What you pay depends on whether you're working or already retired

If you're still working, you and your employer each pay a set percentage of your wages toward Medicare and Social Security. These are separate taxes, taken from your paycheck before you see it. Once you turn 65 and enroll in Medicare, you pay a monthly premium for Part B (doctor visits) and Part D (prescription drugs) if you choose them — these come out of your Social Security check or are billed directly. The exact amounts change each year and depend on your income and when you signed up.

If you're self-employed, you pay both the employee and employer share, which is roughly double what a wage worker pays. If you're already retired and receiving Social Security, your Medicare premiums are usually deducted automatically from your monthly benefit.

Key Takeaways

  • Working people pay 1.45% of wages to Medicare and 6.2% to Social Security; employers match both amounts.
  • Self-employed people pay the full combined rate — 2.9% for Medicare and 12.4% for Social Security — on net earnings.
  • Medicare Part B premiums (for doctor coverage) and Part D premiums (for prescription drugs) are separate from payroll taxes and vary by income level.
  • Part B and Part D premiums are deducted from your Social Security check each month, or you can pay them directly if you don't receive benefits yet.
  • Higher earners pay an additional 0.9% Medicare tax on wages above a certain threshold, which varies by filing status.

Payroll taxes while you're working

Social Security tax is 6.2% of your gross wages (what you earn before deductions). Your employer pays another 6.2%, for a total of 12.4% going into the system. There is a wage cap — in 2024, you only pay Social Security tax on the first $168,600 of earnings. Once you earn above that amount in a year, no more Social Security tax is taken from your paycheck for the rest of that year.

Medicare tax is 1.45% of your gross wages, and your employer matches it with another 1.45%. Unlike Social Security, there is no wage cap — you pay 1.45% on every dollar you earn, no matter how much. Additionally, if your wages exceed $200,000 (single filers) or $250,000 (married filing jointly), you pay an extra 0.9% Medicare tax on the amount above that threshold. Your employer does not match this additional tax.

These taxes are withheld automatically by your employer. You can see them listed on your pay stub as "FICA" (Federal Insurance Contributions Act) or broken out separately as "Social Security" and "Medicare" or "HI" (Hospital Insurance).

What self-employed people pay

If you're self-employed, you pay both the employee and employer portions yourself. That means 12.4% for Social Security (up to the wage cap) and 2.9% for Medicare on your net self-employment income. You calculate this on Schedule SE when you file your taxes.

You can deduct half of your self-employment tax as a business expense on your tax return, which reduces your taxable income. The additional 0.9% Medicare tax on high earners applies to self-employed people the same way it applies to wage workers — on net earnings above the income threshold.

Medicare premiums after you turn 65

Once you enroll in Medicare, you pay monthly premiums for the parts you choose. Part A (hospital insurance) is usually free if you or your spouse paid Medicare taxes for at least 10 years. If you don't meet that requirement, you can buy it, but the cost varies.

Part B (doctor visits, outpatient care) has a standard monthly premium. In 2024, the standard premium is $174.70 per month, but the amount you pay depends on your income from two years ago. Higher earners pay more through a system called Income-Related Monthly Adjustment Amounts (IRMAA). If your income was above a certain level, your Part B premium could be $243.60, $348.40, $453.20, or $558 per month — the exact amount depends on your filing status and income brackets, which change yearly.

Part D (prescription drug coverage) premiums vary widely depending on which plan you choose. Plans range from roughly $7 to $100+ per month. You choose a Part D plan during your initial enrollment period or during the annual open enrollment period (October 15 to December 7 each year).

If you delay enrolling in Part B or Part D after you turn 65, you may pay a permanent penalty — a percentage increase added to your premium for as long as you have Medicare. The penalty is 10% per year for Part B and 1% per month for Part D.

How premiums are deducted from your benefits

If you receive Social Security, your Part B and Part D premiums are usually deducted automatically from your monthly check. You'll see the deduction listed on your Social Security statement. If you don't receive Social Security yet (for example, you're still working past 65), you'll receive a bill for your Part B premium, usually monthly.

Part A has no monthly premium for most people, but you pay a deductible when you use hospital services. In 2024, the Part A deductible is $1,632 per benefit period. Part B also has a deductible ($240 in 2024) and coinsurance — you typically pay 20% of the cost of covered services after you meet the deductible.

Income thresholds that affect what you pay

Your Part B and Part D premiums are based on your Modified Adjusted Gross Income (MAGI) from two years before. Medicare uses tax brackets to determine how much you pay. For example, in 2024, a single person with MAGI up to $97,000 pays the standard Part B premium. Someone with MAGI between $97,001 and $123,000 pays more. The brackets continue upward, and the highest earners pay the most.

These income thresholds are adjusted each year. If your income drops — for example, because you retired or had a major life change — you can ask Medicare to recalculate your premium based on your current year's income instead of the two-year-old figure. This is called a Life-Changing Event adjustment.

What happens if you work past 65

If you're still working and earning wages after 65, you continue to pay Social Security and Medicare payroll taxes on those wages, even if you've enrolled in Medicare. You do not get a break on payroll taxes just because you're on Medicare.

However, if you delay claiming Social Security past your full retirement age, your benefit amount increases by roughly 8% per year until age 70. This is called a delayed retirement credit. The longer you wait, the higher your monthly benefit will be for the rest of your life.

Frequently Asked Questions

Do I have to pay Medicare taxes if I'm self-employed?

Yes. Self-employed people pay both the employee and employer share of Medicare tax (2.9% total) on net self-employment income, with no wage cap. You also pay the additional 0.9% Medicare tax if your net earnings exceed the income threshold for your filing status.

What's the difference between what I pay now and what I'll pay in Medicare premiums later?

Payroll taxes (Social Security and Medicare) are taken from your wages while you work. Medicare premiums are monthly charges you pay after you turn 65 for Part B and Part D coverage. Part A is usually free. Premiums are separate from payroll taxes and are based on your income level.

Can I reduce my Medicare premiums if my income drops?

Yes. If you have a major life change — such as retirement, loss of income, or marriage — you can ask Medicare to recalculate your premiums based on your current year's income instead of the two-year-old figure used by default. Contact Social Security or Medicare to request this adjustment.

What happens if I don't enroll in Part B or Part D when I turn 65?

If you delay enrollment without a valid reason, you'll pay a permanent penalty — 10% more per year for Part B and 1% more per month for Part D. The penalty stays with you for life. There are exceptions if you have other health coverage through an employer.

Do I still pay Social Security tax after I start receiving benefits?

If you're still working, yes — you pay Social Security tax on your wages regardless of whether you're receiving benefits. However, if your earnings are high enough, part of your Social Security benefit may be withheld temporarily. Once you reach full retirement age, there is no earnings limit and no withholding.