Trying to figure out how these values are determined in the Tabular Projections-Expenses-Taxes-Taxes tab?
MAGI for Medicare is used to set IRMAA surcharges and is the regular AGI from two years prior, with certain things added back in (from Nerdwallet):
- IRA contributions
- Half of self-employment tax paid.
- Qualified tuition expenses.Passive loss or income.
- Non-taxable Social Security payments.
- Exclusion for income from U.S. savings bonds.Foreign earned income exclusion.
- Foreign housing exclusion or deduction.
- The exclusion under 137 for adoption expenses.
- Rental losses.
- Publicly traded partnerships losses.Student loan interest deductions.
The inflation adjustment is the mind-bender though. An article at TheFinanceBuff might help:
https://thefinancebuff.com/medicare-irmaa-income-brackets.html
The number everyone talks about for the top of the base IRMAA tier for 2024 is $206,000, but in fact, $206,000 is the max 2022 MAGI you could have had to avoid IRMAA in 2024. Your MAGI in 2024 will set whether you pay IRMAA in 2026, but it will be $206,000 on a real basis, inflation adjusted upwards from October 2023 through September 2025. Obviously we don't know the inflation in 2025 yet, so the actual MAGI target you should shoot for this year is unknowable. Pralana uses the inflation rate you provided. You will notice that your Medicare MAGI is 0.95 of the AGI from two years prior, so you did not have any of the exclusions and you used 2.6% as the inflation rate, since 1/1.026^2 = 0.95.
@ Richard Eaton I know what MAGI is but I need to dig into how these specific values were calculated relative to the AGI? None of the certain things listed are applicable so I need to verify these values.
https://secure.ssa.gov/poms.nsf/lnx/0601101010
Policy for MAGI
1) Modified Adjusted Gross Income (MAGI) is the sum of:
the beneficiary’s adjusted gross income (AGI) (found on line 11 of the Internal Revenue Service (IRS) tax filing form 1040), plus
tax-exempt interest income (line 2a of IRS Form 1040).
2) The MAGI used to determine if the income-related monthly adjustment amount (IRMAA) applies is the most recent tax information that IRS is able to provide. Generally, the information is from two years prior to the year for which the premium is being determined, but not more than three years prior. For example, 2024 premiums are generally based on 2022 tax return information. See HI 01101.020 for more detail about how MAGI is used.
…
https://secure.ssa.gov/poms.nsf/lnx/0601101010
Policy for MAGI
1) Modified Adjusted Gross Income (MAGI) is the sum of:
the beneficiary’s adjusted gross income (AGI) (found on line 11 of the Internal Revenue Service (IRS) tax filing form 1040), plus
tax-exempt interest income (line 2a of IRS Form 1040).
2) The MAGI used to determine if the income-related monthly adjustment amount (IRMAA) applies is the most recent tax information that IRS is able to provide. Generally, the information is from two years prior to the year for which the premium is being determined, but not more than three years prior. For example, 2024 premiums are generally based on 2022 tax return information. See HI 01101.020 for more detail about how MAGI is used.
…
Did you read my whole post? When none of the MAGI vs AGI adjustments are applicable, the MAGI for Medicare is your AGI from two years ago, but deflated for two years of inflation using the inflation number you provided. I tried to prove that to you by back calculating the inflation rate you must have input based on the AGI and MAGI numbers in your table.
I read it again post mod Rich and appreciate the details as that is what I was looking for. Thanks again!
appreciate the details as that is what I was looking for
This business of the 2 year delay in figuring out the IRMAA brackets can get tricky if you are trying to push right up to a bracket. My advice is give yourself a 2% leeway, but here is the best treatment of the topic, courtesy of Harry Sit: https://thefinancebuff.com/medicare-irmaa-income-brackets.html
