IMPORTANT DISCLOSURE INFORMATION
The following presentation by New England Capital Financial Advisors, LLC (“NECFA”) is intended for general information purposes only. No portion of the presentation serves as the receipt of, or as a substitute for, personalized investment advice from NECFA or any other investment professional of your choosing. Please see additional important disclosure at the end of this penetration. A copy of NECFA’s current written disclosure Brochure discussing our advisory services and fees is available upon request or at www.newenglandcapital.com.
Beware of IRMAA
Hi, this is Chris Beale with New England Capital Financial Advisors, LLC with our latest video blog. I’m going to continue with the Social Security series of blogs that Ann Ocone started when she discussed the Social Security cost-of-living adjustment of 3.2% for 2024. Then Chris Lee’s blog talked about common questions concerning Social Security.
My blog will discuss IRMAA. I’m not talking about my lovely 95-year-old neighbor, but IRMAA as in Income Related Monthly Adjustment Amount.
By way of background, know that Medicare Part A typically covers hospital costs, Medicare Part B typically covers 80% of your doctor costs and Part D covers drug prescriptions. IRMAA is the Government’s way to reduce their cost of Medicare Part B –doctor costs, and after the Affordable Care Act or Obamacare was passed, IRMAA also applies to Medicare Part D that covers your drug prescriptions. My discussion will generally apply not to Medicare Advantage Plans, but only to traditional Medicare plans.
Most individuals will pay $174.70 per month for Part B (doctor cost) premiums in 2024. But as you can see in the table, high income earners can pay as much as $594 per month per person and premiums for Part D prescriptions can range from zero to $81 per month.
Normally, you will be notified of the premium costs when you enroll initially or leave your employment. Then you will be notified annually in November thereafter. IRMAA premiums are based upon your prior two years of income on your tax returns.
So, here’s where our planning comes into play. If you’ve worked the prior two years before enrolling in Medicare, but are now retired you can appeal IRMAA, and have your premiums reduced to reflect your current income.
There are typically eight life-changing events that are grounds for IRMAA appeals.
- Marriage
- Divorce
- Death of a spouse
- Work stoppage
- Work reduction
- Loss of an income producing property
- Loss of pension income
- Employer settlement payment.
IRMAA is also why we need to take Roth conversions into consideration and why we look for ways to keep capital gains low by our tax loss harvesting strategies, as Roth conversions and capital gains will increase income and possibly increase IRMAA premiums. Larger required minimum distributions can cause higher premiums, especially in the later years of our lives.
Finally, as an inflation reminder, as if you need another reminder, when President Lyndon Johnson signed the Medicare bill into law in 1965, the part B premium was three dollars a month. If you are only paying $174.70 per month that’s an annual increase of over 6% per year or twice the current inflation rate!
Call our offices if you have any questions and thank you very much.
IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by New England Capital Financial Advisors, LLC [“NECFA”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from NECFA. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. NECFA is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the NECFA’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.newenglandcapital.com. Please Note: NECFA does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to NECFA’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please Remember: If you are a NECFA client, please contact NECFA, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.