Some 4.7 million higher-income seniors pay additional premium surcharges for their Medicare coverage according to the American Association for Medicare Supplement Insurance.
“In 2007 Medicare started imposing the Income Related Monthly Adjustment Amount (IRMAA) surcharge,” explains Jesse Slome, director of the organization. “A senior couple with higher incomes can pay as much as $5,000 more annually to Uncle Sam for their Medicare coverage. It is something to think about before filing your 2022 federal income taxes.”
According to Slome, the majority of seniors impacted by the Medicare premium surcharge are between ages 65 and 80. “For 2023, the IRMAA monthly surcharge for Medicare Plan B ranges from $230.80 to as much as $560.50,” the Medicare insurance expert shares.
Taxes filed for 2022 will determine the IRMAA for Medicare surcharge assessed in 2024. “The threshold levels will not be announced until closer to then,” Slome acknowledges. “That is well after your 2022 taxes are due. And while most tax maneuvers need to have been made prior to the end of the 2022 tax year, there still can be a few ways to reduce or eliminate any surcharge.”
The Association director recommends that seniors should compare their Adjusted Gross Income (AGI) level with potential IRMAA penalty levels. “This could be especially beneficial if you are reporting some earned income from employment or self-employment,” Slome notes. The AGI number is shown on Line 11 of the 2022 IRS 1040 form.
Each year the IRMAA levels are increased based on the rate of inflation. The American Association for Medicare Supplement Insurance (AAMSI) director projected suggested 2024 IRMAA Medicare levels by using current numbers increased by 6 percent. The levels and additional pertinent information can be found online at https://medicaresupp.org/information/medicare-news/2022-tax-tip/.
“If your 2022 AGI is close to or just slightly over one of the projected threshold numbers, it can really pay to discuss options with a tax professional,” Slome suggests. “For those with salary or self-employment income, a last-minute IRA or SEP-IRA contribution may yield that magical double benefit; paying less for Medicare and adding to future retirement savings.”
The American Association for Medicare Supplement Insurance advocates for the importance of consumer awareness and supports insurance and financial professionals who market Medicare insurance solutions.