Seniors Avoid the Cliff!

By Robert S. Morris

Our practice of Elder Law includes all legal issues common to older people. One issue of concern to everyone on Medicare or Social Security is the issue of hidden taxes.

What is the Income Related Monthly Adjustment Amount (IRMAA)?

We are all aware of income taxes and payroll taxes but there are other taxes hiding out there. One of those is IRMAA, which stands for Income Related Monthly Adjustment Amount.

IRMAA is just a fancy name for a hidden tax in the form of an increase in your Medicare premiums.

If you have Medicare part B, which covers physician’s services and/or Medicare part D which covers prescription drugs, you pay a premium for that insurance coverage. You may never notice it because it comes out of your social security before you ever receive it.

With ordinary health insurance we are used to paying a higher premium based on age or health. With Medicare you pay a higher premium in the form of IRMAA based on your income.

At what income do you pay more for IRMAA?

A single person who has a modified adjusted gross income that is even slightly above $85,000 will pay an additional IRMAA payment for both Medicare parts B and D.

Further the modified adjusted gross income used to impose the additional premium is based on your tax return from two years ago. For example your IRMAA for 2019 is based on your income in 2017.

To the extent you can control the amount of your modified adjusted gross income by making discretionary withdrawals from tax deferred accounts such as a traditional IRA, you should consider not only the income taxes you will owe, but also the increase in your Medicare premiums.

Avoid the cliff. Going even a dollar over the applicable limit can increase your premiums by $100 a month.

Robert is an Elder Law, Estate Planning, Guardianship and Medicaid Attorney at Hammerle Finley Law Firm.  Hammerle Finley Law Firm…Give us a call. We can help.

The information contained in this article is general information only and does not constitute legal advice. ©2019