Inflationary pressures are diminishing, but in their wake lies an overall price level considerably higher than existed in our pre-COVID-19 environment. Rising prices were leaving most Americans behind, as wages were (and always are) slow to react to ongoing inflationary pressure. Over time, the situation is correcting, as market forces are pulling earnings upward. Good news, generally, but unintended consequences abound.

Demographics are particularly interesting in this era, as the Baby Boomer generation reaches traditional retirement age in astounding numbers. Statisticians tell us that 10,000 to 12,000 Americans turn age 65 daily, and most use that milestone to enroll in Medicare. Concurrently, many Boomers retire, cut back on working, and/or begin planning for their post-career life.

Medicare is not free to Americans, although “Part A” (Hospitalization) is generally included with enrollment. But the considerable cost is for “Part B” (Doctors, etc.) and “Part D” (optional Prescription Drug Plan). Social Security deducts Medicare costs from monthly Retirement Benefits.

While convenient, payroll deduction too often results in “out of sight, out of mind” thinking, whereby recipients lose track of their own actual costs. Prior to 2003, understanding the cost of Medicare was less important, as every recipient paid the same monthly premium. Then, Congress introduced us all to IRMAA, the Income-Related Monthly Adjustment Amount.

Today, everyone pays the same Medicare “B” base premium, which is currently $185.00/month. Based on household income, IRMAA can raise that monthly premium by up to $443.90. This staggering increase is camouflaged as a “Medicare surcharge,” but in reality, IRMAA is another form of Income Tax.

By the way, IRMAA also applies to “Part D,” whether or not coverage applies to the participant. This can add another $85.80 monthly. Ouch!

Due to timing considerations, IRMAA charges are calculated on income from 2 years prior. In the interim, many people experience dramatic changes in income, through retirement, loss of a spouse, divorce, or other factors recognized by Medicare as “life-changing events.” Anyone experiencing a qualified life-changing event is no longer required to pay IRMAA surcharges. Receiving an immediate surcharge reduction can save 2 years of unnecessary higher payments.

Every Medicare recipient should understand what they are paying, and if they are being overcharged for IRMAA, take swift action to eliminate the excess premium cost. This is done using Form SSA-44, which is available at ssa.gov, the Social Security website. Instructions are included.