Opportunity to Lower IRMAA Fees When There is a Life Changing Event
Oftentimes, new clients come to us after realizing they or a previous financial advisor missed a crucial action step that would have maximized their savings. One such situation recently occurred for a client who, until they spoke with a Storen Financial advisor, was not aware they could save thousands in IRMAA fees by filling out the Medicare Reduction form.
What is IRMAA?
If you’re a Medicare recipient with a higher-than-average income, the Social Security Administration (SSA) could tack an extra charge onto the Medicare premiums you pay each month. These extra fees are called an Income-related Monthly Adjustment Amount (IRMAA). IRMAA charges are based on your income. The SSA calculates the IRMAA amount using your modified adjusted gross income (MAGI) according to your tax returns from 2 years ago. You can use certain strategies, both before and after receiving an IRMAA, to reduce or eliminate this surcharge. (Click here to learn more about avoiding IRMAA fees.)
Storen Financial Advisor Saves Client Thousands in IRMAA Fees
During an annual review, one of our financial advisors recognized a massive savings opportunity for a client. This client had recently retired and was still paying a Medicare premium based on his working income. Our advisor explained that by completing the Medicare reduction form, they could have considerably lower IRMAA fees on Medicare Parts B and D. Before filling out this reduction form, they were paying $12,000 annually in premium costs. After completing it at our advisor’s counsel, they were able to lower the amount to $4,500, for a total savings of $7,500.
Many clients are unaware that this form is an option for them if they’ve had a major drop in income or have had a significant life change such as marriage, divorce, death of a spouse, or an employer settlement payment. This particular client did not realize that Medicare premiums are determined by income two years prior. By meeting with a fiduciary advisor, in an advisory relationship, who acts in their best interest and is knowledgeable in Medicare, they were able to save thousands in avoidable fees.
At Storen Financial, our Advisors regularly study complex tax laws and undergo rigorous training through Ed Slott’s Elite IRA Advisor Group. We want you to understand our tax-saving strategies for building and diversifying your portfolio. For that reason, we happily sit down with clients to answer your toughest questions and help you spot strategies you may have missed, with the goal of instilling the confidence and knowledge you need to place your trust in our team and what we do.
Click here to access the Medicare Reduction form and instructions for completing it.
Have questions? Or interested in meeting with our Storen Advisory team? Click here to contact us now. Or click here to learn more about our Financial Planning Investment Services.
Blog by Brian Biggs, CPA – Financial Advisor, Senior Tax Accountant
Learn more about Brian and the rest of the Storen Financial team here.
This is a hypothetical situation based on real life examples. Names and circumstances have been changed. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or strategies may be appropriate for you, consult your advisor prior to investing. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.