Tax Planning Ideas and Tax Updates

Medicare IRMAA in 2022

by Alli Thomas

Dec 15, 2021

Medicare Part B will see a 15% cost increase in 2022. This is one of the largest in the history of the program. Not only will premiums rise significantly, but the income-related surcharge known as IRMAA will increase in 2022 as well. 

Why Will Part B Premiums Increase? 

According to the Centers for Medicare and Medicaid Services (CMS), COVID-related price hikes and a higher rate of medical care usage have pushed up Part B premiums.  

Another reason is related to potential administration of a new Alzheimer’s medication called Aduhelm. It has a price tag of $56,000 per year and if it were covered by Medicare, could significantly increase program spending.  

What about IRMAA? 

High-income beneficiaries, a status determined by 2020 federal tax filings, will also have to pay higher surcharges for Part B.   

Modified adjusted gross income in 2020 of $91,000 or higher (for single filers) or $182,000 or higher (for married filers) will result in a Part B surcharge between $68 to $408 per month in addition to the regular Part B premium (see below chart). 

2020 Single Filer 

 

2020 Married Filing Jointly

 

2020 Married Filing Single

 

2022 Part B Premium + IRMAA

 

$91,000 and less

 

$182,000 and less 

 

$91,000 and less 

 

$170.10 

 

$91,000 – $114,000 

 

$182,000 – $228,000 

 

N/A 

 

$238.10 

 

$114,001 – $142,000 

 

$228,001 – $284,000 

 

N/A 

 

$340.20 

 

$142,001 – $170,000 

 

$284,001 – $340,000 

 

N/A 

 

$442.30 

 

$170,001 – $500,000 

 

$340,001 – $750,000 

 

$91,001 – $409,000 

 

$544.30 

 

$500,001 + 

 

$750,001 + 

 

$409,001 + 

 

$578.30 

 

Part D (prescription drug coverage) also penalizes high-income beneficiaries. The IRMAA surcharge on Part D can range from about $12 to more than $75 per month in addition to the standard Part D premium. 

Strategies to Avoid IRMA

  • If you’re planning on doing a Roth IRA conversion, plan it carefully, as it will increase your taxable income. 
  • If you invest in municipal bonds (which can be a great source of tax-exempt income), be aware that that interest can affect your Medicare premiums 
  • If you are a higher-income retiree and have had a life-changing event, make sure to notify Social Security by filing an IRMAA appeal. 
  • If you plan to sell any appreciated assets (including real estate), know what your options are to minimize your taxable income. 
  • Consider opening a Medicare Savings Account (MSA) if you meet eligibility requirements.
  • Understand how taking annual required minimum distributions (RMDs) from your retirement accounts might affect your taxable income.
  • Consider making a qualified charitable donation (QCD) to reduce your tax liability.  

Read more: Three Ways to Reduce Your Income-Related Monthly Adjustment Amount (IRMAA) for Medicare Part B 

Looking for more ideas to avoid paying IRMAA? Click here to schedule a free, no-obligation consultation and review of your financial plan using our Results In Advance Planning method with one of our advisors.

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Alli Thomas

Alli Thomas has worked in the financial services industry for nearly 20 years, with a focus on retirement-related investing. She began her career as a FINRA-licensed participant-services call-center associate at Vanguard, and then moved to Principal Financial Group, where she worked closely with employers, assisting with retirement plan set-up and design, selecting appropriate plan investment offerings, and maximizing employee participation through targeted education campaigns and enrollment meetings. Alli has also worked as a qualified 401(k) administrator and registered investment advisor for several small investment firms. She now writes about all things investment- and finance-related, leveraging her extensive experience and passion for retirement planning to help investors make well-informed financial decisions.

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