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IRMAA: Medicare Tax

Finishing Well / Hans Scheil
The Truth Network Radio
June 5, 2021 8:30 am

IRMAA: Medicare Tax

Finishing Well / Hans Scheil

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June 5, 2021 8:30 am

Hans and Robby discuss IRMAA, an added fee that surprises many retirees.


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This is Stu Epperson from the truth.

Talk podcast connecting current events, pop culture, and theology, and were so grateful for you that you've chosen The Truth Podcast Network it's about to start just a few seconds. Enjoy it and please share around all your friends. Thanks for listening and thanks for choosing the truth. Podcast network. This is the Truth Network welcome to finishing well brought to you by Cardinal guy, certified financial planner Lonza Schild, best-selling author and financial planner helping families finish well for over 40 years of finishing well will examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Medicare IRA long-term care life insurance and investments and taxes. Now let's get started with finishing well welcome to finishing well and today show is aunt Irma always wondered if Uncle Sam had a bride well is bride where naming is aunt Irma.

She is the Medicare tax to be talking about today right on old cartoon where we drew up a banner hanging there like Uncle Sam with her hand out so the idea of the show.

As we know wants to be surprised by him Irma but more than that way we we think Jesus taught on him.

Irma somewhat on extent. In Matthew chapter 17 across Matthew being a tax collector. EE jumped right on the side.

It's a neat story because to me when you listen to it. It doesn't make a lot of sense what happened. The certainly that that Jesus was going to be having to pay this tax. But what happened was, you know they got to Capernaum, and Peter goes in to the temple and there like what are you guys going to pay the tax.

While Peter says of course we are. You know doesn't even think before he talks, he goes back to him before he can say a word. Jesus is what Peter what you think you know does the king need to pay taxes on kingdom like really Jesus needs to pay tax to be in the temple. Jesus says something absolutely remarkable that just I think every Christian needs to hear is so that we don't offend pay the tax. Peter your fisherman go fishing.

This is what you can do and this is what you are capable of doing and quite good at. So go fishing in the first fish you catch, you know it's going to have this tax in its mouth again. The whole story doesn't make a lot of sense because how many fish you've ever caught that had four drachma coin in its mouth, but that's what Peter did it in the course paid the tax, but there's so much here that really when you think about it Hans, the first thing that people get it seems like when they find out there been assessed and Irma in which we got explain what that is, they get offended right, you become angry and mean it like paid all the money in his social security and Medicare my whole working career. Now my medic you know and then they get the gold nobody somebody and everybody and anybody. Nobody ever told me about didn't know about because it made for some of you listening on the radio. It is very first time you've ever heard Jan I can't tell you the number of people like to three months after Medicare start the second month you get this letter in the mail from Medicare and Social Security. The IRS just very simply state told you 2019 tax return and you filed single or you file married filing jointly. You made this amount. So you thought your Medicare part B was Anacostia hundred 48, 50 a month if you thought wrong with your Medicare part B is cost you 386 Panama as opposed to hundred and 48, 50, and since you're not on social purity yet many of these higher income people are even though they may be retired now you have to send this in even more money. Quarterly to Medicare to make sure that you stay enrolled in part B and that ditches comes as a shock and we first hear from some people first time we hear from when they get this letter in me. Maybe they watched watch my YouTube videos of the know what the Facebook thing in the thought about calling us than the end of doing it with somebody else or something.

They enroll and then you know that I think I know something about not call us.

The first thing I do is I asked him to know where you fax me the letter when you take a picture of it with your phone and send it to me because I want to read it in my previous know what it says that I want to see the numbers and people are just very angry now and she just needed like Peter.

Realistically, somebody pays that quarterly like if it was 370 40 650-300-8610 386 10 so your quarterly payments can't be over thousand dollars for your Medicare area and left a chain like what you decide about.

It could be as much is 504 90 this people in the highest income level and that's only part of it because then your part D plan which you are paying a monthly premium item not much you pay for your part D plan, you know, tax dollars are some 16 bucks or whatever so you EE submitted faces Irma at the highest level they got paid at $16 but they also have a an additional $77.10 a month there partly so you you got to hidden taxes for Medicare and you know my purpose on this show is not to get you all riled up about it.

And those are the highest level and certainly a lot of people have incomes lower than these threshold is a lot of people that this is applied to but I want to inform you about it and just so you know what it is and there's a lot of planning that can like Peter you can go fishing and that's it and is not more fun to go fishing if you're Peter that is to be no plan tax so the good news for us is really when we begin to look at how we can plan these things is a lot more fun than Pam Jackson sure little talk about what Irma is for a bit and then the second part of the show will will get in his strategy that you can do so IRMA is income related monthly adjustment amount me that you don't sound like somebody is trying to disguise their time to make the place now, related monthly adjustment amount and then they turn it into an acronym called Irma about why people don't read about like what that and it's just nothing more complicated than Medicare surtax people that have high they call it a monthly adjustment and when I'm in a call this attack had the scary part is high income, low threshold right sure for an individual threshold is 88,000 of formal. A 7000 of it even make the parties because you say of income like gross income for those of you that mess with your taxes a little bit they actually have this thing called adjusted gross income that did not just say income you got add gross income just implies income before deduction then you get this word literally adjusted on adjusted gross income PGI and blog posts that do their own tax return make maybe Canada know what AGI adjusted gross income for this permit and a couple other things for seniors.

They throw another run and among certain modified adjusted gross income or area called Maggie you know I just I keep thinking about the magicians that come up with Pharaoh trying to make sense of what you know, Moses and Aaron were talented so it can AGI magic so it isn't as simple as just saying is your income less than 88,000 or is it more than 88,000 as an individual. For the purposes shot when I can get into the DiMaggio and G. Just make you made last in 2019 and 88,000 probably are either not in face if you made more than 88,000 you are going to face if you filed a joint return.

The numbers exactly double hundred and 76,004 last you don't have to pay any Irma, if you made more than that 2019 your panorama and 2021 and has a clip things illegal one dollar over that you pay the whole higher Irma you made $176,010 say your Medicare part B premium is going to go from hundred 48, 5207 90 of the surtax of about 60 bucks a month, then your part D is going to have an additional $12.30 To hundred sleep with those two things together and how you plan about another 72 bucks a month just for going to dollar over the threshold that you go to the highest amount in the highest amount would be you had more than $500,000 of adjusted gross income, which throws out a lot of people obviously for a couple 750,000. The income level for that is the Irma mouse $504.90 now is a whole lot of room in that last category that the people that have more than 165,000 individual income.

They got paid for 7520 months of so doesn't take a huge income to have a substantial Irma and to make matters worse, is there using it two years ago tax return on people that are just now retire so you have a lot of people in their last years of a job they recognize a lot of income people that sell stock option people that cash enough 401(k) they accidentally cashed again because they listen to the people in HR will make a check out to you whatever they were paid a bonus or a severance bonus so people that two years ago. 2019. Return had a big income but now the retired.

They have a much smaller income in retirement.

This is really frustrating. So probably not right now. You see, feel like Peter did when those guys asked him about the tax. Knowing how much money had a monomer at that minute. This had a big problem, but the good news is he went exactly to her the solution was. He went to Jesus and so we got some ways to fish on the other side of the spray course you can find out so much more about, and solutions to these things in Hans's book the complete cargo guide to planning for and living in retirement is available. Of course, a cardinal Their website is the past shows, podcasts, all sorts of resources.

The videos that were talked about it's all there. Cardinal so we come back this sufficient to state Hans and I would love to take our show on the road to your church and Sunday school Christian or civic room. Here's a chance for you to advance the kingdom through financial resources by leveraging Hans expertise and qualified charitable contributions veterans aid and attendance and IRA Social Security care and long-term care. Just go to cargo and contact Tom to schedule a live recording of finishing well at your church, Sunday school or civic contact on that. Cardinal that's Cardinal welcome back to finishing well and today show were talking about Uncle Sam's wife and Irma and just like Uncle Sam face gutter in out and and were hoping in the second segment today we can get some drachma coins for you so that you can through our fishing with Peter that that you cannot help offset this and not offend them. So Hans, there are some answers there are. The first one in the one and the appeal form. Can you can't file an appeal to you actually get the Irma we can start working on it with people.

So when we were meeting people about Medicare were talking about it, which is probably anybody in their 60s come and ask for financial planning were were were talking to them about Medicare and attack coming and then if they have income in the department anywhere near the department that this is can come up we talk to them about her minute. They have their over these amount we prepare them for and then you know like just retiring is a reason to do an appeal for Irma may just in the appeal form and not to get into the details of that other than probably a good idea to get some help with the Irma appeal because in my experience when people try to do this on their own. They write too long of an appeal and then they end up getting turned down because they give him INFORMATION and the right back ported we prayed we had pretty good success getting these appeals approved in what you're doing when you do an appeal is you just saying let my income.

Two years ago was that now I'm retire my I've gotten divorced or my spouse's diet or something is because the economy I lost my job with the coronavirus or just something is created triggering event were my income now and going forward is to be much less than it was two years ago, so I want to look at that we had pretty good success getting those approved for the year you could say the fortunate ones that their income two years ago is just repeating itself now and into the future within an appeal won't work because we got nothing to appeal and they just make a good income and they always do this thing a penalty. So in it.

It's not too late to start planning for it right when they get this thing that is much better with planning is been doing it two or three years ago. So those of you that are in your early 60s late 50s and here listen to the show you're getting ready for Medicare and retirement. Or maybe your 65 and you're still working so you know you definitely don't want to start up for part B is visiting and having Irma, but you might have a year to where we can do something before you depart the to to really plan for this in your retirement to do to make this permanent penalty last time someone that they just changed, I saw on the website. Actually today because if you gone Medicare in your 65 like me and are still working. You know they hitch every quarter for your Medicare which is over $400 and but great news from my perspective anyway because that that's just tufted right out of that big a check for unison.

That kind of money, not quarterly.

They just change it Hans were now you can you can elect for them to take it out of your checking account monthly and so I imagine that would be the same as your own Irma that you know rather than having to pay quarterly over thousand dollars. You can when you go on the website you can you can actually now make it so they can take it out monthly say don't have to hit the whole thing and 1/4 but the point that I'm trying to make is I had no idea that all my goodness when I turned 65. I thought well I'm done with health insurance.

I have gone Medicare. It's free, not 4850. What most people pay you. You meant by that.

Some important about right that you can pay quarterly technology can do it monthly on your technicalities.

You don't have to look at it every month. Most people are paying and so what Irma is as a surcharge on top of right and your part B now you you probably already paid per diem a bank draft.

Is that right this treatment, now I don't have to worry about the other, but the planning part is really where we can do some serious fishing. And to me this is this is fun stuff like wow, look what God gave us resources like Hans to be able to think through this process of my income in order to not have to pay unnecessary taxes will yeah the big worry is to lower your adjusted gross income on your tax return. They will do that will prospectively real simple is weak, we need to have money in a pot that we can draw from. It doesn't show up on her tax return and say why you do that you do that with raw IRA conversions so you get money built up in a raw side that you can draw from for income to live on in retirement and it doesn't show up on your tax return, you can do in life insurance cash values were you can accumulate money in a life insurance policy. It's a little late to start buying one of these at 65 because he really got to get the money in their first life insurance is a long-term proposition that somebody smart enough to start these things when they're 6058 or 65 plan for the way future is your stuff and money. A life insurance policy that can be available to you to withdraw on later if you need it and you can do that tax-free so and if you have built up savings that you've already paid tax on which many people do.

They just been saving is not in an IRA, you can withdraw from your savings account or your investment account or brokerage account you can draw on that and not have to pay any taxes so you consultant property and then you don't necessarily immediately invest that you put it into something you can draw on it so there's a lot of ways to create income after 65 and also the year income. The doesn't show up in your tax return for your living on the same amount of money, but you're just when you look to the IRS like yours. Somebody that makes $50,000 a year.

But even those people who have significant income say that the man is making $88,000 fine if I'm getting this right was if you teach Mr. Ferris pockets that if I you know my income is over 88,000. Let's say it was 93,000 something like that white and I'm still making an income I could begin investing that money in a Roth IRA right as I can take $6000 my income away by putting that money in IRA this year. I and that would reduce my income by $6000 it would raw raw resume writer income likely that you put it in a traditional then your income goes down by 6000 so there's some way for people that are still working to reduce that number say this is one entry because I missed it. I'm right here so you know it we just frequently people think of all kinds of ideas it's painful to me. I go shooting down on some things really know what were doing the planning process, but it's okay brainstorming is there's a lot of things that we can do is know as they call it in the all the heady people that have MBAs with levers that we can pull in the management of your money in the projection and in the distribution of your income. If you have some money to begin with, and people in the higher income levels do and so we can just do some overall planning to make your tax return look more favorable because Irma's not the only thing we gotta worry about your we also appear in his Irma category are paying income taxes on your Social Security check to know is the Irma surtax and then the taxes on the Social Security that a lot of people goes to add up to an they really want to do some income planning and income managed and we don't really want to get into the details of that so much of the show is really just to let people know that there are ways to control your income.

If you have resources and money in retirement. Brian and you know, as I think about it. That's the beauty of having somebody that you can trust then you got a trust him with all the information like this is a huge puzzle that you put together in this plan is are so many moving parts or yeah yeah it it it it because it would just make Irma priority and I see some planners doing this is I'm tempted people come in their fears about so that all of a sudden we start making all kinds of moves to avoid this tax to reduce the stack is a little bit like the tail wagging the dog. Me this is not so huge that you want to base all your financial planning you more want to take this into consideration and one consideration is just pain.

The other consideration is, you know, do we want to do some things and then whatever we do, planning, wise that has negative aspects like paying taxes right now and money that we could pay later. So there really you you go through all the choices. While time is never that perfect choice.

It's just a matter of balancing one thing against another in the idea that that I think Peter shares here, Jesus shared with Peter is probably better said, let's not offend them, God's going to meet this need.

He wouldn't right he wouldn't give us the opportunity if he wasn't gonna meet the need, and it's an opportunity for us to do what we can do and fish with Jesus right so were were were coming up on the end. I just want to talk to people a little bit about the YouTube videos that are out there working all people all over the country. One of those videos is it 100,000 you can find us is about 100 videos up there of me be the front of the whiteboard. You can find it on YouTube at Cardinal advisor ORS. You can also put my name in Hans Schild in the YouTube and they pop right out and we got some of those videos on this very topic. Irma and several other topics as well. It's absolutely beautiful. Not to mention the whole website which is again Cardinal died at Cardinal advisors on YouTube. It's Cardinal guy is there Col. or you can get Hans's book the complete Cardinal guide to planning for and living in retirement. Again, this chapter on Medicare is absolutely free. One of the seven way tabs because you just get the book by emailing Hans, which by the way he would love to get a email from you anyway you got a question that you would like to hear covered on finishing well. By all means email Hans and Hans is always great show. I love being with you today. Yeah, same here and God bless you and all in good fishing. We hope you enjoyed finishing well brought you by Cardinal visit Cardinal for free downloads of the show previous shows on topics such as Social Security, Medicare and IRAs, long-term care, life insurance, investments and taxes as well as constant best-selling book, the complete Cardinal guide to planning for and living in retirement and the workbook once again for dozens of free resources past shows you get Hans book go to Cardinal if you have a question, comment or suggestion for future shows. Click on the finishing well radio show on the website and send us a word.

Once again that's Cardinal Cardinal this is the Truth Network

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