Let’s start with the good news.
“You can get Medicare coverage no matter how high your income is,” says Juliette Cubanski, Deputy Director of the Program on Medicare Policy at KFF, a nonprofit organization focused on health policy. “If you are age 65 or older, or receiving disability insurance through Social Security for two years or more, you qualify for Medicare.”
However, the amount you pay for certain types of Medicare premiums varies based on your income.
How to determine your income for Medicare premium calculations
Your first step is to find the taxes you filed prior to the start of the Medicare year. For 2023, you would look at your 2022 tax return, which includes your 2021 earnings, says Cubanski.
While the income number that Medicare uses is “modified adjusted gross income,” or MAGI, it’s very similar to or the same as the “adjusted gross income” number on your tax return.
If you experienced a major dip in income after you filed your tax return, from a significant life event like a divorce or death of a spouse, you can apply for a reduction in your premium, says Cubanski, using Form SSA-44.
Premiums for Medicare Part A
Almost every Medicare beneficiary (about 99%) has no premium for Part A, which covers care in hospitals, hospices, skilled nursing facilities, and at home. This is because they have 40 or more quarters of Medicare-covered employment, in which Medicare taxes are collected to pay for Part A premiums.
Premiums for Medicare Part B
Income has the biggest effect on premiums in this part of Medicare. Part B covers doctor visits and tests, outpatient care, home health services, and medical equipment.
The standard monthly premium amount for Part B in 2023 is $164.90 and applies to those with a MAGI of up to $97,000 as an individual, and up to $194,000 as a married couple filing taxes jointly.
Premiums increase based on higher incomes. The maximum monthly Part B premium for 2023 is $560.50 a month if your MAGI is greater than or equal to $500,000 for an individual or greater than or equal to $750,000 for a couple.
Part B premium amounts for 2023
Premiums for Medicare Part C
Medicare Part C plans, also known as Medicare Advantage plans, are an alternative to Medicare Parts A and B and often provide additional coverage. You must still be enrolled in and pay premiums for Parts A and B, and you also may pay a monthly premium for the Medicare Advantage Plan.
You can choose from many different types of Medicare Advantage plans. “Their monthly premiums are not based on income,” says Cubanski.
Premiums for Medicare Part D
Medicare Part D plans offer additional prescription drug coverage for Medicare beneficiaries.
Premium amounts for Part D are based on the same income numbers as Part B. For Medicare beneficiaries paying only the standard premium, coverage of Part D is free. If income is higher, additional rates apply.
At the highest income levels (if your MAGI is greater than or equal to $500,000 for an individual or greater than or equal to $750,000 for a couple, you would pay an additional premium of $76.40 per month.
Part D premium amounts for 2023
Coverage for lower income levels
Several programs are available to Medicare beneficiaries with low incomes and assets.
To qualify for the programs, and if not working, monthly individual income can be as low as $1,215 with assets up to $9,090. Married couples have income limits starting at $1,663 to $2,239 with asset caps at $13,630.
The Medicare Extra Help program helps Medicare beneficiaries pay for Part D drug coverage premiums, deductibles, coinsurance, and other costs.
To qualify, individuals must have an income capped at $21,870 and assets no greater than $16,600. Married couples can have a maximum of $29,580 in income and $33,240 in assets.