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This discussion (at least the first 2 points) recently came up on the Retirement and IRA Show podcast and I was curious how you all view it.
I suspect most of us view IRMAA on the cost side of the ledger, as either a tax or a fee that is applied, in cliff fashion, to that one extra dollar as defined by our federal government.
The discussion on the show opened my mind to the fact that Medicare has a base cost and unless you are making a ton of income, few of us pay it. Instead each IRMAA bracket peels back how much “discount” (aka subsidy) we receive toward paying for that coverage.
Contrast this with the recent government shutdown where ACA subsidies became a political chess piece. Government handouts being vilified for those who are low income and don’t pay their “fair share”. After some reflection I could no longer separate the two (conceptually) in my mind.
Are these different?
Is it just social media propaganda that Mr Quinn calls out in his recent post?
Do you think you pay a fee/tax for your Medicare or do you receive a subsidy toward your premiums?
I would like to propose a Humble Dollar contest for the lowest amount going over the IRMAA 2024 income level cliff. (Sorry, no prize)
I’ll start with $552 (ouch!)
When I first retired at age 66 I encountered IRMAA because I had a large payout of accumulated sick leave and vacation. Because this was a one time event, IRMAA was waived.
Later, in planning large Roth conversions, I willingly paid IRMAA to reduce my large TIRA. When I retired, 90% of my savings was in TIRAs. It is now 13%.
Once I understood that IRMAA forces higher income earners to pay a larger share of the true cost of Medicare Part B, I felt it was fair. But I agree with James that it is a little sneaky in the way it works.
There are 8 life-changing events that resulted in a reduction in income that can be used to request a reduction in IRMAA.
Your IRMAA waiver may have been due to the fact that you retired.
IRMAA is a means-test reduction in subsidy. It is a nice surprise gotcha for new wealthy retirees who learn about it after they have all their savings in tax-deferred accounts or municipal income and might trigger it when they withdraw funds. It is a sneaky “non-tax” that has the added kicker of the “cliff” nature. It is sneaky and tricky but with our budget deficits not really unfair.
It is simply …Income-Related Monthly Adjustment Amount. I can’t see how it is either a surprise or gotcha or sneaky. For me it would be fair without budget deficits.
10-15% of large employers use a similar method for health insurance employee premiums.
The first time someone pays it i’m pretty sure they are surprised. Having a 2 year look back for no real reason seems sneaky to me. Having a “cliff” tax seems downright Kafkaesque. It’s progressive but intentionally confusing and complex.
As I understand it, there is a very logical reason for the 2-year look back. 2 years ago is the most recent income numbers available.
Medicare applies IRMAA based on your income, and they receive those income values from the IRS.
The IRS doesn’t know what your current year income is because you haven’t earned it yet.
In January of each year (when new IRMAA brackets are applied) the IRS doesn’t know what you earned last year either because taxes aren’t required to be filed until April 15th.
So for the 2026 application of IRMAA the most recent income numbers available are 2024.
I do have some heartburn with the previous practice of freezing IRMAA brackets (see 2011-2019) which caused more folks to be subject to IRMAA and advance quickly through the unadjusted tiers. But I suppose one could argue that this was a tactic used to address the long term solvency of Medicare which is in worse financial condition than SS.
You nailed that on all counts.
Many Americans seem to ignore we need to pay for what we want and need and the costs rise each year.
Where I land:
Call it what it is: a means-tested premium surcharge (not a “tax”).
Don’t pretend it’s oppression: if you’re paying IRMAA, you’re doing okay—this is a “nice problem.”
This is simply a premium offset adjustment, correct?
How many people do you suppose are “doing okay” vs whining? Just wondering.
IRMMA is not a tax or a fee. IRMAA is an income related additional premium. IRMAA premiums are a tax deductible medical expense.
I don’t think it is accurate to view it as you do. The base subside is 75% of costs for Part B premiums fixed by law.
In a society that screams for fair share and criticizes the tax strategies the wealthy employ to lower their taxes, I think employing strategies to avoid or minimize IRMAA is disingenuous.
Compared with the overwhelming majority of retirees and their incomes, paying IRMAA premiums is a privilege because it reflects one’s above average income.
The higher income, the less credit is earned for social security benefits too where the formula favors lower earners. Is that unfair given the higher earners paid much more in taxes? I think not.
I completely agree with Mr. Quinn’s familiar and well considered thoughts. I suspect that one additional reason that folks rage against IRMAA is the time lag in its calculation. For Medicare premiums in 2026, we use 2024 earnings as reported on the 2025 tax returns. Circumstances change (and IRS appeal provisions exist), and people may not feel the “privilege” of a high income several years after earning it. But there’s no workable alternative that would allow people to calculate premiums in real time based on current income. It’s a flawed system – as all systems can be – yet it’s graduated in a way that reflects the tax system as a whole.
I think that IRMAA is still applied to a one time boost in income (like when you sell your home) is wrong.
I believe there is an appeal process for one time increases in income thus relieving one the higher payment. I’m not sure if income from the sale of a house would be approved.
I don’t know if you’re correct that there’s not a workable alternative that would allow premiums to be calculated based on current income. But, I am sure it’s possible to have a graduated scale instead of cliffs, and this seems like a very reasonable request for those subject to it.