Other Tax Questions
Questions and comments on other topics covered in Fairmark.com, such as UTMA accounts, and any tax questions that don't fit our other categories.
Increase in Medicare Surcharges - IRMAA
Posted by: KAWill, March 30, 2015 07:46PM
A Medicare bill passed last week by the House would increase Medicare Surcharges as shown below.

"For beneficiaries with incomes between $133,500 and $160,000, their share of premiums would increase from 50% to 65%.

For those with incomes between $160,000 and $214,000, their share of premiums would increase from 65% to 75%."

Does this add another tier to the existing surcharges?

[www.advisory.com]

[news.hjnews.com]

It looks as though people currently pay 25%, 35%, 50%, 65% or 80% of the actual Medicare costs via their premium plus any surcharge. Those with no surcharge pay 25%.

One interesting thing is that those with the highest incomes will apparently see no change and continue to pay 80%.

Re: Increase in Medicare Surcharges - IRMAA
Posted by: Alan S., March 31, 2015 06:03PM
Looks like the present 50% tier (209.80) is split 50-50 with the lower income half remaining at 50% and the top half going to 65% (272.70). Then the present 65% (272.70) tier goes to 75% (314.70). Here is a link showing the present premium tiers:

[www.medicare-plans-online.com]

And do not forget that none of these tiers are inflation indexed. Therefore, at present IRMAA is about where SS taxation was 30 years ago and inflation plus changes like this will erase that 75% subsidy for many more every year.

Same for Part D.

The 80% top tier for IRMAA appears analogous to the 85% SS taxation limit, with amounts in excess of that roughly equated to what you paid in as taxes in the past (ie your cost of investment (basis) in the plans).

Re: Increase in Medicare Surcharges - IRMAA
Posted by: KAWill, March 31, 2015 07:43PM
Alan - Thanks for the help. I came to the same conclusion on the additional tier.

It looks like this would take effect starting in 2018 if passed without any changes. I hadn't thought about the inflation aspect and that will definitely affect many retirees.

The point about the top tier staying at 80% makes sense but on the other hand it would be a logical place to increase revenue.

I've often wondered about the relative costs for single versus married beneficiaries. I would guess that a higher percentage of single retirees pay the surcharges. It's not clear if the 2X ratio in surcharge thresholds is fair considering overall earnings and savings while working and economy of scale in living costs in retirement.

Re: Increase in Medicare Surcharges - IRMAA
Posted by: Benn, March 31, 2015 11:39PM
The inequitable aspect of the public information blast from Congress is that the rich should pay "a little bit more", but the facts of the increase are that the highest increase, 30%, is for the single income range $133,500-$160,000. This is mid-range affluent, but not rich, especially in the major population centers on both coasts.


Re: Increase in Medicare Surcharges - IRMAA
Posted by: KAWill, October 12, 2017 07:25PM
Am I correct that the new Medicare Surcharge tiers and thresholds proposed in 2015 for enactment in 2018 were changed at some later date?

It looks like the threshold for paying 80% will be lower than proposed and now appears to be $160K for individual returns and $320K for joint returns.


Re: Increase in Medicare Surcharges - IRMAA
Posted by: KAWill, October 14, 2017 09:31PM
Here is a short article that answers the question.

[www.kiplinger.com]

The article includes a chart showing the 2017 income thresholds and the new thresholds for 2018. The article also includes a brief summary of the 2015 law that went into effect.



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