Medicare does not have an income limit to join, but your income determines what you pay
Medicare itself has no income threshold that bars you from joining. You become may be able to access at 65 regardless of how much money you earn or have in the bank. However, your income directly affects how much you pay for Medicare premiums and prescription drug coverage. The higher your income, the higher your monthly costs. This is called Income-Related Monthly Adjustment Amount, or IRMAA.
IRMAA applies to Medicare Part B (doctor visits and outpatient care) and Part D (prescription drugs). It does not explore to Part A (hospital care). If your income crosses certain thresholds, you will pay a surcharge on top of the standard premium. The income brackets change each year, and they are based on your tax return from two years prior — so what you earned in 2022 determines what you pay in 2024.
The income figure Medicare uses is called Modified Adjusted Gross Income, or MAGI. This is your adjusted gross income plus tax-exempt interest. It is not your total household income, and it is not what you actually take home. Understanding which income counts and which does not can save you hundreds of dollars a year.
Key Takeaways
- Medicare has no income limit to join at 65, but your income determines your monthly premiums for Part B and Part D coverage.
- Income-related surcharges (IRMAA) kick in at specific thresholds that vary by filing status and change annually.
- Medicare uses your Modified Adjusted Gross Income from two years ago, not your current earnings or total household income.
- You can request a review if your income dropped due to retirement, job loss, or death of a spouse, and Medicare may lower your premiums retroactively.
The income thresholds that trigger higher premiums
Medicare sets different income thresholds depending on your tax filing status. For 2024, the thresholds are:
| Filing Status | Income Threshold |
|---|---|
| Single | $97,000 |
| Married filing jointly | $194,000 |
| Married filing separately | $97,000 |
If your income is at or below these amounts, you pay the standard premium with no surcharge. If your income exceeds the threshold, you move into a higher bracket and pay more. There are five income brackets total, and each one carries a different surcharge. The surcharge increases as your income rises.
These thresholds do not adjust for inflation. They stay the same year to year unless Congress changes them. This means that even if your income stays flat, you may move into a higher bracket over time straightforward because the threshold does not rise. The income figure used is from your federal tax return filed two years prior, so there is always a lag between when you earn the money and when it affects your premiums.
What counts as income for Medicare purposes
Medicare uses Modified Adjusted Gross Income, which includes wages, self-employment income, interest, dividends, capital gains, rental income, and distributions from retirement accounts. It also includes tax-exempt interest from municipal bonds — a detail many people miss. Social Security benefits do not count toward IRMAA, which is one reason they are often called the "good income" for Medicare purposes.
Distributions from traditional IRAs and 401(k)s count in full, even if you do not need the money. Roth conversions count as income in the year you convert, which can push you into a higher bracket temporarily. Pension income counts. Annuity payments count. Rental losses do not reduce your income — only rental gains count.
What does not count: gifts, inheritance, return of principal (only the earnings portion of an annuity counts), life insurance proceeds, or money you withdraw from a savings account. Charitable contributions and medical expenses do not reduce the income figure Medicare sees, because IRMAA is based on gross income before deductions.
How to request a review if your income changed
If your income dropped in the current year due to retirement, job loss, death of a spouse, or divorce, you can ask Medicare to recalculate your premiums using your current year income instead of the two-year-old tax return. This is called a Life-Changing Event request. You do not have to wait for your next tax return to be filed.
To request a review, contact Social Security at 1-800-772-1213 or visit your local Social Security office in person. You will need to provide documentation of the event: a termination letter from your employer, a death certificate, a divorce decree, or a recent tax return showing lower income. Social Security will review your request and may lower your premiums retroactively to the month after the event occurred.
The review process usually takes four to six weeks. Your new premium amount will be reflected in your next billing statement. If you overpaid during the waiting period, Social Security will credit the difference to your next month's premium or issue a refund. This is one of the few ways to reduce IRMAA before your next annual adjustment.
How IRMAA affects your out-of-pocket costs
The surcharge is added to your standard Part B premium each month. In 2024, the standard Part B premium is $164.90 per month for most people. If you are in the highest income bracket, you could pay $560 or more per month — more than three times the standard amount. The surcharge applies to each person on Medicare, so a married couple both over 65 could face combined surcharges of $800 or more monthly.
Part D prescription drug premiums also have income-related surcharges, though the amount varies by plan. Some plans have no surcharge until you reach a higher income threshold than Part B. The surcharge is separate from the plan premium itself, so you pay both.
These surcharges are permanent for as long as your income remains above the threshold. They do not go away at a certain age or after a certain number of years. The only way to reduce them is to lower your income or request a Life-Changing Event review.
Strategies to manage income and Medicare costs
If you are approaching or have crossed an income threshold, you have limited options to reduce IRMAA. You cannot straightforward not report income, and you cannot exclude income by putting it in someone else's name. However, you can plan ahead if you have flexibility in when you take distributions from retirement accounts.
Some people delay taking Social Security to reduce their current income, since Social Security does not count toward IRMAA. Others time large one-time events — like selling a rental property or taking a Roth conversion — to years when they are already in a higher bracket, so the surcharge does not increase further. These strategies require planning with a tax professional and are not right for everyone.
If you are still working, your wages count toward IRMAA just like any other income. Retiring or reducing hours can lower your income in the current year, which may may have access to you for a Life-Changing Event review. If you are self-employed, business losses can reduce your net self-employment income, though you must report them accurately on your tax return.
Frequently Asked Questions
Does Social Security count toward the Medicare income limit?
No. Social Security benefits are excluded from the income calculation Medicare uses for IRMAA. This is one reason Social Security is often called the "good income" for Medicare purposes. Other income — wages, pensions, interest, dividends — all count, but Social Security does not.
What if I retire mid-year and my income drops?
You can request a Life-Changing Event review with Social Security. Bring a termination letter from your employer or a recent tax return showing lower income. Medicare may recalculate your premiums using your current year income and lower your surcharge retroactively to the month after you retired.
Can I reduce IRMAA by giving money away or putting it in my spouse's name?
No. Medicare looks at your tax return, not your current account balances or who owns what. The income that counts is what you reported to the IRS, not what you currently have access to. Gifts and transfers do not change your reported income.
Why does Medicare use income from two years ago?
Medicare uses your prior tax return because it is the most recent verified income figure available. Your 2024 premiums are based on your 2022 tax return. This lag means there is always a delay between when your income changes and when your premiums adjust, which is why Life-Changing Event reviews exist.
Do I have to pay IRMAA if I am still working past 65?
Yes. Your income from work counts toward IRMAA the same as any other income. If you are still earning wages and your total income exceeds the threshold, you will pay the surcharge. Retiring or reducing hours can lower your income enough to drop you into a lower bracket.