Not everyone pays the same Medicare premium

The $170 figure you may have heard refers to the standard Part B premium for 2024, but your actual premium depends on your income. If you earned more than a certain amount in the past two years, you will pay a higher premium through a process called Income-Related Monthly Adjustment Amount (IRMAA). If your income was lower, you may pay less. Medicare also offers programs that can reduce or cover your premiums entirely if your income is low enough.

Your premium is not set once and forgotten. It changes each year based on your reported income from two years prior, and it can change mid-year if your circumstances shift — a death in the family, loss of a job, or retirement can all trigger a review and adjustment downward.

Key Takeaways

  • The $170 standard Part B premium applies only to people whose modified adjusted gross income falls below the threshold for that year; higher earners pay more through IRMAA surcharges.
  • Your premium is based on your income from two years ago, so a recent drop in earnings may not show up in your bill until the following year.
  • If your income has recently decreased due to retirement, job loss, or a death in the family, you can request a recalculation without waiting for the annual adjustment.
  • Low-income seniors may may have access to for Medicaid or the Medicare Savings Program, which can reduce or eliminate your Part B premium.
  • You receive a notice each year showing your premium and the income figure it is based on; you have the right to challenge that income if it is wrong.

How IRMAA surcharges work

If your modified adjusted gross income (MAGI) exceeds a certain threshold, Medicare adds a surcharge to your Part B premium. For 2024, the thresholds start at $97,000 for single filers and $194,000 for married couples filing jointly. The surcharge increases in steps: the higher your income, the more you pay above the standard $170.

These income thresholds change each year. Medicare publishes the new thresholds in the fall, and they take effect the following January. The surcharge itself can range from about $70 per month to over $560 per month, depending on your income bracket. Part D (prescription drug coverage) and Part A (hospital insurance) can also have income-related surcharges if your income is high enough.

The income figure Medicare uses is your MAGI from your tax return from two years prior. If you filed taxes, Medicare has access to that information through the Internal Revenue Service. If you did not file taxes that year, Medicare may estimate your income based on other sources, and you have the right to provide documentation showing a different figure.

When you can request a premium reduction

You do not have to wait until the next calendar year if your income has dropped significantly. Medicare allows you to request a life-changing event review if certain circumstances have occurred in the past 60 days. These include retirement, loss of income-producing property, death of a spouse, divorce, or loss of a job.

To request a review, contact Social Security at 1-800-772-1213 or visit your local Social Security office. You will need to provide documentation of the event — a termination letter from your employer, a death certificate, divorce papers, or proof that you sold property. Social Security will forward your request to Medicare, and Medicare will recalculate your premium based on your current income rather than the two-year-old figure.

This process typically takes two to four weeks. Your new premium will be effective the month after Medicare approves the change. If you have already paid the higher premium for months after your income dropped, Medicare may issue a refund or credit the difference toward future premiums.

Low-income programs that reduce or eliminate premiums

If your income is low, you may not pay any Part B premium at all. The Medicare Savings Program (MSP) is a Medicaid program run by your state that pays Medicare premiums, deductibles, and copayments for people whose income falls below 135% to 200% of the federal poverty level, depending on your state and which tier of the program you enter.

To find out whether you may have access to and how to enroll, contact your state Medicaid office or call 1-800-MEDICARE (1-800-633-4227). You can also visit your local Area Agency on Aging, which can walk you through the process. Enrollment is year-round; you do not have to wait for a specific enrollment period.

If your income is even lower — below 100% of the federal poverty level — you may may have access to for full Medicaid, which covers your Part B premium and much more. The income and asset limits vary by state, and so does the process process. Your state Medicaid office or local Area Agency on Aging can tell you what the limits are where you live and how the process works.

Understanding your premium notice

Each year, usually in November, Medicare sends you a notice showing your Part B premium for the coming year. The notice includes the income figure Medicare used to calculate your premium. If that income figure is wrong — because you did not earn that much, because you have since retired, or because the IRS reported incorrect information — you have the right to challenge it.

On the back of the notice, there are instructions for requesting a review. You will need to provide documentation of your actual income: a recent tax return, a letter from your employer showing your earnings, or a statement from Social Security showing your benefit amount. Mail the form and your documentation to the address on the notice, or call the number provided to request a review by phone.

If Medicare agrees that the income figure is wrong, they will recalculate your premium and send you a corrected notice. If you have already paid the higher premium, they will refund the difference or explore it to future months.

What happens if you do not pay your premium

If you do not pay your Part B premium, Medicare will send you a bill and a grace period notice. You typically have three months to pay before Medicare suspends your coverage. Once coverage is suspended, you cannot use it until you pay the full amount owed, including any late fees.

If you cannot afford to pay, contact Medicare when ready at 1-800-MEDICARE. They can discuss payment plans or refer you to local information programs. If you may have access to for the Medicare Savings Program or Medicaid, enrolling in one of those programs will cover your premium and prevent suspension.

Frequently Asked Questions

Can my premium go down if I retire?

Yes. If you retire and your income drops, you can request a life-changing event review within 60 days of your retirement date. Bring a letter from your employer confirming your last day of work. Medicare will recalculate your premium based on your new income, usually resulting in a lower premium or a refund of overpayments.

Why is my premium higher than my neighbor's if we both get Social Security?

Your premium is based on your total income, not just Social Security. If you have other income — from a job, a pension, investment earnings, or rental property — that increases your MAGI and may trigger IRMAA surcharges. Your neighbor may have lower total income, resulting in a lower premium.

What if I disagree with the income Medicare says I earned?

Request a review by returning the form on the back of your premium notice with documentation of your actual income. You can send a copy of your tax return, a letter from your employer, or a Social Security statement. Mail it to the address on the notice or call the number provided.

Do I have to pay the higher premium if I am still working?

Yes. IRMAA is based on your income, regardless of whether you are working or retired. However, if your income drops during the year due to job loss or retirement, you can request a review and may receive a refund or credit for months you overpaid.

Is there a way to avoid IRMAA surcharges?

IRMAA is based on income from two years prior, so you cannot avoid it retroactively. However, certain financial moves — such as converting a traditional IRA to a Roth IRA — may affect your future MAGI. Speak with a tax professional or financial advisor about strategies that may lower your future income and premiums.