MAGI for Medicare Rates

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convert949
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MAGI for Medicare Rates

Post by convert949 » Sun Aug 10, 2014 11:05 am

Good Morning,

I am looking for help in getting a definitive answer about what is included in a retiree's MAGI calculation for Medicare. I have a "one year" penalty ahead for 2014 as I restructure my portfolio at 65. I am aware that I am already in the penalty area due to the necessity to take long term capital gains as a part of that restructuring. I would like to take advantage of near market highs to get as close as I can to my desired equity allocation of 30%. I have already reduced it from 40 to 35%.

I am aware of the income limits but have seen conflicting information online about what is included/excluded from MAGI. My goal is to avoid pushing us into the next tier for 2014 with a higher penalty while trying to avoid the same penalty for next year if I wait to finish my restructuring then.

I have read that Municipal Bond Income is included/excluded. Also, non-taxable portion of SS is included as well as excluding the taxable portion of SS. The sources are from household names in the investment community. Obviously I am not the only one confused by this.

Anyone know the real answer :confused

Thanks in advance,

Bob

sscritic
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Re: MAGI for Medicare Rates

Post by sscritic » Sun Aug 10, 2014 11:12 am

Your MAGI is your adjusted gross income as used on line 37 of IRS form 1040 plus your tax-exempt interest income as used on line 8b of IRS form 1040.
More formally
(6) Modified adjusted gross income is your adjusted gross income as defined by the Internal Revenue Code, plus the following forms of tax-exempt income:
(i) Tax-exempt interest income;
(ii) Income from United States savings bonds used to pay higher education tuition and fees;
(iii) Foreign earned income;
(iv) Income derived from sources within Guam, American Samoa, or the Northern Mariana Islands; and
(v) Income from sources within Puerto Rico.
http://www.socialsecurity.gov/OP_Home/c ... 8-1010.htm

P.S. Stop reading household names.

Calm Man
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Re: MAGI for Medicare Rates

Post by Calm Man » Sun Aug 10, 2014 11:19 am

I have a guy I talk to on occasion who used this same term: penalty. He has never paid a nickel for health insurance in his life despite being 73 until now because his union at the university where he was a professor had that negotiated. Now, as he has several million dollars and has to take RMDs of over 100K a year, he has to pay the higher rate. He calls it a penalty and worse, calls it unfair. I don't view it as a penalty. I view it as a higher income person getting less subsidy from younger people. We all know that despite what most people have paid during their working careers (with exceptions of some very very high earners who have had Medicare contributions uncapped since Clinton did this) the next generation and the one after that is subsidizing our Medicare. I am clueless as to why people think they shouldn't pay more for it but I don't want to totally derail the thread. It's just not so horrible to pay a higher amount and I don't think it need be viewed as a penalty.

sscritic
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Re: MAGI for Medicare Rates

Post by sscritic » Sun Aug 10, 2014 11:44 am

Agree with Calm Man. It is not a penalty. It is your premium. More accurately, it is the premium reduced by your subsidy. Your subsidy is not the same as my subsidy.

Here is what you pay as a percentage of the actual cost:
25%
35%
50%
65%
80%

I don't know if your subsidy is 20% or 65%, but you are getting a subsidy of some kind.

etarini
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Re: MAGI for Medicare Rates

Post by etarini » Sun Aug 10, 2014 11:53 am

I agree with you, Calm Man.

While minimization of taxes is a legitimate investment consideration, it is an understatement to say that people have different opinions about whether their own share is fair.

The best summation of my own view was stated by Bill Bernstein in his recent book, Deep Risk:

"I tend to view taxes more as the dues I pay for membership in a club with a billion-person waiting list."
BTW, less than 5% of all Medicare beneficiaries end up paying those IRMAA (income-related monthly adjustment amount) surcharges.

Eric

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Re: MAGI for Medicare Rates

Post by Professor Emeritus » Sun Aug 10, 2014 12:07 pm

For anyone out there on SSDI and is under 65. If you decline part B when you are first eligible due to disability, you get another full clean shot at age 65 without penalty. DW is disabled and it looked like we were being hit very hard by IRMAA or teh 10% annual penalty. The premium rollback is not in the letters they send, but it is in the operations manual

Premium Rollback

If a premium surcharge was in effect prior to attainment of age 65, the premium is rolled back to the standard (unincreased) premium effective with the month of attainment of age 65.

Months prior to age 65 are never counted in the calculation of a premium increase for late enrollment or reenrollment after age 65.

https://secure.ssa.gov/poms.nsf/lnx/0601001010


As a result we are taking income from IRAs this year when DW is 62.

Humorously the first chunk was a Cref account that we had had endless problems with. I just liquidated it and had them send a check. by chance it went out the day after the S&P high. Since this was my first stock sale transactions since the CPQ debacle I allowed myself to feel like a master of the universe for a whole day.

Professor Emeritus
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Re: MAGI for Medicare Rates

Post by Professor Emeritus » Sun Aug 10, 2014 12:09 pm

etarini wrote: BTW, less than 5% of all Medicare beneficiaries end up paying those IRMAA (income-related monthly adjustment amount) surcharges.
Eric
While completely true, the primary reason is that the well insured decline part B if they have to pay IRMAA.

Professor Emeritus
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Re: MAGI for Medicare Rates

Post by Professor Emeritus » Sun Aug 10, 2014 12:12 pm

Calm Man wrote:I have a guy I talk to on occasion who used this same term: penalty. He has never paid a nickel for health insurance in his life despite being 73 until now because his union at the university where he was a professor had that negotiated.
This is simply an unfair statement. You "pay" for benefits in reduced salary. Labor economists always use a total compensation analysis including all fringe benefits.

It is a tax "penalty" in the same sense of the word as the "marriage penalty".

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convert949
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Re: MAGI for Medicare Rates

Post by convert949 » Sun Aug 10, 2014 12:22 pm

sscritic wrote:
Your MAGI is your adjusted gross income as used on line 37 of IRS form 1040 plus your tax-exempt interest income as used on line 8b of IRS form 1040.
P.S. Stop reading household names.
Good advice sscritic... Thanks again (I posted previously on IRMAA and you were a great help). At that time, you advised to be aware of the brackets to avoid going over the next threshold by a small amount. I did take that advice to heart and am merely trying to max out the current bracket. Thanks for the clarification. I am currently pretty close to that limit after adding back tax exempt interest.

Sorry for calling it a penalty... I know it is "a lower subsidy". I would just like to consolidate my "lower subsidy" into one year. if possible. I am not like the professor... Small business guy who always paid for his own insurance here... Just grateful for the relief from individual coverage...

Thanks again and regards to all,

Bob
Last edited by convert949 on Sun Aug 10, 2014 12:38 pm, edited 1 time in total.

gerrym51
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Re: MAGI for Medicare Rates

Post by gerrym51 » Sun Aug 10, 2014 12:24 pm

are you talking about this-


http://www.ssa.gov/pubs/EN-05-10536.pdf
Last edited by gerrym51 on Sun Aug 10, 2014 12:38 pm, edited 1 time in total.

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convert949
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Re: MAGI for Medicare Rates

Post by convert949 » Sun Aug 10, 2014 12:32 pm

Deleted by OP... Never Mind...
Last edited by convert949 on Sun Aug 10, 2014 2:31 pm, edited 2 times in total.

sscritic
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Re: MAGI for Medicare Rates

Post by sscritic » Sun Aug 10, 2014 12:38 pm

Professor Emeritus wrote:For anyone out there on SSDI and is under 65. If you decline part B when you are first eligible due to disability, you get another full clean shot at age 65 without penalty. DW is disabled and it looked like we were being hit very hard by IRMAA or teh 10% annual penalty. The premium rollback is not in the letters they send, but it is in the operations manual

Premium Rollback

If a premium surcharge was in effect prior to attainment of age 65, the premium is rolled back to the standard (unincreased) premium effective with the month of attainment of age 65.

Months prior to age 65 are never counted in the calculation of a premium increase for late enrollment or reenrollment after age 65.

https://secure.ssa.gov/poms.nsf/lnx/0601001010
The penalty for late enrollment is not IRMAA. I don't see the connection. Please explain. I read your link. This is what I saw. I saw premium increase as a specific premium increase, not a general from any source whatsoever premium increase.
1. Basic Principle

The Supplementary Medical Insurance (SMI) premium is increased 10 percent for each full 12 months during which an individual could have been, but was not, enrolled in SMI.
[edit: that refers to late enrollment, not IRMAA]

2. Premium Increase (Also Known as Premium Surcharge)

The increased premium is always the premium payable increased by the applicable percentage for late enrollment. [edit: late enrollment, not IRMAA] When the premium rate rises, the surcharge percentage remains the same, but the amount of the surcharge increases in proportion to the amount of the rise in the premium.
Now read number 3, what you quoted, but read it in context.

SGM
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Re: MAGI for Medicare Rates

Post by SGM » Sun Aug 10, 2014 1:08 pm

The extra amounts you will pay for Medicare parts B and D are a tax.

In the historic case of Gregory v. Helvering, Judge Learned Hand famously wrote, “Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.”

sscritic
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Re: MAGI for Medicare Rates

Post by sscritic » Sun Aug 10, 2014 1:16 pm

SGM wrote:The extra amounts you will pay for Medicare parts B and D are a tax.
Why do you say that? They are labeled as premiums, and Judge Hand said nothing about insurance premiums. Or do you not consider Medicare insurance. Part B is particular is Supplementary Medical Insurance (SMI).

The law says it is insurance. It pays your medical bills just like insurance. It charges a premium just like insurance. It walks and quakes just like insurance.

How is Medicare not insurance?

Are the regular Medicare premiums also a tax in your and Judge Hand's minds?

Professor Emeritus
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Re: MAGI for Medicare Rates

Post by Professor Emeritus » Sun Aug 10, 2014 2:20 pm

sscritic wrote:
Professor Emeritus wrote:For anyone out there on SSDI and is under 65. If you decline part B when you are first eligible due to disability, you get another full clean shot at age 65 without penalty. DW is disabled and it looked like we were being hit very hard by IRMAA or teh 10% annual penalty. The premium rollback is not in the letters they send, but it is in the operations manual

Premium Rollback

If a premium surcharge was in effect prior to attainment of age 65, the premium is rolled back to the standard (unincreased) premium effective with the month of attainment of age 65.

Months prior to age 65 are never counted in the calculation of a premium increase for late enrollment or reenrollment after age 65.

https://secure.ssa.gov/poms.nsf/lnx/0601001010
The penalty for late enrollment is not IRMAA. I don't see the connection. Please explain. I read your link. This is what I saw. I saw premium increase as a specific premium increase, not a general from any source whatsoever premium increase.
1. Basic Principle

The Supplementary Medical Insurance (SMI) premium is increased 10 percent for each full 12 months during which an individual could have been, but was not, enrolled in SMI.
[edit: that refers to late enrollment, not IRMAA]

2. Premium Increase (Also Known as Premium Surcharge)

The increased premium is always the premium payable increased by the applicable percentage for late enrollment. [edit: late enrollment, not IRMAA] When the premium rate rises, the surcharge percentage remains the same, but the amount of the surcharge increases in proportion to the amount of the rise in the premium.
Now read number 3, what you quoted, but read it in context.
The irmaa connection is US not SS. We are currently subject to Irmaa but may not be by the time DW is 65. Without a new IERP we could not postpone part B without penalty until we are no longer subject to IRMAA. Without a new IREP disabled people are in a worse position than non disabled people. In DWs case she was on full salary sick leave in 2012 and 2013. Now she is on her FERS disability pension which is much lower.

sscritic
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Re: MAGI for Medicare Rates

Post by sscritic » Sun Aug 10, 2014 2:30 pm

Professor Emeritus wrote: The irmaa connection is US not SS. We are currently subject to Irmaa but may not be by the time DW is 65. Without a new IERP we could not postpone part B without penalty until we are no longer subject to IRMAA. Without a new IREP disabled people are in a worse position than non disabled people. In DWs case she was on full salary sick leave in 2012 and 2013. Now she is on her FERS disability pension which is much lower.
Still confused. The page you linked had a reference to IEP (which I looked up), but none to IERP. A search of the POMS for IERP gives me this:
Search Results

showing 0 through 0 of 0 results for your search
I then searched for IREP.
Search Results

showing 0 through 0 of 0 results for your search
Maybe words would serve you better in communicating with others.

mur44
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Re: MAGI for Medicare Rates

Post by mur44 » Sun Aug 10, 2014 3:41 pm

It is not called penalty. It is called surtax.

If you have a very high income, you will likely pay a higher amount
for your Part B premium and Part D premium.
This is called an Income-Related Monthly Adjustment Amount (IRMAA).

Professor Emeritus
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Re: MAGI for Medicare Rates

Post by Professor Emeritus » Sun Aug 10, 2014 3:57 pm

sscritic wrote:
Professor Emeritus wrote: The irmaa connection is US not SS. We are currently subject to Irmaa but may not be by the time DW is 65. Without a new IERP we could not postpone part B without penalty until we are no longer subject to IRMAA. Without a new IREP disabled people are in a worse position than non disabled people. In DWs case she was on full salary sick leave in 2012 and 2013. Now she is on her FERS disability pension which is much lower.
Still confused. The page you linked had a reference to IEP (which I looked up), but none to IERP. A search of the POMS for IERP gives me this:

I apologize for the IEP IERP confusion which first appeared in a letter I got from SS

Here is the issue

Now IEP stands for Initial Enrollment Period which for a person with a disability begins 2 years after they start receiving disability benefits. However if you don't sign up, your 10% penalty begins.

http://www.medicare.gov/your-medicare-c ... nalty.html
Part B late enrollment penalty

If you don't sign up for Part B when you're first eligible or if you drop Part B and then get it later, you may have to pay a late enrollment penalty for as long as you have Medicare. Your monthly premium for Part B may go up 10% for each full 12-month period that you could have had Part B, but didn't sign up for it.


Now DW is 62 and was found to be disabled when she was just 60. At 62 she was "eligible" for Medicare.
However IRMAA made medicare very expensive for her and she was already fully insured through the Federal employee health benefit program.
But if you read the above language there is a 10% penalty for not signing up , a penalty that was starting for her at age 62

The trick is that disabled people get an a second IEP at age 65. NONE OF THE LETTERS MENTION THIS SECOND IEP
Disabled people who decline Part B at the first IEP can sign up without the 10% penalty at the second IEP at age 65.

















Try again. When you are found to be disabled there is a waiting period for benefits

sscritic
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Re: MAGI for Medicare Rates

Post by sscritic » Sun Aug 10, 2014 4:28 pm

Professor Emeritus wrote: Now DW is 62 and was found to be disabled when she was just 60. At 62 she was "eligible" for Medicare.
However IRMAA made medicare very expensive for her and she was already fully insured through the Federal employee health benefit program.
But if you read the above language there is a 10% penalty for not signing up , a penalty that was starting for her at age 62

The trick is that disabled people get an a second IEP at age 65. NONE OF THE LETTERS MENTION THIS SECOND IEP
Disabled people who decline Part B at the first IEP can sign up without the 10% penalty at the second IEP at age 65.
The late enrollment penalty is nothing new; I knew about it. That people on SSDI are medicare eligible after 24 months is also nothing new; I knew about it. The issue was IRMAA. Even if you get to rid yourself of the 10% penalty, you don't rid yourself of IRMAA as I understand it.

Perhaps the point I am missing is how the two factors interact: Since IRMAA is a dollar amount, for someone who enrolls 2 years late but before 65, these will be different.

premium x 1.20 + IRMAA
(premium + IRMAA) x 1.20

I guess I wasn't fully aware of the option to say no, but since those not disabled have the right to say no, it would be discrimination against the disabled not to let them say no as well.
If you are already getting Social Security retirement or disability benefits or railroad retirement checks, you will be contacted a few months before you become eligible for Medicare and given the information you need. If you live in one of the 50 states, Washington, D.C., the Northern Mariana Islands, Guam, American Samoa or the Virgin Islands, you will be enrolled in Medicare Parts A and B automatically. However, because you must pay a premium for Part B coverage, you have the option of turning it down.

Bill Bernstein
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Calm Man's Friend

Post by Bill Bernstein » Sun Aug 10, 2014 5:26 pm

Gotta love the guy: a millionaire full prof who doesn't know how to spell "entitlement," and in more than one sense of the word.

Bill

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Re: Calm Man's Friend

Post by dolphinsaremammals » Sun Aug 10, 2014 5:54 pm

Bill Bernstein wrote:Gotta love the guy: a millionaire full prof who doesn't know how to spell "entitlement," and in more than one sense of the word.

Bill
Sound of rending garments in sympathy to unfortunate person having to take a $100K RMD :D

SGM
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Re: MAGI for Medicare Rates

Post by SGM » Mon Aug 11, 2014 5:04 am

sscritic wrote:
SGM wrote:The extra amounts you will pay for Medicare parts B and D are a tax.
Why do you say that? They are labeled as premiums, and Judge Hand said nothing about insurance premiums. Or do you not consider Medicare insurance. Part B is particular is Supplementary Medical Insurance (SMI).

The law says it is insurance. It pays your medical bills just like insurance. It charges a premium just like insurance. It walks and quakes just like insurance.

How is Medicare not insurance?

Are the regular Medicare premiums also a tax in your and Judge Hand's minds?
Oh dear, I sympathize with your having trouble with cognitive dissonance again. It is so very uncomfortable to hold two opposite ideas as having some truth. Why do they call it FICA taxes when they take it out of paychecks? Is Medicare defined as both an insurance and a tax? How can my little mind get around this weighty question? What is a body to do? Do I have to retreat to watching day time soap operas again? What do the modern day Learned Hands think of insurance as a tax? Oh there was a recent decision. Help is on the way for my overtaxed feeble mind.

The Supreme Court ObamaCare ruling was a 5-4 ruling to uphold the Affordable Care Act. The final Ruling on ObamaCare had a few implications ranging from ObamaCare being defined as a tax and not a mandate and a choice for States to Opt-Out of Medicaid Expansion. At last, I can rest .........an insurance payment is defined as a tax. :D

carolinaman
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Re: MAGI for Medicare Rates

Post by carolinaman » Mon Aug 11, 2014 7:04 am

I exceeded the MAGI threshold when I retired. When I received notice from SS that my Medicare B premium was being increased, I contacted them. When they discovered this was a 1 year occurrence and that I would not exceed MAGI the following year, they reset my premium to the standard rate. This should work for you if it is only a 1 year event. I suggest you contact SS to find out.

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Re: MAGI for Medicare Rates

Post by sscritic » Mon Aug 11, 2014 7:35 am

SGM wrote: Oh dear, I sympathize with your having trouble with cognitive dissonance again. It is so very uncomfortable to hold two opposite ideas as having some truth. Why do they call it FICA taxes when they take it out of paychecks? Is Medicare defined as both an insurance and a tax? How can my little mind get around this weighty question? What is a body to do? Do I have to retreat to watching day time soap operas again? What do the modern day Learned Hands think of insurance as a tax? Oh there was a recent decision. Help is on the way for my overtaxed feeble mind.

The Supreme Court ObamaCare ruling was a 5-4 ruling to uphold the Affordable Care Act. The final Ruling on ObamaCare had a few implications ranging from ObamaCare being defined as a tax and not a mandate and a choice for States to Opt-Out of Medicaid Expansion. At last, I can rest .........an insurance payment is defined as a tax. :D
Medicare tax is charged against earned income when you are working. That tax pays for part of the healthcare of the elderly and disabled. You pay even if you are not using the service. That is a tax.

When you are receiving healthcare as an elderly or disabled person, you pay a premium for the insurance that covers the healthcare you are receiving. That is not a tax; that is an insurance premium.

Both are part of the Medicare system. One part is a tax; one part is insurance.

Read the Supreme Court decision again. The "tax" is not paid to receive services. In fact, it is exactly the opposite: the tax is for not receiving services. You have a choice: pay the premiums or pay the tax. Even the Supreme Court knows the difference.

sscritic
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Re: MAGI for Medicare Rates

Post by sscritic » Mon Aug 11, 2014 7:38 am

johnep wrote:I exceeded the MAGI threshold when I retired. When I received notice from SS that my Medicare B premium was being increased, I contacted them. When they discovered this was a 1 year occurrence and that I would not exceed MAGI the following year, they reset my premium to the standard rate. This should work for you if it is only a 1 year event. I suggest you contact SS to find out.
It depends on what the one year event is. Death is one. Divorce is another. See form SSA-44.

618744
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Re: MAGI for Medicare Rates

Post by 618744 » Mon Aug 11, 2014 9:37 am

Professor Emeritus wrote: Now IEP stands for Initial Enrollment Period which for a person with a disability begins 2 years after they start receiving disability benefits. However if you don't sign up, your 10% penalty begins.

http://www.medicare.gov/your-medicare-c ... nalty.html
Part B late enrollment penalty

If you don't sign up for Part B when you're first eligible or if you drop Part B and then get it later, you may have to pay a late enrollment penalty for as long as you have Medicare. Your monthly premium for Part B may go up 10% for each full 12-month period that you could have had Part B, but didn't sign up for it.


Now DW is 62 and was found to be disabled when she was just 60. At 62 she was "eligible" for Medicare.
However IRMAA made medicare very expensive for her and she was already fully insured through the Federal employee health benefit program.
But if you read the above language there is a 10% penalty for not signing up , a penalty that was starting for her at age 62
If she was covered under her Federal employee insurance, would she not then be eligible to enroll in part B under the "special enrollment period" without penalty? http://www.medicare.gov/sign-up-change- ... and-b.html

SGM
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Re: MAGI for Medicare Rates

Post by SGM » Mon Aug 11, 2014 9:40 am

Sscritic is saying that this country penalizes taxpayers who legally receive a higher income by raising the rate of Medicare payments. How progressive.

I will stubbornly and foolishly choose to consider it a tax and adjust my income as best I can to avoid an extra tax. I think the MAGI limits start at 214,000 and go up again at 320,000 and then 428,000. Exceeding these limits increase the Medicare payments for the following year. It is a 2 year look back. One can petition to have it changed if there has been a significant change in your income, for example, you retired.

sscritic
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Re: MAGI for Medicare Rates

Post by sscritic » Mon Aug 11, 2014 11:17 pm

SGM wrote: I think the MAGI limits start at 214,000 and go up again at 320,000 and then 428,000. Exceeding these limits increase the Medicare payments for the following year. It is a 2 year look back. One can petition to have it changed if there has been a significant change in your income, for example, you retired.
IRMAA starts at $85,001. At that level you could be paying a premium of $272.70 a month rather than $104.90. I am not sure what it the it is that you think can be changed, but what you can change is the year that they use the income from to determine your premium. Changing the year may or may not change the premium (of course, if the premium didn't change with the change in the year, why would you bother to ask them to change the year?).

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Re: MAGI for Medicare Rates

Post by Levett » Tue Aug 12, 2014 6:39 am

"Sscritic is saying that this country penalizes taxpayers who legally receive a higher income by raising the rate of Medicare payments. How progressive."

Is that what Sscritic said? I'm sure he will confirm or deny or expand. :wink:

The missus and I pay IRMAA. We don't feel abused. We feel insured and assured and grateful for the care we have received.

Lev

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Re: MAGI for Medicare Rates

Post by sscritic » Tue Aug 12, 2014 8:44 am

Actually, I would like to expand on Judge Hand by paraphrasing him: “Any one may so arrange his affairs that his costs shall be as low as possible" where costs can include both insurance premiums and taxes.

My auto insurance company offers me a discount if I take a senior drivers safety course. Judge Hand tells me the choice is mine. If I want to do a Roth conversion of $300k, I can do it all in one year or do $100k a year for three years. Judge Hand tells me the choice is mine, and that I should consider both the cost in taxes and the cost in insurance premiums over the next five years (a conversion in year three might increase my insurance premiums in year five - not "the following year"). Similarly, Alan S. and others remind us that we can take our first RMD in the year it is for, in the next year, or part in each. Judge Hand says the choice is mine, and that I should consider the cost in taxes and the cost in insurance premiums over the next four years (the RMD in year two could increase by insurance premiums in year four).

So I say arrange away. Do what's best for you.

Actually, you could just keep your own private insurance and never join medicare; that way, you don't even have to pay the low premium of $104.90 each month. Judge Hand would approve of your choice not to participate, if you so choose.

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Re: MAGI for Medicare Rates

Post by Professor Emeritus » Tue Aug 12, 2014 9:00 am

618744 wrote:
Professor Emeritus wrote: Now IEP stands for Initial Enrollment Period which for a person with a disability begins 2 years after they start receiving disability benefits. However if you don't sign up, your 10% penalty begins.

http://www.medicare.gov/your-medicare-c ... nalty.html
Part B late enrollment penalty

If you don't sign up for Part B when you're first eligible or if you drop Part B and then get it later, you may have to pay a late enrollment penalty for as long as you have Medicare. Your monthly premium for Part B may go up 10% for each full 12-month period that you could have had Part B, but didn't sign up for it.


Now DW is 62 and was found to be disabled when she was just 60. At 62 she was "eligible" for Medicare.
However IRMAA made medicare very expensive for her and she was already fully insured through the Federal employee health benefit program.
But if you read the above language there is a 10% penalty for not signing up , a penalty that was starting for her at age 62



If she was covered under her Federal employee insurance, would she not then be eligible to enroll in part B under the "special enrollment period" without penalty? http://www.medicare.gov/sign-up-change- ... and-b.html


No because although she is covered by FEHBP, she is not an employee. she is an annuitant.

If you're covered under a group health plan based on current employment, you have a Special Enrollment Period to sign up for Part A and/or Part B any time as long as you or your spouse (or family member if you're disabled) is working, and you're covered by a group health plan through the employer or union based on that work.

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Re: MAGI for Medicare Rates

Post by carolinaman » Tue Aug 12, 2014 12:03 pm

sscritic wrote:
johnep wrote:I exceeded the MAGI threshold when I retired. When I received notice from SS that my Medicare B premium was being increased, I contacted them. When they discovered this was a 1 year occurrence and that I would not exceed MAGI the following year, they reset my premium to the standard rate. This should work for you if it is only a 1 year event. I suggest you contact SS to find out.
It depends on what the one year event is. Death is one. Divorce is another. See form SSA-44.
I received payout of accrued sick leave and vacation upon retirement which was about 6 months of pay. I retired at the end of 2010 so this really pushed me over the MAGI limit. Since this was clearly a 1-time event they agreed to reset my Medicare B rate for the next year. I think I had to write a letter explaining the situation.

sscritic
Posts: 21858
Joined: Thu Sep 06, 2007 8:36 am

Re: MAGI for Medicare Rates

Post by sscritic » Tue Aug 12, 2014 12:18 pm

johnep wrote:
sscritic wrote: See form SSA-44.
I received payout of accrued sick leave and vacation upon retirement which was about 6 months of pay. I retired at the end of 2010 so this really pushed me over the MAGI limit. Since this was clearly a 1-time event they agreed to reset my Medicare B rate for the next year. I think I had to write a letter explaining the situation.
I am not disputing the result, just a few of the details don't jibe with what I know. You first said you called them. I wrote that I thought you needed a form. You now write that you wrote a letter. I still think you would have filled out a form, but I could be wrong.

As far as I know, they don't "remove" your extra premium, they used a different year (a non-exceptional year, if you will) to determine your premium. If the income in the non-exceptional year is at a lower level, it could eliminate your IRMAA.

Here are some of the reasons to use a different year:
Marriage
You entered into a legal marriage.

Divorce/Annulment
Your legal marriage ended, and you will not file a joint return with your spouse for the year.

Death of Your Spouse
Your spouse died.

Work Stoppage or Reduction
You or your spouse stopped working or reduced the hours that you work.
Your reason was work stoppage or reduction. It wasn't that you got a big bonus one year, it was that you were not working the next, so they allowed you to use the year after the year of the big bonus rather than the year of the big bonus. That's just my guess from what I know. If your income was high in 2010, that would have put you into IRMAA for 2012. By switching to using 2011 when you weren't working as the basis for your 2012 premiums, you eliminated your IRMAA.

I filed a SSA-44 based on divorce. It took a while, but was finally approved and I received a return of premiums for the IRMAA I had paid (I actually still owned IRMAA, but I went down from level 2 to level 1).

It may be possible that they took the information needed for the SSA-44 over the phone and started filling it out for you. They then asked for a letter of explanation that they attached to the form that they had filled out for you. This is another guess on my part as to how it might have happened.

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GerryL
Posts: 2311
Joined: Fri Sep 20, 2013 11:40 pm

Re: MAGI for Medicare Rates

Post by GerryL » Tue Aug 12, 2014 2:06 pm

sscritic wrote:
johnep wrote:
sscritic wrote: See form SSA-44.
I received payout of accrued sick leave and vacation upon retirement which was about 6 months of pay. I retired at the end of 2010 so this really pushed me over the MAGI limit. Since this was clearly a 1-time event they agreed to reset my Medicare B rate for the next year. I think I had to write a letter explaining the situation.
I am not disputing the result, just a few of the details don't jibe with what I know. You first said you called them. I wrote that I thought you needed a form. You now write that you wrote a letter. I still think you would have filled out a form, but I could be wrong.

As far as I know, they don't "remove" your extra premium, they used a different year (a non-exceptional year, if you will) to determine your premium. If the income in the non-exceptional year is at a lower level, it could eliminate your IRMAA.

Here are some of the reasons to use a different year:
Marriage
You entered into a legal marriage.

Divorce/Annulment
Your legal marriage ended, and you will not file a joint return with your spouse for the year.

Death of Your Spouse
Your spouse died.

Work Stoppage or Reduction
You or your spouse stopped working or reduced the hours that you work.
Your reason was work stoppage or reduction. It wasn't that you got a big bonus one year, it was that you were not working the next, so they allowed you to use the year after the year of the big bonus rather than the year of the big bonus. That's just my guess from what I know. If your income was high in 2010, that would have put you into IRMAA for 2012. By switching to using 2011 when you weren't working as the basis for your 2012 premiums, you eliminated your IRMAA.

I filed a SSA-44 based on divorce. It took a while, but was finally approved and I received a return of premiums for the IRMAA I had paid (I actually still owned IRMAA, but I went down from level 2 to level 1).

It may be possible that they took the information needed for the SSA-44 over the phone and started filling it out for you. They then asked for a letter of explanation that they attached to the form that they had filled out for you. This is another guess on my part as to how it might have happened.
I got the letter about having to pay the IRMAA. I just retired and applied for Medicare. My income this year will be even higher than last because of the severance package I got. Following instructions in the letter, I called the SS Office to ask about how to appeal the IRMAA decision given my change of status (retired/not working). The person I finally got on the phone said there is nothing I can do about it until like 3 years our because they ONLY look at 2-year old tax forms from IRS. She had no explanation for why SS told me to call about appealing because of a change of status.

I intend to keep following this up. Perhaps another phone call to SS will reach someone with a different, more helpful response. Any advice about how to proceed would be welcome.

sscritic
Posts: 21858
Joined: Thu Sep 06, 2007 8:36 am

Re: MAGI for Medicare Rates

Post by sscritic » Tue Aug 12, 2014 3:14 pm

Download SSA-44. Read it carefully. See if it applies to you.

http://www.socialsecurity.gov/forms/ssa-44.pdf

Note the gone down, not gone up.
If you had a major life-changing event and your income has gone down, you may use this form to request a reduction in your income-related monthly adjustment amount.
This is the 12/2013 version using your income from 2012 to determine your premiums for 2014.

If I understand you, you are paying IRMAA for 2014 based on your income in 2012. Your income in 2014 is even higher than your income in 2012. Where is the lower income? If your income is lower in 2015 than in 2014, when 2016 rolls around, you can request that they use 2015 rather than 2014 because of your change in employment.

You don't get approved because your income is going down at some point in the future; you will only get approved if your income already went down in the past. The only issue is whether to use a higher past income or a lower past income in determining your premium. Future incomes are irrelevant.

ralph124cf
Posts: 2250
Joined: Tue Apr 01, 2014 11:41 am

Re: MAGI for Medicare Rates

Post by ralph124cf » Tue Aug 12, 2014 3:59 pm

When I retired at age 65 I applied for Medicare. My income put me into the second tier of IRMAA, so I appealed based on my retirement. I was successful in getting the IRMAA reduced from second tier to first tier, for both my wife and myself.

For those who are not familiar with the numbers, for a married couple with a MAGI of $170K or greater, the addition is $42/mo. for Part B, and $12.10 for Part D. So a total addition of $649.20 per person, or $1,298.40 for a couple for the year.

If the couple has MAGI of over $214K, the adjustment is $104.90/mo. for Part B and $31.10/mo. for Part D. Total additional premium of $1,632 per person, or $3,264 for a couple for the year.

Look at the difference between a MAGI of $213,500 and $214,500. You have additional income of $1000, but your Medicare payments went up by ($3,264 - $1,298) = $1,966 because of that extra income.

Ralph

carolinaman
Posts: 3693
Joined: Wed Dec 28, 2011 9:56 am
Location: North Carolina

Re: MAGI for Medicare Rates

Post by carolinaman » Tue Aug 12, 2014 4:14 pm

sscritic wrote:
johnep wrote:
sscritic wrote: See form SSA-44.
I received payout of accrued sick leave and vacation upon retirement which was about 6 months of pay. I retired at the end of 2010 so this really pushed me over the MAGI limit. Since this was clearly a 1-time event they agreed to reset my Medicare B rate for the next year. I think I had to write a letter explaining the situation.
I am not disputing the result, just a few of the details don't jibe with what I know. You first said you called them. I wrote that I thought you needed a form. You now write that you wrote a letter. I still think you would have filled out a form, but I could be wrong.

As far as I know, they don't "remove" your extra premium, they used a different year (a non-exceptional year, if you will) to determine your premium. If the income in the non-exceptional year is at a lower level, it could eliminate your IRMAA.

Here are some of the reasons to use a different year:
Marriage
You entered into a legal marriage.

Divorce/Annulment
Your legal marriage ended, and you will not file a joint return with your spouse for the year.

Death of Your Spouse
Your spouse died.

Work Stoppage or Reduction
You or your spouse stopped working or reduced the hours that you work.
Your reason was work stoppage or reduction. It wasn't that you got a big bonus one year, it was that you were not working the next, so they allowed you to use the year after the year of the big bonus rather than the year of the big bonus. That's just my guess from what I know. If your income was high in 2010, that would have put you into IRMAA for 2012. By switching to using 2011 when you weren't working as the basis for your 2012 premiums, you eliminated your IRMAA.

I filed a SSA-44 based on divorce. It took a while, but was finally approved and I received a return of premiums for the IRMAA I had paid (I actually still owned IRMAA, but I went down from level 2 to level 1).

It may be possible that they took the information needed for the SSA-44 over the phone and started filling it out for you. They then asked for a letter of explanation that they attached to the form that they had filled out for you. This is another guess on my part as to how it might have happened.
You got me curious so I checked my SS files. You are correct. My life changing event was stopping work at end of 2010 which, in conjunction with my MAGI going down in 2011, was the basis they used. I sent them a copy of documentation from employer confirming my retirement. I had a conf call with SS on 12/22/11 and this was resolved once I sent proof of my retirement. I know I never did a SSA-44 so they must have done it for me. It was actually far easier to do than I expected.

The sick leave/vacation payout did push me over the limit in 2010 but I had forgotten that they actually reduced my Part B premium because I had stopped working. Thanks

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