Reducing Medicare premiums

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bob1234
Posts: 35
Joined: Fri Jan 20, 2012 2:09 am

Reducing Medicare premiums

Post by bob1234 » Fri Dec 22, 2017 1:32 pm

Hello,

Edit: My questions may have been too specific, so just wanted to know a general question. Can an estimate of the current tax year (this will be in 2018) be used to reduce the IRMAA premiums for the same year (2018) if there is a qualifying event?

Here's the original full post:

I am a little confused by the SSA-44 form and was hoping to get some clarification. This is on behalf of my mom, who is 66 and widowed. She just started Medicare on 6/2017 and had to pay a high income surcharge, since her 2015 MAGI was around 165k. Her 2016 MAGI is also around 165k and 2017 MAGI will be anywhere from 170k-190k, depending on if we do a Roth conversion. She retired on 12/2016, but received an early retirement package, with wages through 6/2017. The 2018 MAGI should be just social security + dividends/cap gains, which is hard to estimate since she has some tax-inefficient funds, but I would estimate 2018 MAGI around 100k based on last couple years.

1. The SSA-44 form seemed to imply that an estimate of the 2018 MAGI can be used for the 2018 IRMAA determination. Is that correct?

2. For Step 2, although wages were reduced in 2017, the overall AGI will be higher in 2017 due to investment income + SS + lack of 401k contribution. So, I'm thinking that tax year 2018 should be used for Step 2, although they are asking for an actual AGI here.

3. Also, not sure if I should put 12/2016 (date of retirement) or 6/2017 (date when wages stopped) for date of life-changing date.

4. I assume when computing MAGI, the value of the social security benefits includes the original amount, not the amount after taking out the Medicare premiums. Is that correct?

Thanks in advance!
Last edited by bob1234 on Tue Dec 26, 2017 12:10 pm, edited 1 time in total.

cadreamer2015
Posts: 690
Joined: Wed Apr 08, 2015 1:52 pm
Location: North County San Diego

Re: Form SSA-44 for reducing Medicare premiums

Post by cadreamer2015 » Fri Dec 22, 2017 1:50 pm

Unless you think her 2017 and 2018 MAGI will be below $160,000 I don't think there is any point.
De gustibus non est disputandum

bob1234
Posts: 35
Joined: Fri Jan 20, 2012 2:09 am

Re: Form SSA-44 for reducing Medicare premiums

Post by bob1234 » Sat Dec 23, 2017 1:52 pm

I initially thought the same thing, that they would only do a 1 year lookback, but the form seemed to imply that they could look at the current year estimate, similar to how the ACA does it.

This is from the form: https://www.ssa.gov/forms/ssa-44.pdf

Choose this year (the "premium year") - if your modified adjusted gross income is lower this year than last year. For example, if you request that we adjust your income-related premium for 2018, use your estimate of your 2017 MAGI if:

1. Your income was not reduced until 2018; or
2. Your income was reduced in 2017, but will be lower in 2018.

#1 seems to apply in our case.

bob1234
Posts: 35
Joined: Fri Jan 20, 2012 2:09 am

Re: Reducing Medicare premiums

Post by bob1234 » Tue Dec 26, 2017 4:47 pm

My questions may have been too specific, so just wanted to know a general question. Can an estimate of the current tax year (this will be in 2018) be used to reduce the IRMAA premiums for the same year (2018) if there is a qualifying event?

This will help with Roth IRA conversion planning. Thanks!

mbres60
Posts: 850
Joined: Tue Jul 03, 2007 1:47 pm

Re: Reducing Medicare premiums

Post by mbres60 » Tue Dec 26, 2017 5:29 pm

I don't think so because the qualifying event (her retirement) was 12/2016. Check with Medicare or SS to be sure. When I retired a few years ago (midyear) I received a lump sum payment. 18 months later when I applied for social security they wanted to impose the IRMAA on me because my MAGI that they were looking at was the year I retired. Because retirement was a qualifying event and that lump sum payment was just that year I got the approval not to be subject to IRMAA. This was all because they were looking at the year I retired.

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