IRMAA: The Hidden Medicare Penalty You Might Be Paying

Medicare isn’t always as free as you think. In this episode, we'll explain IRMAA—the income-based surcharge that can raise your premiums and shrink your Social Security check. Learn what triggers it, who’s most at risk, and a few smart planning moves to help keep more money in your pocket.

 

Helpful Information:

PFG Website: https://www.pfgprivatewealth.com/

Contact: 813-286-7776

Email: [e-mail]

 

Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.

 

Episode Transcript

Think Medicare is free once you hit 65. Well, not quite. If your income's too high, there's a hidden surcharge that can quietly shrink your social security check by thousands a year. It's called IRMAA, and we're going to talk about that today here on Retirement Planning Redefined. Hey everybody, welcome into the podcast. Thanks for hanging out with John and Nick and myself as we talk, investing, finance and retirement. And guys, we're going to talk about Aunt Irmaa this week instead of Uncle Sam. Seems like there's these two relatives that got their hand in your pocket. I've always been taught to call IRMAA, the Aunt Irmaa that comes by and pinches your cheeks really hard instead of the cool one that gives you candy when you're a kid. So we're going to talk about IRMAA, and what it is and why it exists and all that good stuff this week. How you doing, John?

 

John:

I'm doing all right. How are you?

 

Speaker 1:

Hanging in there. Doing pretty good. Looking forward to chatting with you guys about this, learning a little bit about what is IRMAA and what does it do to us. And Nick, my friend, how are you?

 

Nick:

Pretty good. Staying busy in the red zone for wedding planning and all that kind of stuff. And we are in football season so-

 

Speaker 1:

There you go.

 

Nick:

... I've had to adjust my sleep schedule a little bit.

 

Speaker 1:

Exactly. So between planning and football, you're burning the candle at both ends.

 

John:

Monday is a little slower for Nick-

 

Speaker 1:

Little slower. Gotcha.

 

John:

... the last three weeks, especially with the Bills, how good they look.

 

Speaker 1:

Yeah, for sure. Yeah, my Lions look pretty good on Monday night this pastime.

 

Nick:

You sure do.

 

Speaker 1:

Yeah. Well, let's get into the conversation a little bit, guys. What is IRMAA and why does it exist? Whoever wants to start?

 

Nick:

All right, I'll go ahead and start. So essentially IRMAA is an acronym that refers to essentially an income related monthly adjustment for the cost of Medicare part B and D. So essentially back in '03, as the plans both Medicare and social security continually get reevaluated due to the pressure that they're under from the standpoint of expenses and flows in, they decided to put this into place where to kind of tier it where people that were earning income currently, so if you're single earning income greater than 106,000 or married filing jointly earning income greater than 212,000, the premiums for part B start to go up. So this is something that we've dealt with quite a bit with clients.

 

It's based upon modified adjusted gross income, which nobody knows what that means, but it is a term that everybody's heard or most people have heard. As a reminder part A, there is no premium charge as long as you worked you or your spouse or former spouse work 40 quarters. This applies to the part B and part D. And it's not a penalty from the perspective of how they look at it. It's not like you're doing something wrong. It's more along the lines of almost just like tax brackets where lower income, lower bracket, the same thing on this, lower income, lower premium.

 

Speaker 1:

Gotcha. Yeah. And that interesting piece that catches people is that it's a two year ago look back. So they're going to adjust it based on what you made