How to see an IRMAA surcharge coming
The income-related surcharge is set from a tax return two years old. Which means you can usually see it coming — and sometimes appeal it.
By Meg Quillen, Cedar Landing Benefits
IRMAA is the surcharge added to Part B and Part D premiums for higher-income households. It surprises people because of its timing: the premium you pay this year is set by the tax return you filed two years ago.
That lag is annoying, but it is also useful. It means a surcharge is visible long before it arrives.
It is a cliff, not a slope
The brackets are thresholds. Exceed one by a single dollar and the whole surcharge for that tier applies for the year. There is no tapering, which makes income that sits just below a threshold unusually valuable to protect.
Both Part B and Part D are affected, and both are typically deducted from your Social Security payment, so the effect lands on the deposit rather than as a bill.
The events that trigger it
In our experience the culprits are rarely salaries. They are one-off events: selling a property, converting a retirement account, exercising options, taking a large distribution, or receiving a redundancy payment. Each can push a single year's income into a bracket the household will never see again.
Planning the timing of those events — across two tax years rather than one, where possible — is one of the few places ordinary arithmetic saves real money in retirement.
When you can appeal
If the income that triggered the surcharge came from a life-changing event — retirement, the death of a spouse, divorce, the loss of a pension or the end of a business — you can ask for the determination to be reconsidered using current income rather than the old return.
The form is short, the evidence is documentary, and the success rate for genuine cases is good. The one thing that does not work is waiting: the surcharge continues while you do nothing.
An estimate for planning, not a quote. Medicare and the Marketplace set your real figures.
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