Summary:
You are eligible for Medicare when you turn 65 or have a qualifying disability. There is no income limit for Medicare. But some people may have to pay more for their Medicare coverage, while others may be eligible for Extra Help. If your income is above a specific threshold, your Medicare might cost more. If you are under a set income level, you may qualify for assistance with your Medicare expenses.
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What are Medicare income limits?
Most people will pay a standard monthly premium for their Medicare coverage, which is determined annually by Centers for Medicare & Medicaid Services (CMS). However, if you are at a higher income level based on your tax returns, your premium might be higher.
In 2023, individuals who earned more than $97,000 annually will have higher monthly premiums for some of their Medicare coverage. Married people filing jointly that made over $194,000 will also pay more in their premiums.
The income limits change each year. It is possible you may pay higher premiums one year but not the next, depending on how your income level fluctuates from year to year.
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What income is used to determine Medicare premiums?
IRMAA stands for income-related monthly adjustment amount. It is a surcharge that people earning a higher income must pay for Medicare Part B and Medicare Part D monthly premiums.
Your modified adjusted gross income (MAGI) is the income amount used to determine the IRMAA amount. Your MAGI is determined after taking certain allowable deductions and tax penalties into account. For many taxpayers, your MAGI and your adjusted gross income (AGI) are the same amount.
Your MAGI includes income you earned throughout the year, including wages, tips, farm income, and business income. Alimony, rental and royalty income, and retirement income are also part of your MAGI. Depending on your investments, you may have capital gains and dividends included in this amount.
Medicare looks at your modified adjusted gross income as reported 2 years prior on your IRS tax returns. For example, if you enroll in Medicare in 2024, the MAGI from your 2022 tax return will be the amount used to determine whether you will pay the IRMAA for 2024.
Medicare premiums by type
Medicare coverage is broken down into Medicare Part A, Medicare Part B, Medicare Part C, and Medicare Part D. Each part offers coverage for different healthcare services and has their own monthly premiums and other out-of-pocket costs to consider. Original Medicare consists of Part A and Part B. Part C and Part D are alternative options Medicare enrollees might choose to extend their coverage options.
Medicare Part A premiums
Medicare Part A is also known as hospital insurance. It covers inpatient stays at hospitals and nursing homes, hospice care, and a limited amount of home health services.
Most Medicare beneficiaries do not pay a monthly premium for Part A. However, if you (or your spouse) have not paid Medicare taxes for 30-39 quarters you will have to pay for your Medicare Part A coverage.
- If you have been paying Medicare taxes for 30- 39 quarters, the standard Part A premium is $278 for 2023.
- If you have been paying Medicare taxes for less than 30 quarters, the standard Part A premium is $506 for 2023.
- If you have been paying Medicare taxes for 40 quarters or more, the standard Part A premium is $0 for 2023.
Medicare Part B premiums
Medicare Part B is known as your medical insurance. It includes visits to providers, preventative care, outpatient services, home health care, and some medical equipment.
The standard Medicare Part B premium amount is $164.90 for 2023. However, if you are a Medicare beneficiary with an annual modified adjusted gross income above the IRMAA threshold, you will have to pay more for your Medicare Part B coverage.
In 2023, Medicare beneficiaries with a modified adjusted gross income above $97,000 have an income-related monthly adjustment (IRMAA) added to their Medicare Part B premiums. For couples who file a joint tax return, that threshold is $194,000 per year.
Part B premiums are expected to increase 6.00% in 2024. IRMAA surcharges for Part B are also predicted to increase by approximately 6.00%. However, final numbers have not yet been released for next year.
Medicare Part D premiums
Medicare Part D is prescription drug coverage. You can enroll in a stand-alone Medicare Part D prescription drug plan with your Original Medicare or a Medicare Advantage plan that includes prescription drug coverage. Both generic and brand-name medications may be included on a Medicare Part D prescription drug plan.
Medicare Part D prescription drug plans are available through private Medicare-approved insurance companies, so costs and benefits vary from plan to plan. According to CMS, the average monthly premium for a stand-alone Medicare Part D prescription drug plan is $56.49 in 2023. The monthly premium for 2024 is projected to be approximately $55.50 – a 1.8% decrease.
Like Medicare Part B, people that earn a higher income will pay an IRMAA surcharge for their Part D benefits in addition to the standard monthly premium. IRMAA payments are made directly to Medicare and must be paid even when an employer or another third party pays your Part D premiums.
The income levels for the IRMAA surcharge for Part D monthly premiums are the same as for Part B premiums.
Medicare Advantage premiums
Medicare Part C is also known as a Medicare Advantage plan. These plans are an alternative way for receiving your Original Medicare benefits and are required to provide the same coverage you receive with Medicare Part A and Medicare Part B. These plans may often feature additional coverage for services like dental and vision care or prescription medications as well.
Unlike Original Medicare, which is administered by CMS, Medicare Advantage plans are offered through private Medicare-approved insurance companies. Plans may vary in their monthly premiums, out-of-pocket costs, and coverage. Premium amounts are set by the individual companies and do not include an IRMAA surcharge for individuals in the higher income brackets.
In 2023, 73% of Medicare Advantage enrollees only paid the Medicare Part B premium for plans that included prescription drug coverage, according to the Kaiser Family Foundation (KFF). In addition, most enrollees have additional benefits with their Medicare Advantage plans, including vision, hearing, and dental care.
What are the rules for higher-income beneficiaries?
The 2023 income brackets for those making $97,000/ year individually and $194,000 jointly are as follows:
| Single | Married Filing Jointly | Married Filing Separately | Part B Premium | Part DIRMAA |
| $97,000 or less | $194,000 or less | $97,000 or less | $164.90 | $0 + your plan premium |
| $97,000 to $123,000 | $194,000 to $246,000 | N/A | $230.80 | $12.20 + your plan premium |
| $123,000 to $153,000 | $246,000 to $306,000 | N/A | $329.70 | $31.50 + your plan premium |
| $153,000 to $183,000 | $306,000 to $366,000 | N/A | $428.60 | $50.70 + your plan premium |
| $183,000 and under $500,000 | $366,000 and under $750,000 | $97,000 and under $403,000 | $527.50 | $70.00 + your plan premium |
| $500,000 or above | $750,000 and above | $403,000 and above | $560.50 | $76.40 + your plan premium |
Medicare Income Limit Frequently Asked Questions
Do Medicare premiums change yearly based on income?
Yes, your Medicare Part B premium will change based on your Modified Adjusted Gross Income (MAGI). Your premium will be recalculated every year based on your MAGI from 2 years prior to the current year. For example, your premium for 2024 will be calculated from the MAGI on your 2022 income tax return.
Recalculating premium amounts every year means that if your income goes up one year, your Medicare Part B premium will also increase. If your income goes down, your Medicare Part B premium will also go down.
You can expect to pay more for your Medicare Part B premiums if your MAGI is over a certain amount of money. For 2023, the threshold for these income-related monthly adjustments will kick in for those individuals with a MAGI of $97,000 and for married couples filing jointly with a MAGI of $194,000. The threshold is recalculated each year.
How is the Medicare income limit calculated?
According to Social Security, the Income Related Monthly Adjusted Amount (IRMAA) payments are calculated based on how much most beneficiaries pay for the true cost of Medicare Part B.
Most beneficiaries pay about 25% of the true cost for their Part B coverage. For those who meet the first threshold for IRMA payments, they will pay around 35%. For those in the secondthreshold they pay 50%, for the thirdthey pay 65%, for the fourth they pay 80%, and for the fifth they pay 85%.
Is the Medicare income limit based on a household?
No, the income limit is based on your individual or jointly filed tax return. Check to see if you and your spouse file jointly or individually on your tax return and compare your MAGI to the most recent income brackets for Part B and Part D IRMAA. This will help you get a better idea of what you should expect to pay for your Medicare Part B coverage.
Can I appeal IRMAA if my income changes?
Yes, you can appeal your IRMAA if the income on your tax return was incorrect or out of date. You may also file an appeal if you experience any of the following events:
- Marriage, divorce, or death of a spouse
- Work stoppage or reduction
- Loss of income from pension
- Loss of income-producing property
Are there ways to manage Medicare costs?
If you can’t afford Medicare costs even with the coverage Medicare provides, additional help may be available to you. Some require eligibility based on income, while one offers ways to possibly lower your MAGI to reduce your monthly premium amount.
Medicare Savings Programs
Medicare savings programs (MSPs) help you pay for your costs associated with Medicare Part A and Part B, including premiums, deductibles, coinsurance, and copayments. There are four different types of MSPs and each covers different costs associated with Original Medicare:
- Qualified Medicare Beneficiary (QMB) – helps pay Part A and Part B premiums, and Part B deductibles, coinsurance and copayments
- Specified Low-Income Medicare Beneficiary (SLMB) – assists with Bart B premium
- Qualifying Individual (QI) – also helps pay for Part B premium
- Qualified Disabled Working Individual (QDWI) – assists with Part A premium
Application for an MSP is done through your state and eligibility is income-based. When you submit an application, your state will determine which MSP you qualify for. QMB, SLMB, and QI programs also help with the cost of prescription medications.
Dual Eligibility for Medicare and Medicaid
Some people may be eligible to enroll in Medicare and Medicaid at the same time. This is known as dual eligibility, and it can help cover more out-of-pocket costs than Medicare alone. Medicaid offers health coverage to qualifying low-income adults, women who are pregnant, children, adults with disabilities, and seniors.
Dually eligible adults will be enrolled in both Part A and Part B, as well as Medicaid. While Medicare and Medicaid often cover the same services, when someone is enrolled in both, Medicare pays for services first. After Medicare has paid, Medicaid will cover costs that Medicare does not typically cover.
Dual eligibility can offer more comprehensive coverage than Medicare alone for qualifying individuals. If Medicare does not cover the full cost of the service, Medicaid may pay the difference if it is a service typically included in Medicaid coverage. Medicaid generally also helps cover the costs of out-of-pocket costs associated with Medicare, including premiums, deductibles, copayments, and coinsurance.
Medicaid generally also covers services not included in Medicare coverage, such as:
- Adult day care
- Home health aides and skilled nursing
- Home services not associated directly with medical care
- Personal emergency response systems
- Respite care for caregivers
Income eligibility for Medicaid varies by state since states administer their own Medicaid programs under federal guidelines.
Manage your Modified Adjusted Gross Income (MAGI)
Finally, you may be able to lower your monthly Part B and Part D premiums by reducing your MAGI. There are different strategies to manage your MAGI, including contributions to a retirement account (IRA or 401(k)) or health savings account. These account contributions are made with pre-tax dollars, which means the amount of the contribution will not be included in your MAGI amount.
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