As a higher-earning senior, you might be familiar with paying taxes on your Social Security benefits. However, there’s an additional cost that could catch you off guard – the Income-Related Monthly Adjustment Amount (IRMAA), a special surcharge on your Medicare premiums. Heather Schreiber, founder of HLS Retirement Consulting, provides valuable insights in her article for BottomLineInc. on how to navigate these potential surcharges effectively.
Understanding IRMAA
IRMAA is determined by your adjusted gross income (AGI) from two years prior. For instance, your 2024 IRMAA is based on your 2022 income. If your AGI exceeds specific thresholds, you may face significant surcharges on both your Medicare Part B and Part D premiums. The standard premium for Part B in 2024 is $174.70 per month, but for those in higher income brackets, it can rise substantially – up to $594 per month per person.
Strategies to Manage IRMAA
Optimize Retirement Account Withdrawals: To minimize IRMAA surcharges, consider strategic withdrawals from tax-advantaged accounts like Roth IRAs. Selling stocks at a loss to offset taxable income can also be beneficial. Consult your accountant for tailored strategies.
Appeal the Surcharge: If your income has decreased due to a life-changing event (e.g., retirement, death of a spouse, divorce), you may qualify for an IRMAA appeal. Visit SSA.gov to download Form SSA-44 and learn more about the appeal process.
Important Considerations
Not all income changes qualify for an IRMAA appeal. One-time income spikes, such as those from a Roth IRA conversion or the sale of a home, typically don’t qualify. However, unique situations like amended tax returns that lower your AGI may warrant a visit to a Social Security office for a potential appeal.
For detailed information, read Heather Schreiber’s full article on BottomLineInc. here.
By staying informed and proactive, you can better manage your Medicare costs and avoid unexpected surcharges.
