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The extra charges that high-income retirees pay for Medicare can have a big impact on lifetime spending.
Analysts at HealthView Services show the numbers in a new report on how the Medicare "income-related monthly adjustment amount" charges, or IRMAA surcharges, might affect hypothetical couples' post-retirement health care spending.
Congress created the IRMAA surcharge system in an effort to hold down federal spending on Medicare. IRMAA rules make couples with annual income over $218,000 pay extra for Medicare Part B outpatient and physician services coverage and Medicare Part D prescription drug coverage.
For a healthy couple in the third highest of the six IRMAA income brackets, the IRMAA rules now in effect could increase the couple's total spending on acute health care by about 27%, according to the analysis.
What it means: The 27% increase in the HealthView analysis amounts to $200,000 to 300,000 in extra spending for the couples in the analysis. That could be enough to get the attention of even moderately affluent clients.
The report: HealthView prepared the health care cost projections to market its health care cost analysis tools and services.
The analysts started with a 65-year-old husband and wife who live in Missouri.
The cost estimates include Medicare premiums, deductibles and spending on dental and vision care. The estimates do not include the cost of long-term care services.
Chronic conditions: If the husband and wife in Missouri have chronic conditions, one spouse lives to 82 and the other to 85, and they have an annual household income of about $217,000 — high enough to miss out on programs for the needy but low enough to avoid IRMAA — the couple's post-retirement acute health care spending could amount to $713,257.
If the couple had annual income from $274,001 to $342,000, which would put them in the third IRMAA bracket, that would increase the couple's total acute health care spending to $911,248, the analysts found.
Good health: If the husband and wife were both healthy, one spouse might live to 88 and the other 90. In that scenario, if the couple had annual income of about $217,000, total post-retirement acute health care spending could be $1,084,579.
If the same couple had income in the third IRMAA bracket, health spending could climb to $1,382,128.
Credit: whyframeshot/Adobe Stock
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