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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.