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How Does Income Affect Medicare Premiums?

If you’re nearing Medicare eligibility, you may wonder – does my income impact what I’ll pay for Medicare coverage? The short answer is yes, income can affect your Medicare premium costs. Medicare uses your income reported on your federal tax return to determine if you’ll pay more for Part B and Part D coverage.

Higher income earners pay extra premium surcharges based on modified adjusted gross income (MAGI). Understanding how Medicare calculates your income and uses it to adjust premiums can help you estimate your total plan costs.

Medicare Part B Premiums and Income in 2023

All Medicare beneficiaries pay a monthly premium for Part B medical insurance. This premium is set each year. In 2023, the standard Medicare Part B premium is $164.90 per month.

However, if your income exceeds $97,000 as an individual or $194,000 as a married couple, you’ll also pay an extra Medicare income-related monthly adjustment amount (IRMAA) premium based on your MAGI.

These income brackets apply for determining your 2023 Part B premium costs:

  • $97,000 or below: $164.90 per month
  • $97,001 – $123,000: $259.80 per month
  • $123,001 – $153,000: $329.80 per month
  • $153,001 – $183,000: $446.50 per month
  • $183,001 – $499,999: $532.70 per month
  • $500,000 and above: $573.10 per month

The extra IRMAA premium is added on top of your standard monthly Part B premium. So higher earners pay more for their Medicare coverage.

What Income Does Medicare Look At?

To determine if you owe any IRMAA premiums, Medicare looks at your MAGI from your federal income tax return.

Your MAGI includes things like:

  • Wages
  • Interest/Dividends
  • Capital Gains
  • Business Income
  • Retirement Distributions

Your MAGI is your total adjusted gross income plus any joint tax-exempt interest income you have.

The tax return Medicare looks at to calculate your IRMAA for 2023 is your 2021 return that you filed in 2022. So your Medicare premiums are based on income from two years prior.

Medicare Part D Premium Surcharges

If you enroll in a Medicare Part D prescription drug plan, you’ll also pay a monthly premium averaging around $30 to $70 per month. Higher earners pay an additional Part D income-related monthly adjustment amount (Part D-IRMAA) premium.

The Part D-IRMAA brackets are the same as for Part B. So if your income exceeds the thresholds, you’ll owe extra for both your Part B coverage and any Part D drug plan.

In 2023, Part D-IRMAA amounts range from an extra $12.20 per month up to an additional $76 per month depending on your income. This is added to your regular Part D Plan premium.

What If Your Income Has Gone Down?

Medicare bases its premium calculations on your income from two years ago. If your current income is significantly lower, this can mean you’re paying higher IRMAA premiums based on outdated earnings information.

Fortunately, you can request that Medicare adjust your premiums by providing documentation that shows your income has decreased and now falls into a lower bracket.

Examples of proof of reduced income include tax returns, pay stubs, or Social Security benefit statements. Submit this to Medicare to potentially reduce your Part B and D premium costs.

How To Estimate Your Medicare Premiums

Wondering what your total Medicare premiums may cost in 2023 based on 2022 income? Here are the steps:

  1. Determine your 2022 MAGI that you’ll report when filing taxes in early 2023.
  2. Look up the Part B IRMAA premium bracket your MAGI falls into for 2023.
  3. Add the base Part B premium ($ 164.90) to your income-based IRMAA amount if applicable.
  4. Estimate your Part D Plan premium based on plans you’re considering.
  5. Look up if any Part D-IRMAA applies and add to your plan premium estimate.

This will give you an idea of your total Medicare premium costs. Actual costs may differ somewhat depending on the plan you choose.

Is There Help for Low-Income Medicare Beneficiaries?

If you have limited income and resources, you may qualify for help paying your Medicare premiums and other out-of-pocket costs.

Medicaid and Medicare Savings Programs provide assistance if you meet state eligibility guidelines. You can also get help with Part D costs through the Extra Help program.

To learn about available assistance options, contact your State Health Insurance Assistance Program or your local Medicaid office.


While Medicare offers broad health coverage, premiums and total costs can vary significantly based on your income. Monitoring your MAGI, understanding IRMAA brackets, and reporting income decreases promptly will help you keep Medicare premiums as low as possible.

We’re Here to Help

You do not have to spend hours reading articles on the internet to get answers to your Medicare questions. Give the licensed insurance agents at Senior Health Advocates a Call at (386) 222-3030. You will get the answers you seek in a matter of minutes, with no pressure and no sales pitch. We are truly here to help.


How does your income affect Medicare premium costs?

 Your income can have an impact on the amount you need to pay for Medicare premiums. If your income is higher, you may have to pay a higher premium.

What is the income-related monthly adjustment amount?

 The income-related monthly adjustment amount (IRMAA) is an additional amount that some Medicare beneficiaries have to pay for Part B and Part D premiums. It is based on your modified adjusted gross income.

What is adjusted gross income?

 Adjusted gross income (AGI) is your total income from all sources, minus any allowable deductions. It is used to determine your modified adjusted gross income for Medicare premium calculation purposes.

How is the income-related monthly adjustment amount calculated?

The income-related monthly adjustment amount is calculated based on your modified adjusted gross income from your tax return. The amount varies depending on your income level.

Will I have to pay higher premiums if my income is higher?

Yes, if your income is above a certain threshold, you may have to pay a higher premium for Medicare Part B and Part D coverage.

What are the income limits for paying higher premiums?

The income limits for paying higher premiums can change each year. For the year 2023, individuals with a modified adjusted gross income above $88,000 and couples with a modified adjusted gross income above $176,000 will pay higher premiums.

What are the standard Part B and Part D premiums?

The standard Part B premium for Medicare is $164.90 per month in 2021. The Part D premium can vary depending on the specific prescription drug plan you choose.

How can I avoid paying the income-related monthly adjustment amount?

 There are certain circumstances in which you may be able to avoid paying the income-related monthly adjustment amount. These include if you have a life-changing event that affects your income or if you qualify for a low-income subsidy.

Can I change my Medicare Plan if my income changes?

 Yes, if your income changes and you are paying an income-related monthly adjustment amount, you may have the option to change your Medicare Plan during the Medicare Annual Enrollment Period.

What if I cannot afford to pay the higher premiums?

If you cannot afford to pay the higher premiums for Medicare Part B and Part D, you may be eligible for assistance programs like the Medicare Savings Programs or the Extra Help program for prescription drug coverage.


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