What if deferring Social Security pushes one over an IRMAA cliff?

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rgs92
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What if deferring Social Security pushes one over an IRMAA cliff?

Post by rgs92 »

If one projects that deferring Social Security could incur larger IRMAA amounts, is that a factor in deciding when to take Social Security?
Has anyone encountered this situation? Is it rare? (Those IRMAA cliffs appear to be quite steep and it seems that careful planning is needed to avoid them.)
Thanks for any insight.
sc9182
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by sc9182 »

Heh, it’s a bit anathema !! :-)

Here on BH - maximize max-delayed highest SS payments, double top-pensions crowd — strongly prefers to enjoy it that way. To achieve that goal - yes, convert TDA to Roth until max delayed SS kicks in, and deplete TDA maximum possible by the time of RMD kicks in.

Now you are asking this question to turn this philosophy upside down. Is that what you are asking !?
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by Mike Scott »

If you know about it you can figure it in and out of your calculations/predictions to see what happens.
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dodecahedron
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by dodecahedron »

I would not let the IRMAA issue be the determining factor in deferring Social Security.

Keep in mind that IRMAA cutoffs are indexed for inflation and many other aspects of your MAGI besides your SS may change between now and age 70. For example, if you have any fixed income (even tax-exempt municipals!) in your taxable account, then if interest rates go up (as seems likely sooner or later), your MAGI will also go up. Also, if marital status changes, then IRMAA cutoffs change. Or if you inherit a tIRA unexpectedly, your RMDs might already be pushing you over.

If it turns out that your deferred SS (or anything else) pushes you just above an IRMAA threshold in a given year, well, you might as make the best of it by perhaps doing a bit more Roth conversion in that particular year.

IRMAA is only a big deal, relatively speaking, if you are just a bit above a threshold.
delamer
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by delamer »

It’s hard to find an exact number, but about 10% of households over age 65 (so probably 2 people on Medicare) have incomes of $175,000+. That puts them roughly in IRMAA territory.

Apparently about 7% of Medicare recipients pay IRMAA.

So it’s not common, but neither is it a rounding error.

At the lowest level, it will cost a couple an additional $1400/year.

So probably not worth changing your claim-at-70 SS strategy, given the bump up in benefits.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by retiredjg »

rgs92 wrote: Sat Sep 25, 2021 1:20 pm Has anyone encountered this situation? Is it rare?
My decision to take SS at 62 was due to other reasons. I didn't even know about IRMAA at that time. It looks like it will work out fine for me. I'm not sure if the higher SS payout would push me into IRMAA or not, but it would certainly be closer. :happy

Since I was able to leave my portfolio alone for the most part all these years, the portfolio has grown a good bit and I'm no longer concerned that I will deplete it before I kick the bucket (under most circumstances).

I think delaying SS is probably more beneficial for a couple than a single person and that was a factor in my decision.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by ehh »

delamer wrote: Sat Sep 25, 2021 2:23 pm It’s hard to find an exact number, but about 10% of households over age 65 (so probably 2 people on Medicare) have incomes of $175,000+. That puts them roughly in IRMAA territory.

Apparently about 7% of Medicare recipients pay IRMAA.

So it’s not common, but neither is it a rounding error.

At the lowest level, it will cost a couple an additional $1400/year.

So probably not worth changing your claim-at-70 SS strategy, given the bump up in benefits.
The $1,400/year appears to be a couples IRMMA on Part B premium.

IRMAA applies to both Part B premium and to Part D premium. For a couple at the lowest level the 2021 IRMAA on part D premium is $270 per year. Total IRMAA of $1,670.

Not a big deal. I agree IRMAA considerations are probably not worth changing your claim at 70 SS strategy.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by SGM »

I used the time while delaying SS to make Roth conversions. If I hadn't made Roth conversions my IRMAA costs would likely be higher than they are now with my delayed SS and other income. My RMDs would be a lot bigger than the higher SS payments. We have no RMDs.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by tibbitts »

rgs92 wrote: Sat Sep 25, 2021 1:20 pm If one projects that deferring Social Security could incur larger IRMAA amounts, is that a factor in deciding when to take Social Security?
Has anyone encountered this situation? Is it rare? (Those IRMAA cliffs appear to be quite steep and it seems that careful planning is needed to avoid them.)
Thanks for any insight.
How much is the cliff you're talking about? Do you mean jumping two IRMAA brackets? Each one is a cliff but not super-steep. However I can see jumping two would be possible (although I haven't done the math to see if that's possible based just on social security claiming), and annoying.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by Nestegg_User »

sc9182 wrote: Sat Sep 25, 2021 1:43 pm Heh, it’s a bit anathema !! :-)

Here on BH - maximize max-delayed highest SS payments, double top-pensions crowd — strongly prefers to enjoy it that way. To achieve that goal - yes, convert TDA to Roth until max delayed SS kicks in, and deplete TDA maximum possible by the time of RMD kicks in.

Now you are asking this question to turn this philosophy upside down. Is that what you are asking !?
yep, as I stated on another thread we're doing Roth conversions until first SS claim (just past FRA...and that's for the lower PIA), then will be taking from the IRA (supplementing if needed from the taxable account). This is to deplete the IRA enough so that IRMAA levels can be avoided, if possible. (just the two SS and pension already puts us well above $100k...so needed to move enough of the portfolio to tax advantaged accounts...and paying only ~10% isn't a bad way to get there.
(I think Vested1, in their early 70's, had the same considerations.)

While IRMAA tier one isn't as bad, tier two is far worse; for us, once the first is on SS we'll never get back to the lowest tax rates...but just trying to not perpetually be in IRMAA land.
(If one is pushed up into tier two, which for us isn't as likely, it's better to take a large chunk out then so as to not be in that position (at least for some time) and possibly even avoid tier one for awhile.). The biggest risk is to already be in tier one, have too large of withdrawals dictated by RMD's, with one passing...tax rates would climb and then tier one would be largely unavoidable for the surviving spouse (and tier two for single starts at only $111 k).
Last edited by Nestegg_User on Sun Sep 26, 2021 6:17 am, edited 1 time in total.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by Lee_WSP »

It would depend on what else is pushing you over the cliff.

For example, if it was RMD's + a slightly larger social security check; does your calculation factor in Roth conversions from retirement until 72.5? If it does, and you are still being pushed over the cliff, you should realize that by taking social security earlier your room for Roth conversions before you fall off the cliff is likewise reduced, so I do not think there is a victory to be had in this case.

If it is a pension that does it, then yes, spreading out social could make sense. But that would likewise assume that RMD's don't put you over the top.

Another strategy would be to convert extra trad dollars for a few years to get future RMD's below the cliff.

But, to be honest, the cliff isn't that bad and if you're paying all of your premiums with previously invested HSA dollars, the reason to avoid the cliff at all shrinks.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by sc9182 »

Nestegg_User wrote: Sat Sep 25, 2021 3:38 pm
sc9182 wrote: Sat Sep 25, 2021 1:43 pm Heh, it’s a bit anathema !! :-)

Here on BH - maximize max-delayed highest SS payments, double top-pensions crowd — strongly prefers to enjoy it that way. To achieve that goal - yes, convert TDA to Roth until max delayed SS kicks in, and deplete TDA maximum possible by the time of RMD kicks in.

Now you are asking this question to turn this philosophy upside down. Is that what you are asking !?
yep, as I stated on another thread we're doing Roth conversions until first SS claim (just past FRA...and that's for the lower PIA), then will be taking from the IRA (supplementing if needed from the taxable account). This is to deplete the IRA enough so that IRMAA levels can be avoided, if possible. (just the two SS and pension already puts us well above $100k...so needed to move enough of the portfolio (a bit under 3M) to tax advantaged accounts...and paying only ~10% isn't a bad way to get there.
(I think Vested1, in their early 70's, had the same considerations.)

While IRMAA tier one isn't as bad, tier two is far worse; for us, once the first is on SS we'll never get back to the lowest tax rates...but just trying to not perpetually be in IRMAA land.
(If one is pushed up into tier two, which for us isn't as likely, it's better to take a large chunk out then so as to not be in that position (at least for some time) and possibly even avoid tier one for awhile.). The biggest risk is to already be in tier one, have too large of withdrawals dictated by RMD's, with one passing...tax rates would climb and then tier one would be largely unavoidable for the surviving spouse (and tier two for single starts at only $111 k).
We’ve read numerous Pro-Roth threads (some are justifiably so - especially the ones with double top pensions and double delayed max-SS folks). Out of many a Roth convert or afraid-of-RMDs., threads — three to four GOOD items are never brought up, nor cried afoul of:

1) some/limited life insurance (tax free?)
2) Surviving spouse most likely elevated to keep higher SS of the two (at very least get to keep the higher SS) — not a single one thread on BH complained that higher SS of surviving spouse now pushed her/him into higher IRMAA tiers !! but we routinely hear LOUDLY about RMDs kicking surviving spouse into quite higher brackets/tiers !! You Gotta look at net monies into the pocket ..
3) Stepped-up basis on Brokerage amounts (couple who amassed 100k+ Annual pensions and/or SSes; and approaching $3 million tax deferred portfolio— and we ought to believe their Brokerage/Business-interests are any less than a few additional millions !?). Stepped up basis instantly wipes hundreds of thousands of LTGC, and NIIT — not one complaint could be heard here :-) (how convenient!!)
4) Surviving spouse never re-marries, or tax-arbitrage (or lower cost of living) to lower tax geographies !?

With any bit of successful planning apriori (don’t forget, we are BH’ers right !?), most likely a Widow/widower now has: more monies/person., more Net-monies (per person), more post-tax monies (stepped-up basis, and/or insurance tax-free), and most-likely more net-monies (per/person) into hand. You gained in a few areas (higher SS, insurance payout, stripped-up basis), and lost in a few areas (higher living expenses per person; and lowered tax-brackets/tiers/cliffs potentially causing tax-torpedoe fears). Hey, you still most-likely have more average monies per-person, and most likely more avg net-monies per person. Plan to tread these areas carefully - you be fine (we are talking only finances here)

Life & Taxation (and some of the above outcomes) ain’t bad as one portrays it to be — whether as couple or as widow(er)
Last edited by sc9182 on Sun Sep 26, 2021 12:10 pm, edited 7 times in total.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by tibbitts »

sc9182 wrote: Sat Sep 25, 2021 4:06 pm 3) Stepped-up basis on Brokerage amounts (couple who amassed 100k+ Annual pensions and/or SSes; and approaching $3 million tax deferred portfolio— and we ought to believe their Brokerage/Business-interests are any less than a few additional millions !?). Stepped up basis instantly wipes hundreds of thousands of LTGC, and NIIT — not one complaint could be heard here :-) (how convenient!!)
Actually I'll guess it's common for Bogleheads to have amassed large deferred balances (and sometimes pensions) as in your example but not have as large taxable investments. $3M deferred and <= $1M taxable might not be an unusual combination.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by retiredjg »

Theoretically, a person deferring SS should be using their tax-deferred account for living expenses. Or using savings for living expenses and converting tIRA to Roth IRA to reduce the tIRA balance.

In either situation, SS may end up being larger but the tax-deferred account should be smaller. Triggering IRMAA may not be any more likely.

So I would not think that IRMAA should be much of a factor in this decision.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by Nestegg_User »

Ain't "complaining" (I'd do that for other things that occurred before we could take advantage- - income averaging (back in the day), changes in retirement plans, loss of "file and suspend", etc)...there's lots of people out there that have very little savings and have no choice but to start SS at 62.

When thinking about it, the choice of when to start SS doesn't really have that large of an impact when far enough out; other factors would have a much larger effect such as "are both healthy? (or if single, are you healthy?), housing conditions (assisted living, nursing home- -for one or both), are both still alive? (if pension, is it reduced (50%?) or full; is loss of second SS material to surviving spouse?) etc.
Also, just as with SS earlier claiming, the difference in, say claiming at FRA vs 70, only gradually diminishes over time and the effect is largely swamped by potential changes in investment returns, etc such that the effect of early claiming might not be as material as one might suppose.
(Hence, after "due consideration" it's unlikely that our claiming strategy will change...especially since I'm already in the mid-60's. (if they were to change the DRC to only 4%... then it would be "obvious" to me to start my SS at FRA (or maybe immediately?)... since I'm already way past 62)
Last edited by Nestegg_User on Sun Sep 26, 2021 6:19 am, edited 1 time in total.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by dratkinson »

Not exactly applicable, but close: "Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." --Peter Lynch

If our IRMAA increases, then we must have the income to pay for it. So it's a good problem to have.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by GerryL »

I delayed SS until age 70, and now SS plus a pair of mini pensions more than cover my basic living expenses. It's not the larger SS that propels me toward IRMAA territory, it's the RMDs. I use QCDs to keep my income from going over the IRMAA cliff.

Within the next 10 years, I will have to decide whether I want to keep increasing my QCDs (not worried about the $100k limit) or to allow myself to cross into the first band of IRMAA territory. If I see that I am about to slip over the cliff, I will think about other money moves I can make in the wide space before the next cliff.

Side note: A relative is over all the IRMAA cliffs with no foreseeable way back. He recognizes that as a GPTH*, even if it does raise their Medicare premiums way above what most people ever have to think about.

* Great Problem to Have.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by Dontridetheindexdown »

Pay it and be grateful!
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by Stinky »

dratkinson wrote: Sat Sep 25, 2021 4:50 pm Not exactly applicable, but close: "Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." --Peter Lynch

If our IRMAA increases, then we must have the income to pay for it. So it's a good problem to have.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by HueyLD »

rgs92 wrote: Sat Sep 25, 2021 1:20 pm If one projects that deferring Social Security could incur larger IRMAA amounts, is that a factor in deciding when to take Social Security?
Has anyone encountered this situation? Is it rare? (Those IRMAA cliffs appear to be quite steep and it seems that careful planning is needed to avoid them.)
Some solutions;

Don’t delay SS;
Draw down your 401(k) starting at 59 1/2 (reduces RMDs);
Convert traditional to Roth;
Give money away;
When you get to RMD age, do QCDs from your TIRA (keeps your AGI down).
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by wrongfunds »

If in retirement, you are worried about the high taxes, logically, do you still worry about running out of money? If so, don't you see the logical disconnect?
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by JackoC »

dodecahedron wrote: Sat Sep 25, 2021 1:45 pm I would not let the IRMAA issue be the determining factor in deferring Social Security.

Keep in mind that IRMAA cutoffs are indexed for inflation and many other aspects of your MAGI besides your SS may change between now and age 70. For example, if you have any fixed income (even tax-exempt municipals!) in your taxable account, then if interest rates go up (as seems likely sooner or later), your MAGI will also go up. Also, if marital status changes, then IRMAA cutoffs change. Or if you inherit a tIRA unexpectedly, your RMDs might already be pushing you over.

If it turns out that your deferred SS (or anything else) pushes you just above an IRMAA threshold in a given year, well, you might as make the best of it by perhaps doing a bit more Roth conversion in that particular year.

IRMAA is only a big deal, relatively speaking, if you are just a bit above a threshold.
I agree, though also with the posts pointing out that delaying SS implies consuming more assets in the meantime which would otherwise throw off taxable income past 70, and Roth conversions work for some people too. But when I look at IRMAA planning the dominant problem is predicting what's going to happen with the interest and dividends portion of our income and the inflation adjustment to the IRMAA levels. In last couple of tax years (last before Medicare for me) I've tried to project what the two year hence IRMAA bracket(s) will be compared to current year income, to manage capital gains recognition (to try) to avoid ending up just over an IRMAA cliff. But for any longer run planning, like even what's going to happen at age 70 six years away, even basic interest, dividend and inflation changes make it too uncertain to make it worthwhile trying to predict, and like you say other things besides those could change too.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by delamer »

sc9182 wrote: Sat Sep 25, 2021 4:06 pm
Nestegg_User wrote: Sat Sep 25, 2021 3:38 pm
sc9182 wrote: Sat Sep 25, 2021 1:43 pm Heh, it’s a bit anathema !! :-)

Here on BH - maximize max-delayed highest SS payments, double top-pensions crowd — strongly prefers to enjoy it that way. To achieve that goal - yes, convert TDA to Roth until max delayed SS kicks in, and deplete TDA maximum possible by the time of RMD kicks in.

Now you are asking this question to turn this philosophy upside down. Is that what you are asking !?
yep, as I stated on another thread we're doing Roth conversions until first SS claim (just past FRA...and that's for the lower PIA), then will be taking from the IRA (supplementing if needed from the taxable account). This is to deplete the IRA enough so that IRMAA levels can be avoided, if possible. (just the two SS and pension already puts us well above $100k...so needed to move enough of the portfolio (a bit under 3M) to tax advantaged accounts...and paying only ~10% isn't a bad way to get there.
(I think Vested1, in their early 70's, had the same considerations.)

While IRMAA tier one isn't as bad, tier two is far worse; for us, once the first is on SS we'll never get back to the lowest tax rates...but just trying to not perpetually be in IRMAA land.
(If one is pushed up into tier two, which for us isn't as likely, it's better to take a large chunk out then so as to not be in that position (at least for some time) and possibly even avoid tier one for awhile.). The biggest risk is to already be in tier one, have too large of withdrawals dictated by RMD's, with one passing...tax rates would climb and then tier one would be largely unavoidable for the surviving spouse (and tier two for single starts at only $111 k).
We’ve read numerous Pro-Roth threads (some are justifiably so - especially the ones with double top pensions and double delayed max-SS folks). Out of many a Roth convert threads three to four GOOD items are never brought up, nor cried afoul of:

1) some/limited life insurance (tax free?)
2) Surviving spouse most likely elevated to keep higher SS of the two (at very least get to keep the higher SS) — not a single one thread on BH complained that higher SS of surviving spouse now pushed her/him into higher IRMAA tiers !! but we routinely hear LOUDLY about RMDs kicking surviving spouse into quite higher brackets/tiers !! You Gotta look at net monies into the pocket ..
3) Stepped-up basis on Brokerage amounts (couple who amassed 100k+ Annual pensions and/or SSes; and approaching $3 million tax deferred portfolio— and we ought to believe their Brokerage/Business-interests are any less than a few additional millions !?). Stepped up basis instantly wipes hundreds of thousands of LTGC, and NIIT — not one complaint could be heard here :-) (how convenient!!)
4) Surviving spouse never re-marries, or tax-arbitrage (or lower cost of living) to lower tax geographies !?

With any bit of successful planning apriori (don’t forget, you are BHer right !?), most likely a Widow/widower now has: more monies/person., more Net-monies (per person), more post-tax monies (stepped-up basis, and/or insurance tax-free), and most-likely more net-monies (per/person) into hand. You gained in a few areas (higher SS, insurance payout, stripped-up basis), and lost in a few areas (higher living expenses per person; and lowered tax-brackets/tiers/cliffs potentially causing tax-torpedoe fears). Hey, you still most-likely have more average monies per-person, and most likely more avg net-monies per person. Plan to tread these areas carefully - you be fine (we are talking only finances here)

Life & Taxation (and some of the above outcomes) ain’t bad as one portrays it to be — whether as couple or as widow(er)
Sure net income is important.

But when one spouse dies and both were receiving SS, then the survivor’s income declines by the amount of the lower benefit.

With RMDs, barring a large difference in ages between the spouses, the survivor’s RMD income will continue to be about the same.

Hence the focus on RMDs pushing on the survivor into a higher bracket.

As you alluded to, even when the per person income increases (regardless of which measure that you use), the actual drop in expenses is a different situation. If housing is the largest expense, there may just be a minor reduction in utilities, while mortgage/rent/property taxes/ homeowners’ insurance won’t decline — assuming the survivor doesn’t move.

There are lots of factors in play here. Whatever anyone thinks of the various tax and SS laws, we all plan based on the reality.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by afan »

I do not understand the concern about IRMAA. It is a small amount of money. Going from standard rates to the first tier increases the premium by a bit over $59. For a couple, the annual increase is $1,425.60. to pay this, the couple has to have MAGI of at least $176,000. Thus, less than 1% of income.

Trying to do long term planning to avoid this will be pointless. Your RMDs will depend on market returns and easily will vary by more than $1425. Same for dividends from a taxable account. Trying to guess now how high your income will be, down to the dollar, at some point years in the future compared to an unknown threshold seems a waste of time.

Even if there are no changes in the tax laws, there is a limit to how precisely one can predict future income. Perhaps if SS and pensions represented the entire income one could do it. If you have taxable or tax deferred assets then they will determine your total income and whether you pay higher IRMAA rates.

We are planning to start SS at 70 for the usual reasons. But the present value difference between doing this and starting earlier is again, quite a small amount.

Roth conversions, depending on the amounts, could have a much bigger influence on future taxes.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by JackoC »

afan wrote: Sun Sep 26, 2021 1:14 pm I do not understand the concern about IRMAA. It is a small amount of money. Going from standard rates to the first tier increases the premium by a bit over $59. For a couple, the annual increase is $1,425.60. to pay this, the couple has to have MAGI of at least $176,000. Thus, less than 1% of income.

Trying to do long term planning to avoid this will be pointless. Your RMDs will depend on market returns and easily will vary by more than $1425. Same for dividends from a taxable account. Trying to guess now how high your income will be, down to the dollar, at some point years in the future compared to an unknown threshold seems a waste of time.
I agree in the end it's not generally possible to say when you'll cross IRMAA threshold(s) years in the future if you're relatively close to let alone above the first one. Two many variables in nominal interest rates, dividend yields, how much tax deferred accounts grow by the time of RMD and the brackets themselves moving targets in nominal $'s.

I would add though that crossing the first IRMAA threshold costs $1425 on Part B plus $295 on Part D if you get that, $1720 total. But it's $2,606/yr more for B&D for a couple at each of the next three brackets, so putting aside basically political arguments like 'they can afford it' and 'nice problem', just on the numbers it's worth some analysis to try to end up just below rather than just above one of those thresholds, where feasible. And it is feasible if it's for example managing this years capital gains recognition against a not *that* uncertain projection of the IRMAA brackets in two years (you're only guessing basically one year's inflation by the end of current year). But again I agree it becomes much less practical for any decision you'd make now affecting a series of years' incomes years in the future, like when you take Social Security. And the good news is the statistical unlikelihood of ending up just above an IRMAA threshold a bunch of years in a row even without paying attention, unless your retirement income is unusually stable.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by andypanda »

"I would add though that crossing the first IRMAA threshold costs $1425 on Part B plus $295 on Part D if you get that"

You pay the Part D IRMAA amount every month whether or not you have Medicare Part D coverage. I was surprised when I got hit with it a few years ago. Oh well.

My wife and I are both on Medicare, both have pensions and both have retiree health insurance with Anthem (we had the same employer) that includes a little vision, a little better dental and really good prescription coverage (for $307/month each take it or leave it and if you leave it you can never get it back.) I'm in my 5th year of paying IRMAA and she is in her first year because she's younger.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by GerryL »

andypanda wrote: Sun Sep 26, 2021 7:16 pm "I would add though that crossing the first IRMAA threshold costs $1425 on Part B plus $295 on Part D if you get that"

You pay the Part D IRMAA amount every month whether or not you have Medicare Part D coverage. I was surprised when I got hit with it a few years ago. Oh well.

My wife and I are both on Medicare, both have pensions and both have retiree health insurance with Anthem (we had the same employer) that includes a little vision, a little better dental and really good prescription coverage (for $307/month each take it or leave it and if you leave it you can never get it back.) I'm in my 5th year of paying IRMAA and she is in her first year because she's younger.
I'm a bit confused about the IRMAA fee on Part D. My Part D plan currently costs me under $7 a month, so less than $84 a year. From what I have seen, going over the first IRMAA cliff could more than quadruple my Part D premium? Is the increase based on the population average or on the individual's premium?
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by andypanda »

The first IRMAA level is the cost of your Part D plus $12.30/month IRMAA.

Of course, we don't have Part D deducted from our SSA retirement checks because we have prescription coverage with Anthem.
When we are at the first IRMAA level we each pay $12.30/month.
When we are at the second IRMAA level we each pay $31.80/month.
Before we got married in 2018 I was getting hammered some years. One year was the 4th IRMAA level based on my Individual income level.

From www.medicareresources.org/medicare-elig ... unt-irmaa/
s

Table 2. Part D – 2021 IRMAA
Individual Joint Monthly Premium
$88,000 or less $176,000 or less Plan Premium
> $88,000 – $111,000 > $176,000 – $222,000 $12.30 + Plan Premium
> $111,000 – $138,000 > $222,000 -$276,000 $31.80 + Plan Premium
> $138,000 – $165,000 > $276,000 – $330,000 $51.20 + Plan Premium
> $165,000 – $500,000 > $330,000 – $750,000 $70.70 + Plan Premium
Greater than $500,000 Greater than $750,000 $77.10 + Plan Premium

Oh well, you work hard and pay taxes and you save and invest then you get to pay more because somebody has to pay for the system to work and they have to get the money where they can find it. Or something like that. :)
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by Dontridetheindexdown »

You should not pay an Income Related Monthly Adjustment Amount (IRMAA) for Medicare Part D if you are not enrolled in a Medicare Part D plan.

As noted by the Centers for Medicare and Medicaid Services (CMS), "If an individual does not have or no longer has Medicare prescription drug coverage, they shouldn’t be charged the Part D-IRMAA."

However, the CMS memo does continue on to note that "if someone didn’t pay the Part D-IRMAA that was owed before disenrolling from their prescription drug coverage, they are responsible for the past due amount."

https://q1medicare.com/q1group/Medicare ... tegory_id=
WildBill
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by WildBill »

Howdy

It means that you have a high income in retirement.

Find a way to lower your income, do Roth conversions, otherwise file it under “Problems of Prosperity” and go on about your business.


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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by dodecahedron »

GerryL wrote: Sun Sep 26, 2021 8:30 pm
andypanda wrote: Sun Sep 26, 2021 7:16 pm "I would add though that crossing the first IRMAA threshold costs $1425 on Part B plus $295 on Part D if you get that"

You pay the Part D IRMAA amount every month whether or not you have Medicare Part D coverage. I was surprised when I got hit with it a few years ago. Oh well.

My wife and I are both on Medicare, both have pensions and both have retiree health insurance with Anthem (we had the same employer) that includes a little vision, a little better dental and really good prescription coverage (for $307/month each take it or leave it and if you leave it you can never get it back.) I'm in my 5th year of paying IRMAA and she is in her first year because she's younger.
I'm a bit confused about the IRMAA fee on Part D. My Part D plan currently costs me under $7 a month, so less than $84 a year. From what I have seen, going over the first IRMAA cliff could more than quadruple my Part D premium? Is the increase based on the population average or on the individual's premium?
It is based on a percentage of the national average base beneficiary premium, currently $33.06 in 2021.

Your IRMAA Part D charges are the same whether you have a barebones plan or a fancy platinum plan. (Mine is similar to yours, $7.30 per month, the cheapest available because I rarely take drugs and when I do it is usually an extremely cheap generic.)

In fact, next year I may switch back to a comprehensive Medicare Advantage PPO plan that includes Part D and has a premium of $0. (It is a great MA plan, with a rare five star Medicare rating.) But even with a zero dollar Part D coverage, if my MAGI were high enough to incur IRMAA, my charges would be the same as others in the same IRMAA MAGI bracket with much more expensive Part D coverage.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by andypanda »

"You should not pay an Income Related Monthly Adjustment Amount (IRMAA) for Medicare Part D if you are not enrolled in a Medicare Part D plan."

From the link posted above: https://q1medicare.com/q1group/Medicare ... tegory_id=

"Reminder: Medicare Part D IRMAA can be charged if you are enrolled in a Medicare Advantage plan that includes prescription drug coverage (MAPD). You can click here to read more: https://Q1FAQ.com/654.html"
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by JackoC »

andypanda wrote: Sun Sep 26, 2021 7:16 pm "I would add though that crossing the first IRMAA threshold costs $1425 on Part B plus $295 on Part D if you get that"

You pay the Part D IRMAA amount every month whether or not you have Medicare Part D coverage. I was surprised when I got hit with it a few years ago. Oh well.
Ah, good to know and with the further clarification of the subsequent exchange (which AIUI is if you had no prescription coverage at all you wouldn't pay the Part D IRMAA, but in the more likely case you had the coverage through a Medicare Advantage plan you would). We haven't started yet but will almost certainly do B&D& a Medigap plan G.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by fyre4ce »

Social Security is only taxed at 85% (maximum) whereas tIRA withdrawals are taxed at 100%. So, if you delay SS and consume other assets in the meantime, it may actually reduce your taxable income and help with IRMAA. You (or someone) really needs to put a spreadsheet to it to sort out the details.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by capran »

One thing I didn't see in the responses so far deserves a brief mention. The IRMAA surcharge applies to your "taxable income" plus tax exempt interest/dividends. If you are basing your expectation that your SS will bump you into the IRMAA surcharge area, are you taking into account that (currently) only 85% of your Social Security is taxable? I mistakenly took my SS at 64 (my overall SS is @ 23,800 but taxable is @ 20,200). My spouse will wait till 70 and currently SS projects her annual to be @ 38,600 which will add @32,800 to taxable income. Since we are delaying hers and mine is low, we have been converting between 89k to 100k from our tIRA to Roth. At that rate, my tIRA will be empty in less than 3 years, so no RMD, but when she hits her 70 for SS we'll have to reduce the amount we're converting by the taxable amount of her SS. If I am lucky enough to live into my 80's we may be able to get her tIRA down so that her RMD's won't put her over IRMAA, but even if it does, as a single widow, at least it's only a surcharge for one person.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by #Cruncher »

The following table may be of help. It shows, for various amounts of other income, what SS benefit would cause Modified Adjusted Gross Income (MAGI) to equal $88,000 for a single return or $176,000 for a joint return, the first amounts triggering a higher IRMAA. For example on a single return $46,824 of SS plus $50,000 of other income produces an MAGI of $88,000. On a joint return $89,412 of SS plus $100,000 produces a $176,000 MAGI.

Code: Select all

Row           Col A     Col B      Col C     Col D
  1   50% threshold               25,000    32,000
  2   85% threshold               34,000    44,000
  3            MAGI               88,000   176,000
             - Other Income -     -- SS Benefit --
  4          Single     Joint     Single     Joint

Code: Select all

  5          40,000    80,000     90,353   139,765
  6          42,500    85,000     79,471   118,000
  7          45,000    90,000     68,588   101,176
  8          47,500    95,000     57,706    95,294
  9          50,000   100,000     46,824    89,412 <---
 10          52,500   105,000     41,765    83,529
 11          55,000   110,000     38,824    77,647
 12          57,500   115,000     35,882    71,765
 13          60,000   120,000     32,941    65,882
 14          62,500   125,000     30,000    60,000
 15          65,000   130,000     27,059    54,118
 16          67,500   135,000     24,118    48,235
 17          70,000   140,000     21,176    42,353
 18          72,500   145,000     18,235    36,471
 19          75,000   150,000     15,294    30,588
 20          77,500   155,000     12,353    24,706
 21          80,000   160,000      9,412    18,824
 22          82,500   165,000      6,471    12,941
 23          85,000   170,000      3,529     7,059
 24          87,500   175,000        588     1,176

Code: Select all

     ----- Confirm Calculation for One Case ------   Formulas in column C copied to column D
 26    Other income               50,000   100,000
 27      SS benefit               46,824    89,412
 28  Oth inc + SS/2               73,412   144,706  =C26+C27/2
 29  SS 50% taxable                4,500     6,000  =MIN(50%*C27,MAX(0,50%*MIN(C2-C1,C28-C1)))
 30  SS 85% taxable               33,500    70,000  =MIN(85%*C27-C29,85%*MAX(0,C28-C2))
 31  Tot SS taxable               38,000    76,000  =C29+C30
 32            MAGI               88,000   176,000  =C26+C31
For background on how the taxable portion of SS is determined see the Wiki's Taxation of Social Security benefits. Here is the hairy formula in cell C5 that is copied right to column D and down to row 24. It took me a long time to work out.

Code: Select all

=IF(A5+MAX((C$3-A5)/0.85,(C$3-1.85*A5+0.5*C$1+0.35*C$2)/0.425)/2>C$2,MAX((C$3-A5)/0.85,(C$3-1.85*A5+0.5*C$1+0.35*C$2)/0.425),IF(A5+MAX((C$3-A5)/0.5,(C$3-1.5*A5+0.5*C$1)/0.25)/2>C$1,MAX((C$3-A5)/0.5,(C$3-1.5*A5+0.5*C$1)/0.25),0))
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by delamer »

capran wrote: Tue Sep 28, 2021 12:05 am One thing I didn't see in the responses so far deserves a brief mention. The IRMAA surcharge applies to your "taxable income" plus tax exempt interest/dividends. If you are basing your expectation that your SS will bump you into the IRMAA surcharge area, are you taking into account that (currently) only 85% of your Social Security is taxable? I mistakenly took my SS at 64 (my overall SS is @ 23,800 but taxable is @ 20,200). My spouse will wait till 70 and currently SS projects her annual to be @ 38,600 which will add @32,800 to taxable income. Since we are delaying hers and mine is low, we have been converting between 89k to 100k from our tIRA to Roth. At that rate, my tIRA will be empty in less than 3 years, so no RMD, but when she hits her 70 for SS we'll have to reduce the amount we're converting by the taxable amount of her SS. If I am lucky enough to live into my 80's we may be able to get her tIRA down so that her RMD's won't put her over IRMAA, but even if it does, as a single widow, at least it's only a surcharge for one person.
EDIT: NOTE THAT THIS MAGI DEFINITION IS NOT THE ONE USED FOR IRMAA

According to this government site, the nontaxable portion of Social Security is part of MAGI. MAGI is what determines whether IRMAA applies, not taxable income plus tax-exempt divudends/interest:

m Your MAGI is the total of the following for each member of your household who’s required to file a tax return:

*Your adjusted gross income (AGI) on your federal tax return
*Excluded foreign income
*Nontaxable Social Security benefits (including tier 1 railroad retirement benefits)
*Tax-exempt interest
*MAGI does not include Supplemental Security Income (SSI)


https://www.healthcare.gov/income-and-h ... come/#magi
Last edited by delamer on Tue Sep 28, 2021 5:33 pm, edited 1 time in total.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by #Cruncher »

delamer wrote: Tue Sep 28, 2021 10:02 amAccording to this government site, the nontaxable portion of Social Security is part of MAGI. MAGI is what determines whether IRMAA applies, not taxable income plus tax-exempt divudends/interest: ...
  • Your adjusted gross income (AGI) on your federal tax return
  • Excluded foreign income
  • Nontaxable Social Security benefits (including tier 1 railroad retirement benefits)
  • Tax-exempt interest
  • MAGI does not include Supplemental Security Income (SSI)
(underline added)
I believe this refers to purchasing healthcare insurance:
When you fill out a Marketplace application, you’ll need to estimate what your household income is likely to be for the year.
It doesn't refer to the Medicare premium subject to IRMAA. According to What is the income-related monthly adjusted amount (IRMAA)?:
It’s important to understand that MAGI for calculating IRMAA isn’t the same as the normal MAGI that you might be accustomed to for non-healthcare purposes, nor is it exactly the same as MAGI for calculating premium tax credits and Medicaid/CHIP eligibility under the Affordable Care Act. Table 1 in this Congressional Research Service brief is useful in seeing how MAGI is determined for IRMAA calculations.
The "Medicare Premiums" column of Table 1 omits non-taxable SS from items included in MAGI.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by delamer »

#Cruncher wrote: Tue Sep 28, 2021 11:04 am
delamer wrote: Tue Sep 28, 2021 10:02 amAccording to this government site, the nontaxable portion of Social Security is part of MAGI. MAGI is what determines whether IRMAA applies, not taxable income plus tax-exempt divudends/interest: ...
  • Your adjusted gross income (AGI) on your federal tax return
  • Excluded foreign income
  • Nontaxable Social Security benefits (including tier 1 railroad retirement benefits)
  • Tax-exempt interest
  • MAGI does not include Supplemental Security Income (SSI)
(underline added)
I believe this refers to purchasing healthcare insurance:
When you fill out a Marketplace application, you’ll need to estimate what your household income is likely to be for the year.
It doesn't refer to the Medicare premium subject to IRMAA. According to What is the income-related monthly adjusted amount (IRMAA)?:
It’s important to understand that MAGI for calculating IRMAA isn’t the same as the normal MAGI that you might be accustomed to for non-healthcare purposes, nor is it exactly the same as MAGI for calculating premium tax credits and Medicaid/CHIP eligibility under the Affordable Care Act. Table 1 in this Congressional Research Service brief is useful in seeing how MAGI is determined for IRMAA calculations.
The "Medicare Premiums" column of Table 1 omits non-taxable SS from items included in MAGI.
Thanks for this.

Having multiple definitions for the same term is bizarre, and I say that as a federal retiree…
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by capran »

delamer wrote: Tue Sep 28, 2021 10:02 am
capran wrote: Tue Sep 28, 2021 12:05 am One thing I didn't see in the responses so far deserves a brief mention. The IRMAA surcharge applies to your "taxable income" plus tax exempt interest/dividends. If you are basing your expectation that your SS will bump you into the IRMAA surcharge area, are you taking into account that (currently) only 85% of your Social Security is taxable? I mistakenly took my SS at 64 (my overall SS is @ 23,800 but taxable is @ 20,200). My spouse will wait till 70 and currently SS projects her annual to be @ 38,600 which will add @32,800 to taxable income. Since we are delaying hers and mine is low, we have been converting between 89k to 100k from our tIRA to Roth. At that rate, my tIRA will be empty in less than 3 years, so no RMD, but when she hits her 70 for SS we'll have to reduce the amount we're converting by the taxable amount of her SS. If I am lucky enough to live into my 80's we may be able to get her tIRA down so that her RMD's won't put her over IRMAA, but even if it does, as a single widow, at least it's only a surcharge for one person.
According to this government site, the nontaxable portion of Social Security is part of MAGI. MAGI is what determines whether IRMAA applies, not taxable income plus tax-exempt divudends/interest:

m Your MAGI is the total of the following for each member of your household who’s required to file a tax return:

*Your adjusted gross income (AGI) on your federal tax return
*Excluded foreign income
*Nontaxable Social Security benefits (including tier 1 railroad retirement benefits)
*Tax-exempt interest
*MAGI does not include Supplemental Security Income (SSI)


https://www.healthcare.gov/income-and-h ... come/#magi
WOW!!!! I thought I had double checked all that on a prior query. Looks like I may be screwed for a year based on 2020 income. Our joint income plus tax free interest AND the 3500 from SS that was untaxed (85% of our SS is taxed) was 173,300. Do I remember a thread about what the 2022 IRMAA bracket will be on the 2020 income. Is there any chance that the income limits will be less than the 2020 IRMAA based on 2018 income? If I did dodge the bullet, it looks like it could be just barely. Any additional info greatly appreciated. Sure glad you corrected me as that will encourage me to back off a little from what I was going to convert tIRA to Roth at the end of the year. In checking, found 2 different sources that say the threshhold for 2019 income for the 2021 IRMAA surcharge is 176,000. But only have found one source published on April 17, 2021 suggesting that the 2022 threshold based on 2020 income is expected to be 180,000 due to CPI. any confirmation?
Last edited by capran on Tue Sep 28, 2021 1:54 pm, edited 1 time in total.
diy60
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by diy60 »

capran wrote: Tue Sep 28, 2021 1:34 pm WOW!!!! I thought I had double checked all that on a prior query. Looks like I may be screwed for a year based on 2020 income. Our joint income plus tax free interest AND the 3500 from SS that was untaxed (85% of our SS is taxed) was 173,300. Do I remember a thread about what the 2022 IRMAA bracket will be on the 2020 income. Is there any chance that the income limits will be less than the 2020 IRMAA based on 2018 income? If I did dodge the bullet, it looks like it could be just barely. Any additional info greatly appreciated. Sure glad you corrected me as that will encourage me to back off a little from what I was going to convert tIRA to Roth at the end of the year.
The person you are quoting was mistaken, see the posts directly above yours. Untaxed SS is NOT included in MAGI for the purposes of determining IRMAA. Also, the 1st tier limit for 2022 (based on 2020) will be 91/182. Tiers are indexed to inflation using CPI-U data.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by LilyFleur »

GerryL wrote: Sat Sep 25, 2021 8:30 pm I delayed SS until age 70, and now SS plus a pair of mini pensions more than cover my basic living expenses. It's not the larger SS that propels me toward IRMAA territory, it's the RMDs. I use QCDs to keep my income from going over the IRMAA cliff.

Within the next 10 years, I will have to decide whether I want to keep increasing my QCDs (not worried about the $100k limit) or to allow myself to cross into the first band of IRMAA territory. If I see that I am about to slip over the cliff, I will think about other money moves I can make in the wide space before the next cliff.

Side note: A relative is over all the IRMAA cliffs with no foreseeable way back. He recognizes that as a GPTH*, even if it does raise their Medicare premiums way above what most people ever have to think about.

* Great Problem to Have.
I most likely will be paying IRMAA. The single brackets for IRMAA are challenging. It will be a huge reduction in health insurance premiums for me, even with paying for supplemental insurance. I am working part-time at age 61 just to pay my health insurance premiums. And, yes, IRMAA is a GPTH, especially if a pension is the reason.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by capran »

diy60 wrote: Tue Sep 28, 2021 1:48 pm
capran wrote: Tue Sep 28, 2021 1:34 pm WOW!!!! I thought I had double checked all that on a prior query. Looks like I may be screwed for a year based on 2020 income. Our joint income plus tax free interest AND the 3500 from SS that was untaxed (85% of our SS is taxed) was 173,300. Do I remember a thread about what the 2022 IRMAA bracket will be on the 2020 income. Is there any chance that the income limits will be less than the 2020 IRMAA based on 2018 income? If I did dodge the bullet, it looks like it could be just barely. Any additional info greatly appreciated. Sure glad you corrected me as that will encourage me to back off a little from what I was going to convert tIRA to Roth at the end of the year.
The person you are quoting was mistaken, see the posts directly above yours. Untaxed SS is NOT included in MAGI for the purposes of determining IRMAA. Also, the 1st tier limit for 2022 (based on 2020) will be 91/182. Tiers are indexed to inflation using CPI-U data.
Thank you!!! I try to be careful and check and re-check everything and thought I had it nailed down. I re-read the link and the link clearly states that the inclusion of the untaxed portion of SS is for the purpose of MAGI as it relates to health insurance on the Market Place website. and I found this link on a gov web site that says MAGI related to IRMAA is your AGI plus tax free interest, with NO mention of the untaxed SS, so that's a big "whew", so the 3,000 cushion I plugged in is still in play. (I put that cushion because several years ago we got notified of an end of year involuntary bond redemption, with a weeks notice). https://www.ssa.gov/OP_Home/handbook/ha ... -2501.html
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by dodecahedron »

capran wrote: Tue Sep 28, 2021 2:14 pm
diy60 wrote: Tue Sep 28, 2021 1:48 pm
capran wrote: Tue Sep 28, 2021 1:34 pm WOW!!!! I thought I had double checked all that on a prior query. Looks like I may be screwed for a year based on 2020 income. Our joint income plus tax free interest AND the 3500 from SS that was untaxed (85% of our SS is taxed) was 173,300. Do I remember a thread about what the 2022 IRMAA bracket will be on the 2020 income. Is there any chance that the income limits will be less than the 2020 IRMAA based on 2018 income? If I did dodge the bullet, it looks like it could be just barely. Any additional info greatly appreciated. Sure glad you corrected me as that will encourage me to back off a little from what I was going to convert tIRA to Roth at the end of the year.
The person you are quoting was mistaken, see the posts directly above yours. Untaxed SS is NOT included in MAGI for the purposes of determining IRMAA. Also, the 1st tier limit for 2022 (based on 2020) will be 91/182. Tiers are indexed to inflation using CPI-U data.
Thank you!!! I try to be careful and check and re-check everything and thought I had it nailed down. I re-read the link and the link clearly states that the inclusion of the untaxed portion of SS is for the purpose of MAGI as it relates to health insurance on the Market Place website. and I found this link on a gov web site that says MAGI related to IRMAA is your AGI plus tax free interest, with NO mention of the untaxed SS, so that's a big "whew", so the 3,000 cushion I plugged in is still in play. (I put that cushion because several years ago we got notified of an end of year involuntary bond redemption, with a weeks notice). https://www.ssa.gov/OP_Home/handbook/ha ... -2501.html
Medicare is government-subsidized health insurance but it is NOT a type of "Market Place" insurance! Two entirely different things.

Market Place insurance premium subsidies are NOT available to folks who are old enough to qualify for Medicare.

And to further confuse things, as noted above, the government uses two different definitions of MAGI for the two different programs.

Yes, it is confusing. It is simpler in pretty much every other country that I know of.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by GerryL »

capran wrote: Tue Sep 28, 2021 2:14 pm
diy60 wrote: Tue Sep 28, 2021 1:48 pm
capran wrote: Tue Sep 28, 2021 1:34 pm WOW!!!! I thought I had double checked all that on a prior query. Looks like I may be screwed for a year based on 2020 income. Our joint income plus tax free interest AND the 3500 from SS that was untaxed (85% of our SS is taxed) was 173,300. Do I remember a thread about what the 2022 IRMAA bracket will be on the 2020 income. Is there any chance that the income limits will be less than the 2020 IRMAA based on 2018 income? If I did dodge the bullet, it looks like it could be just barely. Any additional info greatly appreciated. Sure glad you corrected me as that will encourage me to back off a little from what I was going to convert tIRA to Roth at the end of the year.
The person you are quoting was mistaken, see the posts directly above yours. Untaxed SS is NOT included in MAGI for the purposes of determining IRMAA. Also, the 1st tier limit for 2022 (based on 2020) will be 91/182. Tiers are indexed to inflation using CPI-U data.
Thank you!!! I try to be careful and check and re-check everything and thought I had it nailed down. I re-read the link and the link clearly states that the inclusion of the untaxed portion of SS is for the purpose of MAGI as it relates to health insurance on the Market Place website. and I found this link on a gov web site that says MAGI related to IRMAA is your AGI plus tax free interest, with NO mention of the untaxed SS, so that's a big "whew", so the 3,000 cushion I plugged in is still in play. (I put that cushion because several years ago we got notified of an end of year involuntary bond redemption, with a weeks notice). https://www.ssa.gov/OP_Home/handbook/ha ... -2501.html
I researched and fretted over "what is MAGI" for a couple of years before I found an explanation about different MAGIs for different purposes and a definitive statement about MAGI for determining IRMAA. I sure wish they would add a hyphenated suffix for MAGI, like they do with CPI.
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Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by AnnetteLouisan »

IRMAA... wasn’t she the neighbor on Bewitched? 😅

but seriously- it’s insane how complicated it is having a few extra nickels to rub together!
FactualFran
Posts: 2776
Joined: Sat Feb 21, 2015 1:29 pm

Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by FactualFran »

capran wrote: Tue Sep 28, 2021 1:34 pm WOW!!!! I thought I had double checked all that on a prior query. Looks like I may be screwed for a year based on 2020 income. Our joint income plus tax free interest AND the 3500 from SS that was untaxed (85% of our SS is taxed) was 173,300. Do I remember a thread about what the 2022 IRMAA bracket will be on the 2020 income. Is there any chance that the income limits will be less than the 2020 IRMAA based on 2018 income? If I did dodge the bullet, it looks like it could be just barely. Any additional info greatly appreciated. Sure glad you corrected me as that will encourage me to back off a little from what I was going to convert tIRA to Roth at the end of the year. In checking, found 2 different sources that say the threshhold for 2019 income for the 2021 IRMAA surcharge is 176,000. But only have found one source published on April 17, 2021 suggesting that the 2022 threshold based on 2020 income is expected to be 180,000 due to CPI. any confirmation?
Unofficial IRMAA income thresholds for 2022 premiums, based on 2020 income, are already known. For Married Filing Jointly they are: 182,000, 228,000, 284,000, 340,000, and 750,000.
capran
Posts: 1091
Joined: Thu Feb 18, 2016 9:45 am

Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by capran »

Thanks. Such a relief. It's not that we can't afford to pay a surcharge, but I have never thought paying more for something because I made good financial choices is a good thing.
sc9182
Posts: 2178
Joined: Wed Aug 17, 2016 7:43 pm

Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by sc9182 »

capran wrote: Tue Sep 28, 2021 6:52 pm Thanks. Such a relief. It's not that we can't afford to pay a surcharge, but I have never thought paying more for something because I made good financial choices is a good thing.
Sure - there are a few (or during few years), folks can get over IRMAA tiers (is it 8% folks !?), but un-knowingly crossing it is what we are discussing about. If you are knowledgeable about this - try to keep Roth-conversions under respective tiers — is what we are discussing.

If you are intentionally aggressively Roth-converting past IRMAA tiers (for some not-so-fortunate ones, taxing their SS wages)., then regret about it later — strictly avoidable. Everyone trying to optimize their individual tax situation - including a low resourceful families - which get affected with SS taxation upon their lowly IRA withdrawals/conversions :-(

Luckily, IRMAA tiers do go up with time/inflation-adjusted.
capran
Posts: 1091
Joined: Thu Feb 18, 2016 9:45 am

Re: What if deferring Social Security pushes one over an IRMAA cliff?

Post by capran »

I must admit I was a little panicked when I read the one post about the inclusion of the non taxed portion of SS being a part of MAGI, and glad it's not part of the IRMAA equation. Indeed, we are adjusting to find the sweet spot as we try to reduce our IRA's by converting as much as possible, getting as close as we can without going over. The one wild card is end of year involuntary bond redemptions, so have been waiting until mid December to do our annual tIRA to Roth conversion. Vanguard says a corporate bond redemption can occur with little to no warning at any time prior to end of year, so best I can do is allow extra room just in case.
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