exempting anyone from the Medicare IRMMA surcharges. You will also learn you should be aware of your numbers when implementing any type of strategy.
This Week’s Blog – 2023 IRMAA Update – Will You Have a Surcharge for Medicare Part B and D?
A major part of retirement planning is ensuring that you have the healthcare insurance necessary to go to the doctor for checkups, treatment, or injuries. Medicare is one way to secure healthcare in your retirement, but youmay be spending more on surcharges in 2023 than you expect due to the Income-Related Monthly Adjustment Amount known as IRMAA.
We’re going to cover the 2023 IRMAA update and what it means for you if you have Medicare Part B and/or D.
A major part of retirement planning is ensuring that you have the healthcare insurance necessary to go to the doctor for checkups, treatment, or injuries. Medicare is one way to secure healthcare in your retirement, but youmay be spending more on surcharges in 2023 than you expect due to the Income-Related Monthly Adjustment Amount known as IRMAA.
We’re going to cover the 2023 IRMAA update and what it means for you if you have Medicare Part B and/or D.
Don’t know what IRMAA is or what surcharges you may face? Read through our guide on IRMAA Medicare Surcharges.
At its core, IRMAA is a surcharge that you’ll pay for your Medicare if you make over a certain amount of money each year. Updates to IRMAA will affect you because in most cases it means you’ll need to pay more for your Medicare.
Will You Avoid IRMAA Surcharges?
We’ve had quite a few clients who didn’t know about these surcharges and were surprised when they had to pay more for their Medicare. The baseline is based on the modified adjusted gross income (MAGI) of an individual or couple.
Based on the figures below, you will not have a surcharge if you meet the following income requirements:
Single person: $97,000/annually or less
Married filing jointly: $194,000/annually or less
If your modified adjusted gross income falls under these amounts, your monthly premiums will be $164.90.
Anyone who is still working will need to plan accordingly, because IRMAA is based on what you were earning two years ago. For example, if you are a single person and made $100,000 in modified adjusted gross income in 2021, you would be over the threshold in 2023, based on these earnings.
What to Do If You Made More Than $97,000/$194,000 in 2021?
If you exceed these figures when single or married and filing jointly, the IRS will recognize some nuances or life-changing events that can help offset the surcharge. If you or your spouse experienced the following, you would be considered for a life-changing event:
Retirement
Marriage
Divorce
Widowing
Layoff
Loss of pension
Loss of income-producing property
Retirement is one of the life-changing events that the Social Security Administration (SSA) will allow. If you can receive this exception, you will avoid the surcharge. We recommend looking into the life-changing events listed and understanding if you can avoid paying surcharges.
However, the rules are very specific, and the event must fall under one of the exceptions above.
With this in mind, if you believe that you have had a life-changing event and can show your income is under what it was two years ago, you can file form SSA-44. The form is relatively simple and allows you to explain:
Why your income is less
What the significant change is and why it happened
Again, if you have one of the exceptions above, we highly recommend filling out the form because it will allow you to avoid or reduce surcharges.
What to Expect if Your Modified Adjusted Gross Income Exceeds the Baseline
If you do not have exceptions and will need to pay additional surcharges on your Medicare premiums, you can expect the following monthly surcharges in 2023:
MAGI for single filer
MAGI for joint filer
Part B Surcharge
Part D Surcharge
$97,000 – $123,000
$194,000 – $246,000
$65.90
$12.20
$123,000.01 – $153,000
$246,000.01 – $306,000
$164.80
$31.50
$153,000.01 – $183,000
$306,000.01 – $366,000
$263.70
$50.70
$183,000.01 – $499,999
$366,000.01 – $749,999
$362.60
$70
$500,000 or more
$750,000 or more
$395.60
$76.40
Note: Remember, all these surcharges are in addition to the standard monthly premium of $164.90.
If you’re still working or you have events coming up that will add to your income, it’s important to plan the transactions with IRMAA in mind. For example, if you plan on selling an asset that would put you above these thresholds, it may be worthwhile to sell three years before qualifying for Medicare to avoid these additional charges.
Form SSA-44 and the exceptions it provides is almost a one-time deal with some exceptions.
We have had some folks try to apply and a nice representative at the SSA helps them out. However, the form and its exceptions do not help you if you had a one-time investment gain or were trying to follow a specific strategy for your retirement plan.
Tax strategy meetings are an important part of retirement planning because your income determines whether you will pay Medicare surcharges. We have clients who want to do Roth conversions for a variety of reasons, but Roth conversions will add to your MAGI. An increase in income means it’s important to consider both the additional tax you may owe on the Roth conversion and whether the conversion will infringe on the IRMAA thresholds, requiring you to pay a surcharge you might not have had otherwise.
To avoid these surcharges when converting to Roth, convert your accounts before you qualify for Medicare, or put specific strategies in place such as planning carefully around the thresholds.
You’re not stuck with high surcharges forever. Your premiums are recalculated from your tax return each year, so you may have to pay surcharges in 2023, but if your income in 2022 falls, the surcharges for 2024 will be based on the lower 2022 amount.
Do you have any questions about these figures, or do you need some guidance on your IRMAA surcharges?
We do love it when someone refers a family member or friend to us. Sometimes the question is, “How can we introduce them to you?” Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage.
Here are this week’s items:
Portfolio Update: Murs and I have recorded our portfolio update for September 26, 2022
This Weeks Podcast – Will I Avoid IRMAA Surcharges on Medicare?
Are you going to be able to avoid IRMAA surcharges on Medicare parts B and D? IRMAA stands for Income-Related Monthly Adjusted Amount, and there are charges on both parts B and D based on where your income lands.
If you’re thinking about retiring any time soon, there are ways to manage your income to stay at a lower amount to avoid surcharges on your Medicare premiums.
Medicare Part B and D have something called the IRMAA Medicare surcharges. When retirement planning, it’s crucial to consider the impact that the additional costs will have when trying to secure your retirement.
Medicare Part B and D have something called the IRMAA Medicare surcharges. When retirement planning, it’s crucial to consider the impact that the additional costs will have when trying to secure your retirement.
Medicare kicks in at 65, and there are premiums and surcharges that you need to know about.
What is IRMMA?
Income-related monthly adjustment amount (IRMAA) is an essential part of your Medicare because it’s a sliding scale percentage, which you’ll be required to pay based on your income. Depending on your income, you may or may not have this additional surcharge.
IRMAA is on top of the Medicare premiums that you pay, so it’s something to consider.
Note: We also have a flow chart, which will show you how much you’ll be required to pay for IRMAA based on your income. Call our office at (919) 787-8866 and ask Laura or Morgan for the chart.
IRMAA Medicare Surcharges FAQs
What is modified adjusted gross income?
Modified adjusted gross income is your income minus deductions and then added back items, such as your student loan interest or retirement account contributions. You’ll find this value on your tax form.
Did your modified adjusted gross income surpass $91,000 filing single or $182,000 filing jointly in the previous two years?
If you answer “no,” your premium for Part B will be $170.10 per month.
If you answer “yes,” your surcharges will be on a sliding scale, but there are a lot of additional questions to be asked.
You Answered, “Yes.” Now What?
If you answer “yes,” then the following questions will be asked:
Have you or a spouse experienced a life-changing event that significantly impacts your income? This includes marriage, divorce, widowing, retirement, loss of pension or income-producing property. If you answered “yes,” this will mean that you’ll submit a form to the IRS office to show that this income is no longer accurate. You’ll need to file form SSA 44, which shows your income has dramatically changed, putting you back to the previous premium.
No life-changing events but your modified adjusted gross income exceeds the figures above. Now, we’ll look at your tax return two years ago to find your modified adjusted gross income. Depending on this figure, you will pay:
$91,000 – $114,000 (single); $182,000 – $228,000 (married filing jointly): Additional surcharge is $68 per month for Medicare Part B and $12.40 per month for Part D.
$114,000 – $142,000 (single); $228,000 – $284,000 (married filing jointly): Additional surcharge is $170.10 per month for Medicare Part B and $32.10 per month for Part D.
$142,000 – $170,000 (single); $284,000 – $340,000 (married filing jointly): Additional surcharge is $272.20 per month for Medicare Part B and $51.70 per month for Part D.
$500,000+ (single); $750,000 (married filing jointly): Additional surcharge is $408.20 per month for Medicare Part B and $77.90 per month for Part D.
IRMAA is per person, so if you’re married and filing jointly, you’ll need to pay these additional surcharges for each person in the household on Medicare.
Strategizing for your Medicare is a smart decision because there are ways to reduce income to help save on these premiums.
Note: This will look back two years, so for 2023, your 2021 modified adjusted gross income will change.
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