Not everyone pays the same amount for Medicare Part B

The standard Part B premium — the monthly charge for doctor visits and outpatient care — is set each year by Medicare and affects most people who enroll. For 2024, that standard amount is $164.90 per month, though the exact figure changes annually. However, you may pay less than the standard rate, nothing at all, or more than the standard rate, depending on your income, when you signed up, and whether you already worked long enough to earn Medicare coverage.

The most common reason your premium differs from the standard amount is your income level. Medicare uses a formula called Income-Related Monthly Adjustment Amount (IRMAA) to charge higher premiums to people with higher incomes. At the other end, people with very low income may pay nothing. Some people also pay less because they enrolled late and received a discount, or because they are still working and their employer covers part of the cost.

Key Takeaways

  • The standard Part B premium changes each year, but you may pay less if your income is below a certain threshold or nothing at all if you receive Supplemental Security Income (SSI).
  • If your income is above $97,000 as a single filer or $194,000 as a married couple filing jointly, you will pay a higher premium through IRMAA.
  • People who delay enrolling in Part B after they first become may be able to access may pay a permanent 10 percent penalty on top of the standard premium for each year they waited.
  • Your employer may cover some or all of your Part B premium if you are still working and covered under a group health plan.
  • State Medicaid programs and Medicare Savings Programs can pay your Part B premium if your income and resources fall within their limits.

How income affects what you pay each month

Medicare compares your income from two years ago to income thresholds set by law. If you earned more than the threshold for your filing status, you pay a surcharge on top of the standard premium. The surcharge increases in steps — the higher your income, the more you pay. For 2024, a single person with income between $97,000 and $110,000 pays about $230 per month instead of $165. Someone earning over $500,000 pays roughly $560 per month.

The income figure Medicare uses is your Modified Adjusted Gross Income (MAGI), which comes from your tax return from two years prior. If your income dropped significantly — you retired, sold a business, or had a major life change — you can ask Medicare to use your current year's income instead. This is called a Life-Changing Event request, and you must file it within 60 days of the event.

If your income is low enough, you may owe nothing for Part B. People who receive Supplemental Security Income (SSI) from Social Security do not pay a Part B premium at all. People with income just above the SSI threshold may pay a reduced amount.

When you pay nothing or get help from the state

Several state programs can pay your Part B premium if your income is low. The Medicare Savings Program (MSP) exists in every state and covers Part B premiums for people whose income is between 100 and 200 percent of the federal poverty line, depending on which tier of the program you enter. You explore through your state Medicaid office, not through Medicare directly.

A second route is Medicaid itself. If you are low-income enough to may have access to for your state's Medicaid program, Medicaid will pay your Part B premium as part of your coverage. Income limits vary by state, but in most places they are quite low — often under $900 per month for a single person.

A third option is the may have access to Individual (QI) program, which covers Part B premiums for people whose income is between 120 and 135 percent of poverty. This program has limited funding and operates on a first-come, first-served basis in many states, so availability changes throughout the year.

The penalty for signing up late

If you did not enroll in Part B when you first became may be able to access — usually at age 65 — and you did not have other health coverage through an employer or union, Medicare charges you a late enrollment penalty. The penalty is 10 percent of the standard premium for each full year you delayed. If you waited three years, you pay 30 percent extra on top of the standard rate, permanently, for as long as you have Part B.

The penalty applies only if you had no "creditable coverage" during the months you were not enrolled. Creditable coverage means health insurance through an employer, union, TRICARE, the Veterans Administration, or certain other sources. If you were covered through a spouse's employer plan, you do not owe a penalty when you enroll later. You will need to show proof of that coverage when you enroll.

What happens if your employer still covers you

If you are still working and your employer offers health insurance, you may not need to enroll in Part B right away. You can delay Part B without penalty as long as you have creditable coverage through the employer plan. Once you leave that job or lose the coverage, you have eight months to enroll in Part B without owing a late penalty.

Some employers pay part or all of an employee's Part B premium directly. If your employer does this, the amount they pay does not count as taxable income to you. You still owe the remainder of the premium yourself, unless your employer covers the full amount. When you retire and lose the employer coverage, you must enroll in Part B within eight months or face the late penalty.

How to find out what you will actually pay

Your Part B premium notice arrives in December for the following year. The notice shows the standard premium and any IRMAA surcharge you owe based on your income from two years prior. If the amount surprises you or seems wrong, you have 60 days from the date on the notice to request a review.

You can also call Medicare at 1-800-MEDICARE to ask what your premium will be before the official notice arrives. Have your Social Security number and recent tax return information ready. If you think your income has dropped significantly since the year Medicare is using, ask about filing a Life-Changing Event request at that time.

If you cannot afford the premium you are being charged, contact your state Medicaid office or your state health insurance counselor (through the State Health Insurance information Program, or SHIP) to learn whether you may have access to for a state program that covers the cost.

Frequently Asked Questions

Can I reduce my IRMAA surcharge if my income dropped after I retired?

Yes, if you had a major life change like retirement, divorce, or death of a spouse, you can request that Medicare use your current year's income instead of the income from two years ago. You must file this request within 60 days of the event. Contact Medicare at 1-800-MEDICARE or file online through your Medicare account.

Do I have to pay Part B if I am still working and covered by my employer?

No. You can delay Part B without penalty as long as your employer plan is active and you are still employed. Once you leave the job or lose the coverage, you have eight months to enroll without owing a late penalty. After eight months, the 10 percent annual penalty applies.

What is the difference between the Medicare Savings Program and Medicaid?

The Medicare Savings Program pays your Part B premium (and sometimes other costs) if your income is low but above the Medicaid limit. Medicaid covers a broader range of services and has lower income limits. You can may have access to for both at the same time. explore through your state Medicaid office for either program.

If my spouse is still working, do I have to pay the full Part B premium?

Your Part B premium is based on your own income, not your spouse's. However, if you are covered under your spouse's employer health plan, you can delay Part B without penalty. Once that coverage ends, you have eight months to enroll.

How far back does Medicare look at my income for the IRMAA calculation?

Medicare uses your income from two years prior. For 2024 premiums, they use your 2022 tax return. This means if you retired in 2023, your 2024 premium is based on income you earned before retirement. You can request a change if you had a major life event, but you must ask within 60 days.