You'll probably get Medicare Part A for free if you qualify for Medicare. This applies no matter how much money you have going into your monthly bank account. However, Part A only covers a limited portion of your health care, such as inpatient or skilled nursing facility care in a hospital.

You'll need Medicare Part B for routine doctor's appointments, which comes with premiums. You'll need to stay below the Medicare maximum income thresholds to avoid seeing your premiums increase. Knowing these limits is essential if you plan to keep working once you're on Medicare.

Who will have to pay the extra amount?

When you sign up for Social Security, you'll also want to sign up for Medicare. You'll get Medicare Part A for free if you meet the age and work history qualifications. But you'll also want Part B, which covers your doctor's visits and other medically necessary services. For Part B, you'll pay monthly premiums. Based on income, these Medicare payments can change from one year to the next. In 2024, if your 2022 adjusted gross income was $103,000 or less, or $206,000 or less, you'll pay the standard premium of $174.70 per month if you're married and filing jointly.

Your pay depends on your income once you've exceeded that Medicare threshold. Your premium will be higher if you earn between $103,001 and $129,000. It goes up to $594.00 per month, which applies to single filers earning $500,000 or more in 2022.

How will the extra amount be collected?

If you pay Part B premiums, the amount automatically comes out of your monthly Social Security payments. If you aren't receiving Social Security, a bill will arrive in the mail. You can pay this online, through your bank's bill pay service, or by mailing a check.

Most Medicare recipients will pay the standard premium. However, suppose Medicare sees that your tax return reported an income that exceeded the limit. In that case, your premiums will be adjusted to reflect that. This excess will be reflected as an Income Related Monthly Adjustment Amount (IRMAA), a surcharge added to the standard premium.

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What if my income has changed?

Medicare premiums are calculated based on your tax return from two years ago. That means if your income suddenly increases this year, you won’t have to worry about paying extra until a couple of years down the road.

If your income has decreased and you’ve received a bill that reflects higher premiums, it could be due to the tax return Medicare is using to calculate your premium. If your circumstances change and you were previously exceeding the threshold for Medicare, you can request a review of your premiums due to a life-changing event. Qualifying events include:

• Marriage, divorce, or death of a spouse
• Loss of work income for you or a spouse
• Property loss due to a disaster

You can request such a review by completing this form or calling 1-800-772-1213 to schedule an interview with your local Social Security office.

Where can I get more information?

“Does income affect Medicare” may not be your only question. If not, the good news is that you can usually track down the information you need online. The best resource is your my Social Security account. This is where you’ll get some answers specific to your own Medicare payments.

To ask about Medicare premiums or any other Social Security- or Medicare-related topic, your local Social Security office can be a great resource. But you can also pick up the phone and call 1-800-772-1213, or 1-800-325-0778 (TTY) if you have difficulty hearing. The SSA answers calls on weekdays from 8 a.m. to 7 p.m., but you can also get information via the automated service after hours.

Final Thoughts

Are Medicare advantage premiums based on income? Yes, but in many cases, you’ll pay the lowest premium. This is the standard premium, and it applies to you unless you earn more than the Medicare cut off income, at which point you’ll pay a surcharge. If you’re still planning your retirement, it’s important to calculate medical insurance premiums into your monthly income, including what you might pay for a Medicare supplement. We recommend working with a Certified Financial Planner® to discuss your options and planning a budget that will help you live comfortably.

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