Your Medicare premium depends on your income, the year you signed up, and which parts you choose
Medicare Part A (hospital insurance) has no monthly premium for most people — you paid for it through payroll taxes while you worked. Part B (medical insurance) and Part D (prescription drug coverage) do charge monthly premiums, and the amount you pay is tied directly to your income from two years ago. Part C (Medicare Advantage) premiums vary by plan and location. Understanding how each part calculates its cost helps you predict what you'll owe and spot errors on your bill.
The income figure Medicare uses is your Modified Adjusted Gross Income (MAGI), which comes from your tax return. For most people, MAGI is the same as your adjusted gross income. Medicare looks at your MAGI from two years before the current year — so in 2024, they use your 2022 tax return. If your income drops significantly (retirement, job loss, divorce), you can report the change and have your premium recalculated sooner.
Key Takeaways
- Part B and Part D premiums are based on your income from two years prior, using the Modified Adjusted Gross Income from your tax return.
- Higher income triggers Income-Related Monthly Adjustment Amounts (IRMAA), which add surcharges to your Part B and Part D premiums.
- If your income drops due to retirement, job loss, or divorce, you can report the change and have your premium recalculated in the same year.
- Part A has no premium for most people; Part C premiums vary by plan and are set by the insurance company, not by income.
- Your premium notice arrives in December for the following year, giving you time to review the amount before January coverage begins.
How Part B premiums are set and adjusted for income
The standard Part B premium is the same for everyone, but it increases each year based on the cost of living. In 2024, the standard premium is $164.90 per month, though this figure changes annually. If you enroll in Part B after your initial enrollment period (the three months before and after your 65th birthday), you pay a permanent 10% surcharge for each year you delayed — this is called the late enrollment penalty.
If your MAGI exceeds a certain threshold, Medicare adds an Income-Related Monthly Adjustment Amount (IRMAA) on top of your standard premium. The income thresholds and surcharge amounts change each year. For example, in 2024, if you are single and your MAGI is between $97,000 and $121,000, you pay an extra amount per month. If your MAGI is above $500,000 (single) or $750,000 (married filing jointly), you pay the highest surcharge. These thresholds are indexed to inflation, so they shift annually.
You receive a notice called the Notice of Medicare Premium Amount in December, which shows your Part B premium for the following year. If the amount seems wrong — for example, if your income dropped significantly — you have 60 days from the date on the notice to request a change.
Part D prescription drug premiums and income-related surcharges
Part D premiums are set by the insurance company offering the plan, so they vary widely depending on which plan you choose and where you live. The base premium covers the cost of the plan's drug formulary. Like Part B, Part D also uses IRMAA: if your income exceeds the threshold, you pay an additional monthly surcharge on top of the plan's base premium.
The income thresholds for Part D IRMAA are the same as for Part B, but the surcharge amounts are different and are recalculated each year. In 2024, the surcharge ranges from about $7 to $76 per month depending on your income level. You will see both the plan premium and the IRMAA surcharge listed separately on your bill.
If you do not enroll in Part D when you first become may be able to access, you pay a late enrollment penalty equal to 1% of the national average Part D premium for each month you were without coverage. This penalty is permanent and is added to your premium for as long as you have Part D coverage.
Part A premiums and who pays them
Most people pay nothing for Part A because they or their spouse paid Medicare taxes (called the Hospital Insurance Tax) for at least 40 quarters (10 years) while working. If you do not have 40 quarters of work history, you may be able to buy Part A coverage. In 2024, the Part A premium for someone with 30 to 39 quarters of work history is $278 per month; for someone with fewer than 30 quarters, it is $505 per month. These amounts are adjusted annually.
Part A has no income-related surcharge. Your premium is either zero (if you have sufficient work history) or a flat monthly amount (if you are buying coverage). Part A does not use IRMAA.
Part C (Medicare Advantage) premiums and how they work
Part C plans are offered by private insurance companies and bundle Part A, Part B, and usually Part D coverage into one plan. Each insurance company sets its own Part C premium, which can range from $0 to several hundred dollars per month depending on the plan and your location. Some plans in some areas have no premium at all, though you still pay the Part B premium to Medicare separately (unless the plan is a special type that includes it).
Part C premiums are not based on income. The insurance company cannot charge you more because you earn more money. However, if your income is high enough to trigger IRMAA, you still pay the Part B and Part D surcharges separately — the Part C plan premium itself does not change.
Part C plans are available only in certain geographic areas, and the plans offered and their premiums change each year. You can review available plans and their costs during the Annual Enrollment Period (October 15 to December 7) using the Medicare Plan Finder tool on Medicare.gov.
Income thresholds and IRMAA surcharge amounts for 2024
| Income Level (Single Filer) | Income Level (Married Filing Jointly) | Part B IRMAA Surcharge | Part D IRMAA Surcharge |
|---|---|---|---|
| $97,000 or less | $194,000 or less | $0 | $0 |
| $97,001–$121,000 | $194,001–$242,000 | $65.90 | $7.00 |
| $121,001–$145,000 | $242,001–$290,000 | $164.70 | $18.70 |
| $145,001–$169,000 | $290,001–$338,000 | $263.50 | $30.40 |
| $169,001–$500,000 | $338,001–$750,000 | $362.30 | $42.10 |
| Over $500,000 | Over $750,000 | $362.30 | $76.20 |
These thresholds and amounts are adjusted annually and are based on 2022 income (used in 2024). The thresholds do not change with inflation, but the surcharge dollar amounts do. If your income is near a threshold, even a small increase can move you into a higher bracket.
What to do if your income drops or changes
If your income decreases due to retirement, job loss, death of a spouse, or divorce, you do not have to wait two years for Medicare to use your new income. You can request a life-changing event adjustment by contacting Social Security. You will need to provide documentation of the change — a retirement letter, a divorce decree, a death certificate, or a letter from your employer showing the job loss date.
Social Security will recalculate your MAGI using your current year's projected income instead of the income from two years ago. This can lower your Part B and Part D surcharges when ready. You have 60 days from the date of your premium notice to request this change, though it is best to report it as soon as the change happens.
If you report a change and your income goes back up later in the year, Medicare will use the higher income for the following year's premium. The adjustment is not permanent — it applies only to the current year.
How to review your premium notice and spot errors
Your Notice of Medicare Premium Amount arrives in December and shows your Part B and Part D premiums for the following year. The notice lists your MAGI, the income threshold that applies to you, and the surcharge amount (if any). Review the MAGI figure carefully — if it is wrong, your entire premium calculation is wrong.
Common errors include income from a one-time event (a home sale, an inheritance, a retirement account withdrawal) being counted when it should not be, or income from a spouse being included when you file separately. If you spot an error, call Social Security at 1-800-772-1213 and ask to speak with someone about your MAGI. Have your most recent tax return available.
If you disagree with the surcharge amount but your MAGI is correct, you can request a reconsideration through Social Security. This is different from a life-changing event adjustment — it is used when you believe the income figure itself is inaccurate or when you have a circumstance that makes the surcharge unfair.
Frequently Asked Questions
Why does Medicare use my income from two years ago instead of this year?
Medicare uses prior-year income because it takes time to process tax returns and calculate premiums for millions of people. Using a consistent, documented figure (your tax return) prevents disputes. If your income drops significantly, you can report the change and have your premium recalculated in the same year.
Can I lower my Part B or Part D premium by reducing my income?
You cannot deliberately reduce your income to lower your Medicare premium, and Medicare will not recalculate based on temporary income reductions. However, if your income drops due to a life-changing event (retirement, job loss, divorce, death of a spouse), you can report it and have your premium adjusted.
What counts as income for the MAGI calculation?
MAGI includes wages, self-employment income, interest, dividends, rental income, and distributions from retirement accounts. It does not include Social Security benefits. If you are unsure whether a specific type of income counts, check your tax return — your MAGI is listed there.
Do I have to pay Part B and Part D surcharges if I have a Part C plan?
If your income triggers IRMAA, you pay the Part B surcharge to Medicare and the Part D surcharge to your plan (if your plan includes Part D). The Part C plan premium itself does not increase based on income. You pay all three amounts separately.
What happens if I disagree with my premium amount?
You have 60 days from the date on your premium notice to request a change. Contact Social Security at 1-800-772-1213 with documentation of the error or life-changing event. If Social Security denies your request, you can file an appeal.