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What is the income used for IRMAA

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In retirement, for your health coverage there is no an option, there is only Medicare, especially if you are 65 or older and no longer have health coverage through an employer or spouse’s employer.

The biggest reason as to why there is no option is that due to federal regulations in order to receive your Social Security benefit you must accept Medicare Part A when eligible.

Failure to enroll into Medicare leads to the immediate forfeiture of all current, future and even past Social Security benefits.

Thankfully, Medicare is a fantastic program for those who utilize it correctly, but there are costs to it, and these costs are based solely on your income costs through Medicare’s Income Related Monthly Adjustment Amount (IRMAA).

IRMAA, simply, is a surcharge on top of any current year’s Medicare Part B and Part D premiums for those of who earn “too much” income.

The income that is used for IRMAA is defined by Social Security as being:

“Adjusted gross income plus any tax-exempt interest” or everything on lines 2a and 8b of the IRS form 1040.

Some examples of income used for Medicare’s IRMAA income are:
Social Security benefitsDistributions from Tradational 401(k)’s
Wages/ InterestDistributions from Tradational IRA’s
Pension and Rental IncomeDistributions from Tradational SEP IRA’s
Capital GainsDistributions from Tradational 403(b)’s
Dividends (including municipalities)Distributions from Qualified/Tax Deferred Investments
IRMAA Income
What does NOT count as IRMAA income:
Roth AccountsLife Insurance
Health Savings Accounts (HSA’s) Home Equity (Primary Residency)
401(h) PlansCertain Annuities
Does not count towards IRMAA
Why you need to plan for IRMAA:

1. The obvious reason: to be able to control your health coverage costs in throughout retirement.

2. IRMAA surcharges, as well as the bulk of Medicare will reduce your Social Security benefits on a monthly basis

Ultimately, the higher your Medicare premiums, especially due to IRMAA, the lower your Social Security benefit will be.

Your health just happens to be your greatest asset, the time to start planning for it is today.

For a free report detailing how your savings will impact your only mandatory expense in retirement please contact us at:

Phone: (208) 231-7080 or by email at [email protected]

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