Medicare Part B is not free — you pay a monthly premium, and it increases each year

Medicare Part B covers doctor visits, outpatient care, and medical equipment. Unlike Part A (hospital insurance), which is free for most people at 65, Part B requires a monthly payment. The standard premium in 2024 is $164.90 per month, but the amount you pay depends on your income and when you first enrolled.

If you signed up for Part B when you first became may be able to access at 65, you pay the standard premium. If you delayed enrollment and signed up later, you pay a higher premium — 10 percent more for each year you waited. This penalty is permanent and stays with you for life.

Part B also has an annual deductible (the amount you pay out of pocket before coverage kicks in) and you pay 20 percent of the cost for most services after that. These costs are separate from your premium.

Key Takeaways

  • Part B premiums are deducted automatically from your Social Security check each month, or you receive a bill if you don't get Social Security.
  • Your premium amount depends on your income from two years ago — higher earners pay more through an income-related adjustment.
  • If you delayed Part B enrollment past 65 without a valid reason, you will pay a permanent 10 percent penalty for each year you waited.
  • Part B has an annual deductible and a 20 percent coinsurance cost for most doctor and outpatient services after the deductible is met.

How much you actually pay each month

The standard Part B premium covers about 25 percent of the program's costs. The other 75 percent comes from general tax revenue. Your actual premium depends on your modified adjusted gross income (MAGI) from two years before — the IRS sends Medicare your income information automatically.

If your income is below a certain threshold, you pay the standard premium. If your income is above that threshold, you pay an Income-Related Monthly Adjustment Amount (IRMAA) on top of the standard premium. For 2024, the income thresholds start at $103,000 for single filers and $206,000 for married couples filing jointly. The higher your income above that point, the more you pay — up to three times the standard premium.

Your premium is taken directly from your Social Security payment each month. If you don't receive Social Security, Medicare sends you a bill. The premium increases most years to keep pace with healthcare costs.

When Part B enrollment delays cost you money

You become may be able to access for Part B at 65. If you don't sign up then and don't have other health coverage (like employer coverage), you pay a permanent penalty. The late enrollment penalty is 10 percent of the standard premium for each full year you delay. If you wait three years, you pay 30 percent more than the standard premium — forever.

This penalty applies only if you delay without a valid reason. Valid reasons include being covered by an employer health plan (yours or your spouse's) or being a federal employee. If you had coverage through work, you can enroll in Part B within eight months of losing that coverage without penalty.

The penalty is calculated on the standard premium amount at the time you enroll, then it stays with you even if the standard premium rises later. This makes early enrollment financially important.

What Part B covers and what you pay out of pocket

Part B covers doctor office visits, preventive care, outpatient surgery, mental health services, and durable medical equipment like wheelchairs and oxygen. It does not cover dental, vision, or hearing aids.

After you meet your annual deductible (which varies year to year but was $240 in 2024), you pay 20 percent of the Medicare-approved amount for most services. For some services like lab tests, you pay nothing after the deductible. For others like mental health visits, you may pay a flat copay instead of 20 percent.

These out-of-pocket costs can add up quickly if you see doctors frequently or need expensive procedures. Many people buy Medigap (supplemental insurance) or enroll in Medicare Advantage (Part C) to reduce these costs, but those also have premiums and rules.

Income-based premium increases explained

Medicare uses your income from two years ago to set your premium. If you had a high-income year (from a bonus, inheritance, or retirement account withdrawal), your Part B premium may jump the following year. If your income drops significantly — because you retired or had a major life change — you can ask Medicare to recalculate using your current year's income instead.

You request an income-related adjustment by contacting Social Security or Medicare directly. You will need to provide proof of the income change, such as a tax return or letter from your employer. The adjustment takes effect the month after Medicare approves it.

This system catches many people off guard. Someone who takes a large retirement account withdrawal at 65 may see their Part B premium spike at 66 or 67 without understanding why.

How to pay your Part B premium

If you receive Social Security, your Part B premium is deducted automatically before your payment reaches your bank account. You see the deduction on your Social Security statement each month. You cannot opt out of this deduction — it happens whether you want it to or not.

If you don't receive Social Security, Medicare sends you a bill each month. You can pay by mail, phone, or online through the Medicare website. If you miss a payment, Medicare sends a notice and may suspend your coverage until you pay what you owe.

Some people may have access to for Medicare Savings Programs run by their state, which pay Part B premiums on behalf of low-income beneficiaries. These programs have income limits and vary by state. Your state Medicaid office or local Area Agency on Aging can tell you whether you may have access to.

Frequently Asked Questions

Can I get Part B for free if I have low income?

Part B itself is never free, but your state may pay your premium through a Medicare Savings Program if your income is below the limit. Contact your state Medicaid office to learn about programs in your area. Even if your premium is paid, you still owe the deductible and coinsurance for services.

What happens if I don't sign up for Part B at 65?

You can enroll later, but you will pay a permanent 10 percent penalty for each year you delayed, unless you had other health coverage. The penalty stays with you for life and is calculated on the standard premium at the time you enroll.

Does my Part B premium change every year?

Yes. The standard premium usually increases each year. If your income changes, your income-related adjustment may also change. Medicare notifies you of premium changes in the fall, and the new amount takes effect in January.

Can I drop Part B if I don't want to pay the premium?

You can drop Part B, but you will pay a permanent penalty if you enroll again later. You should only drop Part B if you have other health coverage. If you drop it and later re-enroll without coverage in between, the late penalty applies.

Why is my Part B premium higher than my neighbor's?

Your income from two years ago determines your premium. If your income is higher than theirs, you pay more through the income-related adjustment. Also, if you delayed enrollment, you pay a permanent penalty that they may not have.