IRMAA (Medicare surcharge) for F/T worker laid off this year

[Rapid Robert]

For 2022 and 2023, taxpayer's AGI was just barely above the IRMAA threshhold. Taxpayer was laid off this year (2024), and signed up for Medicare (was previously on employer plan).

So is the (expected) reduction in income for 2024 going to qualify for the "life changing event" (work stoppage) in order to avoid IRMAA? The Form SSA-44 is confusing in this regard and does not clearly indicate if the current calendar year can be used as the "tax year in which your income was reduced by the life changing event".

[dtlee]

I believe so. They appear to be somewhat arbitrary in their decisions, but I believe this is worth a try.

As an example, I have seen an instance where two people in similar situations filed similar forms (they compared notes like they might have on a homework assignment in high school) because they had been identically impacted. One was approved and the other was denied.

[kathyc2]

Was he told the amount would be higher than the standard amount? First year starts at standard amount. https://www.medicare.gov/Pubs/pdf/11...care-costs.pdf

[Rapid Robert]

Kathyc2, thank your for the link. While the document does state that enrollees start at the standard premium amount in the first year, I did not see any language in that document that confirms this policy overrides IRMAA. And yes, he did get a letter in the mail dated 4/27 (coverage begins in May) stating the IRMAA surcharge will apply based on his 2022 tax return.

More details:

The letter, from SSA, included a phone number for Medicare, so that is what taxpayer called (while I was in the same room). Not counting the hold time (which actually wasn't horrible), we basically wasted ten or more minutes with a fragile phone rep before they indicated that we really needed to call Soc. Security instead, since this is SSA's show, not Medicare's. Once through to SSA (again, not horrible wait time), it was pleasant to get offered a phone appointment the next day instead of trying to fill out the Form SSA-44. Optimistic at this point, although taxpayer and I both wonder how to provide a reasonable estimate of 2024 MAGI at this early point in the year.

edit: See Post #6 for correction to following paragraph:

I was surprised to see that the IRMAA threshold for a single filer actually went down from 2022 ($103k) to 2023 ($97K), and the it will go back up to $103K for 2024. I thought these numbers were always adjusted upward for inflation, but maybe they also factor in whatever current or future shortfall in Medicare is expected, or maybe (more likely) they base it on actual Medicare expenditures (i.e. cost of health care and drugs). Kind of like how the cost for Part B, or the subsidy amount for Part A, can also go up and down.

[kathyc2]

I was surprised to see that the IRMAA threshold for a single filer actually went down from 2022 ($103k) to 2023 ($97K), and the it will go back up to $103K for 2024. I thought these numbers were always adjusted upward for inflation, but maybe they also factor in whatever current or future shortfall in Medicare is expected, or maybe (more likely) they base it on actual Medicare expenditures (i.e. cost of health care and drugs). Kind of like how the cost for Part B, or the subsidy amount for Part A, can also go up and down.

The 2022 amount (based on 2020 TR) was 91K. I think you are confused by the two year delay. https://www.cms.gov/newsroom/fact-sh...hly-adjustment

Your OP said he was barely above the MAGI limit, and if truly a "life changing event" how would your 2024 estimate be close???? If you read the instructions for SSA44 it indicates that you are then to send them a copy of 2024 1040 when filed. If the return if over the estimated allowed MAGI he will be billed back.

[Rapid Robert]

I assure you that I am not confused by the two year delay, but it seems many others are, including the Medicare phone rep we talked with, who was one of my initial sources.

https://secure.ssa.gov/poms.nsf/lnx/0601101020

Let's use the terminology "TY" for tax year, and "DY" for determination year for IRMAA. So for example, DY2024 is based on TY2022. Per the above link, the history is this (assume single filer):

DY2024, TY2022: $103K.
DY2023, TY2021 $97K
DY2022, TY2020 $91K
DY2021, TY2019 $88K

It does appear that it goes up every year, at least recently (somewhere I was reading about various law changes related to this, not sure it was always indexed). So my preceding comment was wrong, as it was based on a quick search of someone else's research where they probably were confused, or at least made no attempt to distinguish between TY and DY.

I also see that Form SSA-44 actually does provide instruction for my taxpayer's situation, so again shame on me for not reading all the instructions. It does seem bizarre, however, that they expect you to put in 2025 estimates when we are not even half way through 2024 yet. Since the life changing event was getting laid off, and since client is old enough for Medicare, who knows what future income will be? Maybe he'll get another job, maybe he'll take out a lot of IRA and pension money, maybe he'll sell his house to downsize.... Yes, I understand they can bill retroactively, but then you are in the annoying situation where you are hit with a large bill all at once when you weren't expecting it, instead of even monthly payments.

I wish it did work they way you suggested, that you are excused from IRMAA in the year you sign up (which is rarely for an entire 12 months anyway). That would simplify things a lot.

"Tax Year
Fill in both empty spaces in the box that says “20__” with the year following the year you
wrote in Step 2. For example, if you wrote "2024" in Step 2, then write "2025" in Step 3."

In any case, the good news is that the phone appointment happened as scheduled, the phone rep made it pretty painless and for now at least taxpayers is out of IRMAA-land.

[kathyc2]

It was enacted in the 2003 Medicare Modernization Act, but didn't take effect until 2007. Original amount was 80K from 2003 law. Inflation adjustment amount uses CPI-U from Aug to Aug, rounded to nearest 1K.

ACA froze amounts at 85K for 2011- 2019.

2020 inflation index picked up again.

You do realize that the Parts B and D subsidies are not funded from MC tax, but from general revenues, correct?

[Rapid Robert]

You do realize that the Parts B and D subsidies are not funded from MC tax, but from general revenues, correct?

Well, that's an interesting turn from the topic of IRMAA life-changing events (I'm not objecting).

I know that Part A costs a little over $500/month if one does not have sufficient work credits to have it covered, so that is a subsidy for sure. I guess I wasn't aware that Parts B and D were subsidized at all, other than the fact that Medicare, as a single payer system, can pay less than the providers bill for, which I don't really see as a subsidy.

Where would my monthly subsidy amount be found? I carefully track all personal expenses in Quickbooks (surprise, surprise) so I have records of comparable health insurance coverage for spouse & myself spanning years, first under an employer plan, transitioning for a few months to ACA marketplace, and then onto Medicare. I know that with employers, you can see the Form W-2 Box 12 Code DD amount to find the total cost of your insurance coverage (employee deductions plus employer subsidy if any). Requiring Code DD was one of the smarter things they did as part of Patient Protection and Affordable Care Act (aka Obamacare), but unfortunately too few workers actually bother to look at or understand it.

What I found interesting is that in the transition from private employer coverage (large corporation) to Medicare (including Parts A, B, C, and D), our expenses for health insurance didn't seem to change significantly (I could go calculate the actual percent change over time if I needed to).

[TaxGuyBill]

I know that Part A costs a little over $500/month if one does not have sufficient work credits to have it covered, so that is a subsidy for sure. I guess I wasn't aware that Parts B and D were subsidized at all, other than the fact that Medicare, as a single payer system, can pay less than the providers bill for, which I don't really see as a subsidy.

Where would my monthly subsidy amount be found?

Is there a reason why you want to know the "subsidy amount", other than curiosity?

I wasn't aware of any "subsidies" either, other than the 'bulk rate' for getting discounts.

[kathyc2]

Part A is funded by payroll tax.

SMI (Parts B & D) are funded by a combination of premiums and transfers from general fund. For 2024 full cost would be 699 for Part B and subsidized amount would depend on where a person falls on IRMMA chart.


For 2022 (last year available) 330B for Part B and 92B for Part D was transferred from general fund to trust fund. This is 13.3% of FIT (personal and corporate) collected.

[Rapid Robert]

Is there a reason why you want to know the "subsidy amount", other than curiosity?

As I mentioned earlier in this thread, I keep pretty meticulous financial records for myself, so yes, curiosity, but not idle curiosity -- it's to make budgeting decisions. Here is some actual health insurance cost history for married couple, age mid-60s, average health (neither excellent nor poor), handful of routine prescriptions and vaccines, HMO plan, includes dental/vision PPO plan, no co-pays or deductibles for preventive care and drugs. Data is taken from paycheck pre-tax deductions along with Form W-2 Box 12 Code DD amount. This is a Fortune 500 employer so assume it's accurate. Medicare data includes base cost for Medicare Part A (what someone without enough credits would pay out of pocket for Part A, a little over $500/mo at this time).

So what I want to know, is whether the drop in cost I saw when switched to Medicare was "real", or only because I am not taking into account the subsidy. I found another link that seemed to have very detailed info, at least at a national level, I'll have to look for it again.
.

All numbers for two covered persons

2017-2019, employer group health insurance:
all 3 years were in the range $20K - $21K

2020: transition year from employer, briefly on ACA marketplace, then Medicare Parts A, B, C, and D.
$20.5K

Medicare Parts A, B, C, and D. plus separate dental/vision PPO plan
2021: $17,400
2022: $18,760
2023: $18,585

[kathyc2]

How does someone have MC A, B, C and D?????

I thought C was private issue insurance that replaces A, B and D

[Rapid Robert]

How does someone have MC A, B, C and D?????
I thought C was private issue insurance that replaces A, B and D

Part C is Medicare Advantage. I say I have those parts because all three involving premiums (B, C, and D) are listed separately as deductions from Soc. Security on the Form 1099-SSA. Also, insurer provides EOB (explanation of benefits) statements separately for Parts C and D.

I found that web link I was referring to. Even if you don't make it through the entire article, just reading the summary bullet points at the top is probably worth your time if you are at all interested in the topic of Medicare funding. (Although I still didn't see where it answered my question about the amount of a individual's subsidy for parts other than Part A).

https://www.kff.org/medicare/issue-brief/what-to-know-about-medicare-spending-and-financing/

[kathyc2]

I found that web link I was referring to. Even if you don't make it through the entire article, just reading the summary bullet points at the top is probably worth your time if you are at all interested in the topic of Medicare funding. (Although I still didn't see where it answered my question about the amount of a individual's subsidy for parts other than Part A).

Say what? This says the same thing I said, that 25% (unless IRMMA applies) of Part B is from premiums and 75% is from general revenue. If this doesn't answer your question about subsidy, you need to define what your meaning of "subsidy" is.

[Rapid Robert]

"This says the same thing I said, that 25% (unless IRMMA applies) of Part B is from premiums and 75% is from general revenue"

Ok, color me dense, but maybe I'm finally getting it. I've always been looking for a dollar amount, to be clear. I got derailed from your post #10 because the link is bad (always leads me to "Invalid File Specified" web page), but I see there you tossed out a $699 number. How was that calculated? EDIT:maybe, 174.7 x 4 = 698.8

Are you saying the maximum IRMAA surcharge represents the subsidy, for someone paying only the base Part B/D premiums? So, $419.30 + 81.00 = 500.30, which when added to base Parts B+D premiums comes close? Or is that equivalent to saying that the base fully subsidized premium, is exactly 25% of the unsubsidized premium? (Incidentally, while Part B premium is standardized, I don't see where Part D premium is, so I'm assuming numbers may vary slightly due to that).