Broker Check

IRMAA Is Not Your Great Aunt

| June 15, 2023

Sadly, most people who are in the distribution phase of their financial lives find out about IRMAA the hard way.  Income-Related Monthly Adjustment Amount is a sliding scale of set statutory percentage-based tables used to adjust Medicare Part B and Part D prescription drug coverage MONTHLY premiums.  This is based on your Modified Adjusted Gross Income (MAGI).

So here is an example, your MAGI (married, filing jointly) was more than $194,000 but less than or equal to $246,000 your part B premium would be $230.80 per month.  But if you exceeded that amount ($246,000) by just $1, your premium would now be $329.70 per month.  That $1 would cost you an additional $1186.80 on your Part B for exceeding $246,000.  What makes this even harder is when you start taking your Required Minimum Distributions (RMD’s), this also gets added to your MAGI!

This is why the order of distributions in your investment accounts are critical, not just in saving on Medicare expenses, but also in regular taxes as well.  Now that RMD’s have been extended beyond age 72 to age 73 and age 75, we are seeing more people getting moved into higher tax brackets when those distributions take place.  This is not a period in your life when you want to pay more taxes!

Having a solid financial/retirement plan and working with an advisor who understands how to mitigate this risk every year and can see the cash flow projections over several or more years will help reduce not only your taxes but your Medicare expenses as well.  If you would like to find out more about how this can be of benefit to you, call us at 256-417-4870.



Mike Mickels is the President of CochranMickels Retirement Specialists and an avid sporting clay competitor. CochranMickels Retirement Specialists provides personalized planning and investment services to individuals approaching and in retirement. They also provide retirement and benefits training to Federal employees. Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc, a Registered Investment Advisor. CochranMickels and Cambridge are not affiliated.