There are no income limits to be eligible for Medicare coverage, but some individuals have to pay higher premiums based on how much they earn.
While Medicare Part A (hospital insurance) and Medicare Advantage (Part C) premiums are not income-based, high earners pay more for Part B (medical insurance) and Part D (prescription drug coverage). In 2023, this threshold is $97,000 for individuals and $194,000 for joint filers.
Low-income individuals may be eligible for financial assistance through Medicare Savings Programs and the Extra Help program. People who make $1,660 or less a month ($2,239 for married couples) may be able to get help paying their Part B premiums and related expenses.
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Understanding How Medicare Sets Premiums
Medicare sets standard premiums for different plans. However, as healthcare costs continue to rise, Medicare reevaluates those premiums each year. The monthly premium for Medicare Part B changes annually and decreased by about $5 from 2022 to 2023.
Even though Medicare provides a standard premium amount, each person’s monthly payments can vary based on their income. Past a certain threshold, beneficiaries must pay a surcharge on their Part B and Part D coverage, called an income-related monthly adjustment amount (IRMAA). Social Security determines an IRMAA using income tax filings from two years ago and notifies beneficiaries of their expected payment.
How Your Income Affects Medicare Premiums in 2023
Medicare comprises four parts, each with its own premiums, penalties, and possible surcharges. Each person’s monthly payments depend on their needs and income.
Medicare Part A
Medicare Part A serves as hospital insurance, covering inpatient care at hospitals, skilled nursing facilities, home health care, and hospice care. For most people, Part A does not cost anything.
Monthly Premium | |
|---|---|
If you or your spouse worked 10 or more years in the U.S. | $0 |
If you or your spouse worked between 7.5-10 years in the U.S. | $278 |
If you or your spouse worked fewer than 7.5 years in the U.S. | $506 |
Rather than a yearly deductible, Part A deductibles are calculated per benefit period. A benefit period starts on the day a patient is admitted into an inpatient facility and ends 60 days after they stop receiving care. There’s no limit to the number of benefit periods per year. During each one, Medicare will begin paying after a $1,600 deductible.
Medicare Part B
Medicare Part B, sometimes referred to as “medical insurance,” covers the following:
- Outpatient care
- Doctor’s services
- Preventative care
- Medical equipment
In 2023, the standard premium is $164.90 per month. However, high earners could be saddled with a monthly payment of up to $560, depending on their income bracket. Premiums start to increase for individuals who made $97,000 in 2021 or joint filers who made $194,000. Medicare starts to pay after participants hit a $226 deductible.
Medicare Part C
You can purchase Medicare Part C plans, also known as Medicare Advantage Plans, through private insurers. While they must meet Original Medicare coverage requirements, they do not have a standard premium and are unaffected by your income.
Instead, the monthly payment varies based on your coverage needs, location, and choice of insurer. Some plans include prescription drug coverage or may help pay your Part B premium.
If you enroll in a Medicare Advantage Plan, you’ll be notified of premium adjustments in an Evidence of Coverage or Annual Notice of Change. Insurance companies may increase your premium on their own terms, unrelated to Medicare’s income brackets.
Medicare Part D
Medicare Part D offers prescription drug coverage. While the national base premium is $32.74 in 2023, those with higher incomes must pay an IRMAA. The IRMAA is not part of your Part D premium, so you do not pay it to your insurer. Instead, the payment goes directly to Medicare. Even if a third party, such as your union, pays your Part D premium, you’re still responsible for the IRMAA payment. The IRMAA income brackets are the same as Part B.
How Much Does Medicare Cost in 2023?
How much you pay for Medicare in 2023 depends on your 2021 income taxes. Most people are eligible for Premium-Free Part A and do not have to pay additional fees for other Medicare coverage. Keep in mind that the Medicare income brackets and IRMAA payments change each year. For 2023, here’s how the surcharges break down:
Yearly Income (Single) | Yearly Income (Married Couple) | Medicare Part B Monthly Premium | Medicare Part D Monthly Premium |
|---|---|---|---|
Less than $97,000 | Less than $194,000 | $164.90 | Plan premium |
$97,000 – $123,000 | $194,000 – $246,000 | $230.80 | $12.20 + plan premium |
$123,000 – $153,000 | $246,000 – $306,000 | $329.70 | $31.50 + plan premium |
$153,000 – $183,000 | $306,000 – $366,000 | $428.60 | $50.70 + plan premium |
$183,000 – $500,000 | $366,000 – $750,000 | $527.50 | $70 + plan premium |
More than $500,000 | More than $750,000 | $560.50 | $76.40 + plan premium |
Part B and Part D premiums are usually taken out of Social Security or Railroad Retirement Board benefit payments. If you do not receive benefit payments or you’d rather pay directly, Medicare will send you a bill.
For plans paid to a private insurer, you must still pay the IRMAA amount directly to Medicare. Part A premiums and Part D IRMAA payments are due every month, while Part B premiums are paid every three months.
Medicare Late Enrollment Fees
Sign up for Medicare as soon as you’re eligible to avoid tacking on additional penalty payments. These are not just one-time fees; late enrollment penalties are added to your premium each month, but the duration varies.
Your first chance to sign up, called the initial enrollment period (IEP), generally occurs when you turn 65. This period lasts seven months total, three months before and after your birth month. If you have employer-based health coverage through your job or your spouse’s job, you can delay signing up for Part B. Once that coverage expires, you have 8 months to enroll in Part B.
You can enroll in Part D coverage during your IEP, three months before and after signing up for Medicare. If you delay Part B and have equivalent prescription drug coverage, you can sign up for Part D in the three months prior to enrolling in Part B.
If you miss the IEP and do not qualify for a special enrollment period, you can still sign up for coverage during the open enrollment period. However, you may have to pay the following penalties.
Part A Penalty
If you do not qualify for Premium-free Part A and do not buy it when you first become eligible, you will pay an additional 10% on top of your monthly premium. The penalty lasts for twice the number of years you could have signed up but did not. If you wait one year to sign up, your penalty will last for two years.
Part B Penalty
The Part B penalty is 10% for each year you could have signed up and did not have adequate coverage through an employer or spouse. This lasts the lifetime of your policy. If you did not qualify for a special enrollment period and chose to skip Part B coverage for three years, for example, a 30% penalty will be added to your monthly premium.
Part D Penalty
The Part D penalty also lasts the duration of your policy. You will pay 1% for each month you were eligible and did not have creditable drug coverage. For example, if you waited six months, you’d tack on 6% to your monthly premium.
How To Appeal an IRMAA Decision
Social Security makes IRMAA determinations each year based on your tax information from two years prior. But a lot can change in two years, and you may appeal an IRMAA decision if you’ve experienced a life-changing event or if the IRS information is incorrect.
If you had an amended tax return in that year, you can call Social Security at 1-800-772-1213 and speak with a representative. You have 60 days to ask for a reconsideration.
To appeal based on a life-changing event that reduced your income, complete Form SSA-44 and mail or fax it, along with your evidence, to a Social Security office. Social Security considers the following situations:
- Marriage
- Divorce or annulment
- Death of spouse
- Work stoppage or reduction
- Loss of pension income or income-producing property
- Employer settlement payment
If Social Security denies the reconsideration request, you may appeal the decision through the Office of Medicare Hearings and Appeals. Keep in mind that the IRMAA payment lasts for one year and will be reevaluated the following year.
Financial Assistance for Low-Income Beneficiaries
Individuals below certain income limits for Medicare may be eligible for financial assistance through Medicare Savings Programs and Extra Help. These help pay for premiums and the cost of care.
Medicare Savings Programs
Medicare Savings Programs provide state assistance to help you pay for Original Medicare premiums and, in some cases, deductibles, coinsurance, and copayments. Even if you’re uncertain whether you are eligible, you should still apply.
Your state may use different guidelines or income limits for Medicare assistance. Alaska and Hawaii have higher limits, for example. Similar to IRMAA payments, these Medicare income guidelines change each year.
Your monthly income and overall resources determine the amount of support you receive. Resources include stocks, bonds, and money in a checking, savings, or retirement account. The state does not factor in the following into your resource limit:
- Your home
- Furniture
- Personal items
- One car
- Burial plot or burial expenses up to $1,500
Each of the following 4 Medicare Savings Programs has its own income limits.
Qualified Medicare Beneficiary (QMB) Program
The QMB program helps pay for Part A premiums, Part B premiums, deductibles, and copayments for Medicare-approved services and items. Under this program, providers are not allowed to bill beneficiaries for care covered by Medicare. QMB is partial Medicaid, and participants may receive a small bill for a Medicaid copayment.
Monthly Income Limit | Resource Limit | |
|---|---|---|
Individual | $1,235 | $9,090 |
Married Couple | $1,663 | $13,630 |
Those in the QMB program should present their Medicare card along with their Medicaid or QMB card every time they receive care.
Specified Low-Income Medicare Beneficiary (SLMB) Program
Through the SLMB program, Medicaid helps pay for Part B premiums. Beneficiaries must be enrolled in both Part A and Part B. If they are eligible for Premium-free Part A and full coverage through SLMB, their total monthly premium for Original Medicare will be $0.
Monthly Income Limit | Resource Limit | |
|---|---|---|
Individual | $1,478 | $9,090 |
Married Couple | $1,992 | $13,630 |
Those who are eligible for full Medicaid benefits may also be eligible for SLMB Plus, which could provide coverage for vision, dental, and hearing care.
Qualifying Individual (QI) Program
Beneficiaries must apply each year to participate in the QI program, which helps pay for Part B premiums. To qualify, individuals cannot be eligible for Medicaid, and they must be enrolled in Part A and Part B. This program operates on a first-come, first-served basis, and states give priority to people already in the QI program. States use the following income guidelines:
Monthly Income Limit | Resource Limit | |
|---|---|---|
Individual | $1,660 | $9,090 |
Married Couple | $2,239 | $13,630 |
Qualifying Disabled & Working Individual (QDWI) Program
The QDWI program assists people who have a disability, are currently working, and have lost Social Security benefits or Premium-free Part A by returning to work. The program supports individuals under 65 who are not eligible for Medicaid but still have limited earnings. Aid goes toward Part A premiums.
Monthly Income Limit | Resource Limit | |
|---|---|---|
Individual | $4,945 | $4,000 |
Married Couple | $6,659 | $6,000 |
Extra Help
The Extra Help program focuses on Part D premiums and prescription drug costs. Some individuals are enrolled in the program automatically, such as those with full Medicaid coverage or those who receive Social Security Income benefits.
People in Medicare Savings Programs that help pay for Part B premiums — namely QMB, SLMB, and QI — also get automatic support through Extra Help. QMB participants pay no more than $4.30 for each Medicare-covered drug, while SLMB and QI participants pay no more than $10.35.
Beneficiaries who do not qualify automatically can still apply through the Social Security website or at an office. Applicants must provide proof of resources through bank statements, tax returns, investment account balances, and any benefit statements.
Medicare income limits for Extra Help are based on the previous year. The 2023 income limits are below:
Monthly Income Limit | Resource Limit | |
|---|---|---|
Individual | $1,843 | $16,600 |
Married Couple | $2,485 | $33,240 |
Medicare offers several levels of Extra Help, depending on income. At most, those who qualify for Partial Extra Help pay 75% of their premium. Partial Extra Help breaks down into four brackets, and each provides an additional savings of 25%. Beneficiaries also pay no more than 15% for each covered drug. Once the total cost of drugs reaches $7,400 — including Medicare’s payments — drug costs are capped. See the comparison below:
Monthly Premium | Plan Deductible | Generic Prescription Costs | Brand-Name Prescription Costs | |
|---|---|---|---|---|
Full Extra Help | $0 | $0 | $4.15 | $10.35 |
Partial Extra Help | Varies based on income; between 0-75% of premium | $104 | No more than 15% of the cost; then $4.15 | No more than 15% of the cost; then $10.35 |
Putting It Together
Even though Medicare calculates standard premiums, your payment can vary significantly based on your income. If you earned above-average wages, or have significant investment earnings, you may have to pay a surcharge for Part B and Part D. On the other hand, if you have limited income, you might be eligible for federal or state financial support.
As you prepare to enroll in Medicare, it’s a good idea to start planning early so you can avoid any financial surprises. Use Medicare’s website to estimate your premium costs or shop around for the best Medicare Advantage rate.
When in doubt, discuss your options with a Medicare representative or contact your State Health Insurance Assistance Program. They can help you determine your premiums, choose a plan, and apply for assistance.