By Tom Moutes, LACERS Commissioner
Warning! Reading this article may help your retirement pocketbook!
Income-Related Monthly Adjustment Amounts (IRMAAs) have remained top of mind for the LACERS Board.
What are IRMAAs? IRMAAs are surcharges the federal government extracts from you for the pleasure of being in a Medicare health plan, depending on your income. LACERS Retirees who are 65 or older must enroll in Medicare health plans to receive LACERS health benefits.
Starting in 2007, the federal government began charging higher-income earners additional IRMAA surcharges.
At that time, the IRMAAs typically applied only to Retirees who had been in such positions as General Manager or Assistant General Manager. Also, in 2007, the IRMAAs were not very expensive. The most expensive monthly IRMAA was $161.40.
Fast forward to today, and the IRMAAs can impact many more Retirees. Currently, a career employee who is a Sr. Management II or above may well find themselves paying monthly IRMAAs starting at age 65. It is likely that IRMAAs will impact even lower City classifications in the future. This is due to the high cost of living in Los Angeles and, therefore, the higher salaries we earn due to that high cost of living. (People in states like Iowa may likely never experience an IRMAA surcharge due to their relatively lower cost of living.) Also, the IRMAA surcharges have jumped over the years, with the most expensive being $689.90 per month!
Currently, LACERS is allowed only to reimburse for what is called the “basic” IRMAA, leaving many Retirees with IRMAA surcharges totaling hundreds of dollars per month! This, even though LACERS saves hundreds of dol- lars every month when a member turns 65 and enrolls in Medicare plans.
In the past, the LACERS Board has recommended that it be allowed to cover more of the cost of the IRMAAs our members pay. So far, the City has not moved forward to allow such reimbursements.
Our board is again reviewing the IRMAA reimbursement issue.
Please make sure RLACEI has your email address so it can send you alerts on how you can get involved in helping acquire better IRMAA reimbursements for LACERS Retirees.