TAX PLANNING: Let’s say you are single and have $45,000 in Social Security, $35,000 in IRA distributions and $15,000 in interest and dividends in 2021. That brings you to $95,000 in MAGI, which is below the $97,000 threshold where they increase your premiums. If you sold a stock for a $2,001 gain, that would bring you to $97,001 in MAGI and your monthly premium would jump by $66 per month. Perhaps it would be wise to wait and sell that stock in 2022.
The only problem is, Medicare doesn’t announce next year’s premium parameters until the fall, which usually is after you’ve filed your previous year tax returns. What to do?
Well here we are near the end of 2023, which will be used to establish 2025 Part B premiums. The best you can do is just use the 2021 parameters and plan accordingly.
The MAGI cut-off for standard premiums in recent years have changed as follows:
2021 (for 2023): $97,000 (single), $194,000 (joint)
2020 (for 2022): $91,000, $182,000
2019 (for 2021): $88,000, $176,000
2018 (for 2020): $87,000, $174,000
2015-2017 (for 2017-2019): $85,000, $170,000
What happens if your income jumps really high one year? You sell a rental property, win the Lotto, take a new job, etc. Well, your premiums will jump if your MAGI leaps over those income parameters. Not much you can do about it. The good news is that it will drop back down the following year if your MAGI drops below the income threshold.
There are some unique situations where you are allowed to an appeal a Part B premium IRMAA after you receive your notice from the Social Security Administration. Certain life-changing events that cause an income decrease can be considered to reduce your premium, such as death of a spouse, marriage, divorce, reduction in work hours, loss of pension, involuntary loss of income-producing property due to a disaster and receipt of settlement from employer due to closure or bankruptcy.
Visit www.medicare.gov for more information.
