Close this search box.

Understanding Your Medicare IRMAA Calculator Report

Play Video

Now that we have your report, let’s step through what you are looking at and its significance to you.
On the first page, you will likely see a large red number. In technical terms, we would say that this number is an estimation of your future federally mandated Medicare liability and surcharges.

In normal English, this number is a close estimation of how much you’ll pay for Medicare coverage from age 65 to 90. It is derived from the data that you provided. It should be noted that this number represents the cost of your monthly premium and any additional surcharges you may be subject to. It also accounts for Medicare supplements if you chose to include them. It does not account for non-Medicare covered treatments or visits. These kinds of medical expenses could raise this number.

Now that you have an estimation of your future Medicare costs, the question becomes, “what to do with this number?” At this point, you have two options, plan to pay that number, or reorganize your assets to reduce this number. Simply growing your assets will only make this number bigger.
Obviously, the ideal situation is to reduce this number. But let’s take a moment to understand why it is so important to reduce this number.

Social Security is used to pay your Medicare premiums. Medicare premiums have been growing at a faster rate than Social Security for several years. This means as you progress through your retirement, more of your Social Security money will go to Medicare and less will go to your retirement. Plus, the government taxes you on the portion of Social Security that is used to pay your Medicare Premiums.

In some situations, Medicare premiums will eat up all the social security money and the individual will still be liable to pay taxes on the social security income consumed by Medicare premiums.

You may be saying, “The government wouldn’t do that to us.” or, “This is a glitch that the government will fix.”
While that is everyone’s hope, this has been happening since 1984. The reality is the more money the Government brings in the happier all politicians are. Plus, the Social Security program has been struggling to maintain funding. By reducing your social security income, Social Security won’t go broke as fast.

The red number you see on the first page of your report represents a serious finical burden. Easing that burden is of upmost importance. Your advisor is ready to show you solutions to ease this burden. We encourage you to work closely with them.

That big red number may be scary, but together we can diminish it and make sure your retirement is a happy one.