IRMAA confusion

[Fisher]

I have come to realize that after all these years I might not have a sufficient grasp on how IRMAA actually works.

Using a single person in 2023, the 1st IRMAA threshold is at $97,001. I also know that IRMAA is calculated from MAGI 2 years in the past. So far so good. I've always thought that in this example if an individual's 2023 MAGI was over $97k then IRMAA would be triggered and the Part B surcharge would be based on that person's income from 2021.

But what happens if the 2023 income is $50k and the 2021 income was $100k? Would there still be an IRMAA trigger? Because if that's the case then SS would have to be checking every single Medicare beneficiary's MAGI from 2 years ago, every single year. And that does not seem feasible.

And then reverse that - if a person has $100k MAGI in 2023 but only $50k in 2021, how would that play out?

 

[Midlevel]

They know everyone's yearly income so it's easy for them to tell clients what their Part B premium would be each year. If income is 50K in 2023 then come 2025 they would go back to paying what most people do. If income is 100K in 2023 then they would pay elevated premiums come 2025. Happens alot when someone sells farmland and gets hit for 1 year with high Part B premiums and then it drops back down.

 

[Chazm]

They definitely reevaluate every year. Usually in late Nov or December.

 

[Fisher]

Ok, thanks guys. I certainly did not know about the yearly checking.

Follow-up question - So the 2023 $97k figure actually applies to the 2021 MAGI? In other words, if a person's 2021 income was $96k they're free of IRMAA but if it was $98k (in 2021) they will get dinged?

If so, I've been explaining this all wrong.

 

[Chazm]

Ok, thanks guys. I certainly did not know about the yearly checking.

Follow-up question - So the 2023 $97k figure actually applies to the 2021 MAGI? In other words, if a person's 2021 income was $96k they're free of IRMAA but if it was $98k (in 2021) they will get dinged?

If so, I've been explaining this all wrong.

That is Correct.

 

[Fisher]

Thanks again, both of you. I'm smarter now.

 

[DS4]

…….. SS would have to be checking every single Medicare beneficiary's MAGI from 2 years ago, every single year. And that does not seem feasible.

No one is physically checking incomes. All done by software. Yes, it is feasible.