2018 Budget changes Medicare’s IRMAA brackets
With the Bipartisan Budget Act of 2018 passing through Congress there will be some new adjustments specifically for Medicare as the Budget changes Medicare’s IRMAA brackets (Income Related Monthly Adjustment Amount) starting 2019.
IRMAA applies to people with higher incomes who are enrolled in Part B or covered under a Medicare Part D Prescription Drug Plan. For those who enter Medicare’s IRMAA there will be a surcharge on top of their monthly Medicare Part B and Part D premiums.
Note: Social Security benefits pay for these surcharges automatically. Also, once a retiree enters an IRMAA bracket they are disqualified from the Hold Harmless Act provision. Meaning, there is a high probability that those enter Medicare’s IRMAA will see a reduction in Social Security benefits that year.
The changes are:
- Those earning $5000,000 or more in income will be in a new IRMAA bracket. The brackets, according to the Budget, in 2019 are:
Individual MAGI Part B Premiums Part D Premiums Under $85,000 $134.00 Premium $85,000 – $107,000 $187.50 $13.30 $107,000 – $133,500 $267.90 $34.20 $133,500 – $160,000 $348.30 $55.20 $160,000 – $500,000 $428.60 $76.20 $500,000 and above* $455.60 $97.10
*Medicare Board of Trustees, as of 2017, is reporting that the premiums will remain constant from 2018 to 2019 but, will inflate at rate of over 5 percent for Part B and over 7 percent for Part D each year through 2026.
- The Consumer Price index for Urban Consumers (CPIU) will be used, starting in 2028, to determine the income brackets of Medicare’s IRMAA.
Starting in 2028, each August, there will be a 2-year look back to determine the inflation rate for the upcoming year (e.g. 2028’s surcharges for Medicare’s IRMAA brackets will use the August 2026 CPI-U data).
If the CPI-U increases, then the IRMAA brackets will adjust to that year’s rate of inflation.
There are also numerous changes to the overall Medicare program, although, from an investors point of view, when their Social Security benefits and the costs associated to their health coverage are on the line these will be the biggest.
The time to design a financial plan that will generate income in retirement that will not be recognized by Medicare’s IRMAA is now.
Dan McGrath is considered to be a leading authority on the subject of how health related costs in retirement will affect both retirement as well as the overall the financial planning process. Mr. McGrath has also authored the bestselling retirement planning book “What you don’t know about retirement will hurt you” as well as “Medicare: A Practical Guide to Understanding Your Health Coverage in Retirement”. http://www.jesterfinancial.com