Do You Know IRMAA?


Retirees Update

By Tom Moutes, RLACEI Legislative Director

Tom Moutes

in this case, IRMAA is not the nice lady next door; it’s the nasty surprise you receive when you reach age 65 and find out you are paying more for your healthcare each month than you were before. This extra payment, or Income-Related Monthly Adjustment Amount (IRMAA), is a surcharge the federal government extracts from you for the pleasure of being in a Medicare health plan. Currently, these IRMAAs range between $164.90 and $560.50 per month based on your income! Depending on your Medicare eligibility, LACERS will reimburse the smallest monthly amount the feds charge – currently, that’s the $164.90 amount. The IRMAA amounts can change every calendar year.

Based in part on a request by RLACEI, the LACERS staff and board have been studying the IRMAA reimbursements. When the federal government first initiated IRMAA charges in 2007, the monthly amounts were comparatively small – ranging from $93.50 to $168.66 per month. While the lower amount has “only” gone up by about 75 percent, the upper IRMAA amount has more than tripled! This means that Retirees who paid FICA taxes while they were working, and therefore have both Medicare A and B, are still only eligible for a monthly IRMAA reimbursement at the lowest-tier rate – currently $164.90 – even though their IRMAA charge may be much higher. Those Retirees who did not pay the FICA tax while working are only eligible for Medicare B and are currently not entitled to any IRMAA reimbursement from LACERS.

The LACERS Board commissioned an actuarial study to determine the potential costs associated with providing more than the “basic” IRMAA reimbursement, currently, $164.90, to age 65-plus Retirees with Medicare A and B. Subsequently, the Board authorized the staff to conduct educational/listening sessions. RLACEI was well represented at both the virtual session and the in-person session.

Based on the staff reports and listening sessions, it is likely the LACERS staff will be recommending some type of reimbursement or other fix for Medicare B-only Retirees and an enhanced amount of reimbursement for Retirees with Medicare A and B. (These articles are written a month in advance, so it is possible by the time this appears in Alive! the staff report will already be out.)

Even if the LACERS staff recommends enhanced reimbursements, that would just be the first step of the process to make this happen. The LACERS board would need to recommend the enhanced reimbursements to the City Council and mayor, and those entities would have to approve the proposals. This likely will not be an easy process and it will take all of us, with RLACEI leading the way, to weigh in on this expected proposal. That means every LACERS member, whether Retired now or hoping to retire later, should submit public comments to the LACERS Board and especially to the City Council if the item is submitted for consideration. There is strength in numbers, and, through a very large response, we can show we are paying attention and we care about our financial future and the futures of our fellow LACERS members.