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How Are Medicare Premiums Calculated?

The Social Security Administration (SSA) uses your income to calculate your costs for Medicare Part B. You may pay a higher Medicare premium if you have what the SSA considers a higher income. The SSA looks at your federal tax return from two years ago to determine your income level.

As of 2023, you might have to pay a higher premium for Medicare Part B if you:

  • Filed an individual tax return reporting a modified adjusted gross income of more than $97,000
  • Filed a joint tax return with a spouse reporting a modified adjusted gross income of more than $194,000

How Does Medicare Work Overall?

Medicare is a federally sponsored health insurance program that serves the following individuals:

  • People ages 65 and older
  • Individuals with certain disabilities
  • People with end-stage renal disease or ALS

The Medicare program comprises several parts:

  • Original Medicare, made up of Medicare Part A (hospital insurance) and Part B (medical insurance)
  • Medicare Advantage, also known as Medicare Part C
  • Drug coverage, also called Part D

Beneficiaries must choose between Original Medicare and Medicare Advantage.

Medicare Part A

Part A covers any care you might receive in a hospital, such as stays in inpatient hospital facilities, skilled nursing care, hospice, and certain types of home healthcare.

Anyone who qualifies for Medicare is eligible for Part A coverage, but you must sign up for Medicare Part B to enroll in Part A. Most beneficiaries, including members that receive Part A prior to the age of 65, do not pay a premium for Part A. However, if you or your spouse did not pay Medicare taxes for at least 10 years while working, Part A may cost you a monthly premium of $278 or $506, depending on your situation.

Medicare Part B

Part B pays for services from healthcare providers, along with preventative services, medical equipment, outpatient care, and medically necessary home healthcare. Anyone eligible for Medicare can get Part B coverage.

The standard premium for Medicare Part B costs $164.90 per month, but yours may be higher if you enroll in Medicare late or earn a high income according to the SSA’s standards.

Medicare Part C

Medicare Advantage, or Part C, rolls parts A, B, and D into one plan, often adding other benefits not offered by Original Medicare, such as dental and vision coverage. Anyone eligible for Original Medicare may instead opt for a Medicare Advantage plan, but you must enroll in both Part A and Part B to qualify for Part C.

Private insurers offer Medicare Advantage plans, and premiums vary depending on the insurance provider and plan you choose.

Medicare Part D

Medicare Part D helps cover prescription drugs and recommended shots and vaccines. Original Medicare does not include Part D, but you can purchase Part D separately through a Medicare-approved insurance provider. In most cases, Medicare Advantage plans do provide prescription drug coverage.

Most beneficiaries with Original Medicare must pay a monthly premium for Part D.

How Much Do Medicare Premiums Cost?

Expect to pay different premiums for different Medicare parts, and in some cases, you might pay no premium at all. The premium prices discussed below are current as of 2023.

Medicare Part A Premiums

Most people do not pay a monthly premium for Medicare Part A. If you or your spouse paid Medicare taxes for a long enough period, typically at least 10 years, you will not have to pay a Part A premium. Enrolling in Medicare before age 65 exempts you from premium costs, too.

If you do not fall within the above-mentioned categories, you might have to pay a monthly premium for Part A. Here’s how the costs shake out:

Monthly Premium
If you or your spouse worked for 10 years or more in the U.S.
If you or your spouse worked between 7.5 and 10 years in the U.S.
If you or your spouse worked fewer than 7.5 years in the U.S.

Medicare Part B Premiums

Most people pay a monthly premium for Part B, with prices starting at $164.90 per month, and beneficiaries who make more money often pay higher premiums. You may also pay higher premiums if you enroll in Medicare late, in which case the premium penalty increases the longer you wait to enroll.

Here’s what you might pay for your Part B Medicare premium based on income:

Individual Income
Married Couples‘ Income
Monthly Premium
Less than $97,000
Less than $194,000
Between $97,000 – $123,000
Between $194,001 – $246,000
Between $123,001 – $153,000
Between $246,001 – $306,000
Between $153,001 – $183,000
Between $306,001 – $366,000
Between $183,001 – $499,999
Between $366,001 – $749,999
Between $500,000 and above
Between $750,000 and above

If you have Medicare Part C, it may pay for your Part B premium, but not in most cases.

Medicare Part C Premiums

Because private insurers provide Medicare Advantage, or Part C, plans, premium prices vary based on your plan type, income, and location, among other factors.

That said, most Part C enrollees do not pay a premium, dragging down the average cost of a Medicare Advantage plan to just $18 as of 2022. However, if you do have to pay a premium, you could pay up to $200 or even more. Also, remember that you must have parts A and B to enroll in a Medicare Advantage plan, and most Medicare Advantage plans do not cover your part B premium.

Medicare Part D Premiums

Your monthly premium for Medicare Part D depends on your Medicare plan premium, your income bracket, and whether you enrolled in Part D on time. High earners tend to pay higher premiums for Part D, and those who signed up for Part D after their initial enrollment window may pay a late enrollment penalty, which is added to the monthly premium.

The average premium for Medicare Part D is $32.74 per month. See the below chart for a detailed breakdown of Part D premium prices.

Individual Income
Married Couples’ Income
Monthly Cost In Addition to Premium
Less than $97,000
Less than $194,000
Between $97,000 – $123,000
Between $194,001 – $246,000
Between $123,001 – $153,000
Between $246,001 – $306,000
Between $153,001 – $183,000
Between $306,001 – $366,000
Between $183,001 – $499,999
Between $366,001 – $749,999
$500,000 and above
Between $750,000 and above

What Factors Affect Medicare Premium Prices?

Various factors impact Medicare premiums, depending on which type of Medicare plan you purchase. For example, your income bracket factors into all Medicare premiums except Part A, and location only matters for Medicare Advantage plans. Below we explain the primary factors affecting Medicare premiums.

  • Income: Parts B, C, and D all take income level into account when determining plan premiums. If you make more money, you can expect to pay higher monthly premiums for each of these plans.
  • Penalties: If you enroll in Medicare after your initial enrollment period ends — usually three months after you turn 65 — you may have to pay late enrollment penalties, which are usually tacked onto your monthly premiums. Late penalties apply to all Medicare parts. Exceptions apply for Part A if you do not pay a Part A premium.
  • Location: Premium prices for Original Medicare and Part D are standardized, but Medicare Advantage premiums take your location into account. Not all Part D plans are available in every state. 
  • Healthcare Costs: As prescription drug prices increase, so do Medicare monthly premiums.

How to Navigate Medicare Premium Changes

Medicare costs — including premiums, copays, and deductibles — may change from year to year, depending on the cost of healthcare. The Centers for Medicare and Medicaid Services (CMS) usually announces prices for the following year each fall.

If your premium changes and you can no longer afford it, you might get assistance through the following avenues:

  • Your state’s State Health Insurance Assistance Program (SHIP). SHIPs provide unbiased counseling and assistance to Medicare beneficiaries. Learn more at
  • Medicare Savings Programs (MSPs) help cover costs associated with Original Medicare. You can qualify for an MSP based on your resources and income.
  • The Extra Help program, also called the Medicare Part D Low-Income Subsidy, covers costs associated with Medicare Part D.
  • Medicaid is a government-sponsored program serving low-income people and people with disabilities, among other demographics. You can have Medicaid and Medicare at once, and Medicaid can pay for some of your Medicare costs.

How to Ask For a Premium Adjustment

If you experience a life-changing event that resulted in a lower household income, you can request a lower premium for Medicare Part B and Part D. Such events may include:

  • Death of a spouse
  • Divorce
  • Employer settlement payment
  • Loss of income
  • Marriage

Here’s how to ask for a premium adjustment should a qualifying life-changing event take place:

  1. Fill out the request form for a Medicare Income-Related Monthly Adjustment Amount (IRMAA).
  2. Gather evidence of your life-changing event.
  3. Mail or fax the completed IRMAA form and your evidence to a Social Security office.

If you need help, call +1 800-772-1213 to speak to a representative from the Social Security Administration.

Putting it All Together

Medicare premiums are variable and may change from year to year depending on your income, your location, whether you enrolled in Medicare during your initial enrollment period, and the price of healthcare.

Most people do not pay for Medicare Part A, but Parts B and D usually carry premiums, as do some types of Medicare Advantage plans. If your premium changes and you can no longer afford it, several programs can help cover Medicare-associated costs. And if your financial situation changes due to a qualifying event, you can request lower Medicare premiums.

Frequently Asked Questions 

A premium is the amount you must pay, usually each month, to maintain insurance coverage. A deductible is the amount you must pay out of pocket before your insurance plan kicks in to cover expenses. A copay is a set amount you have to pay for a covered service, even if you have met your deductible.

Yes, if you itemize deductions on your federal tax return, your Medicare premiums may be tax-deductible. And if you’re self-employed, you may not have to itemize deductions for your Medicare premiums to be tax-deductible.

CMS announces the upcoming year’s premiums each fall. If you already have Medicare, your plan should send you a Plan Annual Notice of Change each September to notify you of any upcoming changes to your premiums and coverage.

Yes, if you receive SSA benefits and are enrolled in Medicare, the SSA automatically deducts your Medicare premiums from your Social Security benefits.

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