The Basic Formula: Income and Brackets
Your Medicare Part B premium depends on your modified adjusted gross income (MAGI) from two years ago. Medicare uses your tax return from that year to sort you into one of five income brackets, each with its own monthly premium. The higher your income bracket, the more you pay — and the increase can be substantial.
For 2024, the standard Part B premium is $164.90 per month for most people. But if your MAGI exceeds certain thresholds, you pay more. A single person earning $97,000 pays the standard rate. A single person earning $500,000 pays roughly triple that amount. The brackets reset each year, and the dollar thresholds change annually based on inflation.
The two-year lag matters. If you retired in 2024 and your income dropped sharply, Medicare is still using your 2022 tax return to calculate your 2024 premium. You cannot change this retroactively, but you can request a review if your income dropped due to a specific life event — and that review can lower your premium going forward.
Key Takeaways
- Medicare calculates your Part B premium using your modified adjusted gross income from two years prior, sorted into five income brackets with different monthly costs.
- The standard premium for 2024 is $164.90 per month, but higher earners pay surcharges called Income-Related Monthly Adjustment Amounts (IRMAA) that can triple the cost.
- If your income drops due to retirement, job loss, or divorce, you can request a life-event review to lower your premium when ready rather than waiting two years.
- Your MAGI includes wages, self-employment income, interest, dividends, and certain other sources — not just what you earned from work.
- Part B premiums are deducted from your Social Security check automatically, or you receive a bill if you do not yet receive Social Security.
What Income Counts Toward Your Premium
MAGI is not the same as your salary. It includes wages, self-employment income, interest, dividends, capital gains, rental income, and distributions from retirement accounts. It also includes half of any Social Security benefits you receive. Some income sources are excluded — for example, Supplemental Security Income (SSI) and certain railroad retirement benefits do not count.
If you are married and file jointly, Medicare adds both spouses' incomes together. A couple where one spouse earned $60,000 and the other earned $50,000 has a combined MAGI of $110,000 for premium purposes, even if they file separately for other tax reasons. This can push a couple into a higher bracket than either person would reach alone.
Tax-exempt interest from municipal bonds counts toward MAGI for Medicare purposes, even though it does not count on your federal tax return. Roth conversions also count — the amount you convert is added to your MAGI that year, which can push you into a higher premium bracket. This is a common surprise for people managing their retirement income strategically.
The Five Income Brackets and 2024 Premiums
Medicare publishes the income thresholds and corresponding premiums each year. For 2024, here is how the brackets work for a single person:
| Income Range (Single) | Monthly Premium |
|---|---|
| Up to $97,000 | $164.90 |
| $97,001 to $123,000 | $230.80 |
| $123,001 to $153,000 | $329.70 |
| $153,001 to $183,000 | $428.60 |
| Over $183,000 | $527.50 |
For married couples filing jointly, the thresholds are roughly double. A couple with MAGI under $194,000 pays the standard rate. A couple over $366,000 pays the highest surcharge. These numbers change each year — the 2025 thresholds will be higher than 2024, and you can find the current year's brackets on Medicare.gov.
The surcharge you pay above the standard premium is called an Income-Related Monthly Adjustment Amount (IRMAA). It is not a separate bill; it is added to your Part B premium. If you also have Medicare Part D (prescription drug coverage), you pay an IRMAA on that too, calculated using the same income brackets.
How the Two-Year Lookback Works
Medicare uses your tax return from two years before the year you are paying the premium. If you are paying Part B premiums in 2024, Medicare looked at your 2022 tax return. In 2025, they will look at your 2023 return. This lag exists because Medicare needs time to receive tax data from the IRS.
The two-year lag creates a timing problem for people who retire or experience a major income drop. If you retired in 2023 and your income fell from $200,000 to $40,000, you still pay the high-income premium in 2024 and 2025 because Medicare is using your 2022 and 2023 returns. Your premium will drop in 2026 when they use your 2024 return.
You cannot change this by waiting or by filing an amended return. But if your income dropped due to a life-event change — retirement, job loss, divorce, death of a spouse, or loss of income-producing property — you can request a review. Medicare will recalculate your premium using your current-year income instead of the two-year-old return. This review is called a Medicare Income-Related Monthly Adjustment Amount (IRMAA) appeal.
Requesting a Premium Review After a Life Event
To request a review, you need to contact Social Security (not Medicare directly). Call 1-800-772-1213 or visit your local Social Security office. You will need to explain the life event and provide documentation — a termination letter from your employer, a divorce decree, a death certificate, or a statement of reduced income from your business.
Social Security will ask for your current-year income estimate. If you are newly retired, they may ask for a letter from your employer confirming your retirement date and final salary. If you had a business loss, bring documentation of that loss. The review typically takes two to four weeks.
If Social Security approves the review, your new premium takes effect the following month. You will receive a notice showing your recalculated premium. If you overpaid during the months before the review, Medicare does not refund the difference — it applies the credit to future premiums. This is why it is important to request a review as soon as your income changes, not months later.
How Your Premium Is Paid
If you receive Social Security benefits, your Part B premium is deducted automatically from your monthly check. You will see the deduction on your Social Security statement each month. If you do not yet receive Social Security, Medicare sends you a bill each month or quarter, depending on your preference.
If you are still working and have not yet claimed Social Security, you will receive a bill. Some people choose to pay quarterly instead of monthly to reduce paperwork. You can change your payment method by contacting Medicare at 1-800-MEDICARE or through your Medicare account online.
If you miss a payment, Medicare will send you a notice. If you do not pay within three months, your Part B coverage can be terminated. If you later want to re-enroll, you may face a permanent penalty — your premium will be 10 percent higher for each year you were not enrolled. This penalty applies even if you re-enroll years later, so it is important to stay current on payments or contact Medicare if you are having trouble paying.
Frequently Asked Questions
Can I lower my Part B premium if my income dropped this year?
Yes, if your income dropped due to retirement, job loss, divorce, or death of a spouse. Contact Social Security at 1-800-772-1213 with documentation of the change. They will recalculate your premium using your current income, and the new rate takes effect the following month. Without a documented life event, you must wait for the two-year lookback to cycle through.
Does my Part B premium change every year?
Yes. The standard premium and income thresholds change each year based on inflation and program costs. Even if your income stays the same, your premium may increase. Medicare announces the new rates in the fall for the following year, and the changes take effect January 1.
What if I am married but file taxes separately?
Medicare still combines both spouses' incomes for premium calculation purposes, even if you file separate tax returns. This often results in a higher premium than if you filed jointly. Married couples filing separately should discuss this with a tax professional, as the Medicare impact may outweigh other tax benefits of filing separately.
Does my Part D prescription drug premium use the same income brackets?
Yes. If you have Medicare Part D coverage, you pay an IRMAA on that too, calculated using the same income brackets and two-year lookback as Part B. Your Part D IRMAA is added to your Part D premium, so higher earners pay more for prescription coverage as well.
What happens if I disagree with Medicare's income calculation?
You can request a formal appeal. Contact Social Security or Medicare to request a reconsideration. You will need to provide documentation showing that Medicare's income figure is incorrect — for example, a corrected tax return or evidence that the income was from a non-countable source. The appeal process typically takes four to six weeks.