Medicare, the federal system of health care insurance for beneficiaries 65 years of age and older, or those under 65 with certain disabilities, is available for everyone who meets the qualification requirements, regardless of income.
However, you may pay more for your Medicare monthly premiums if your income is above a certain level set by the federal government. On the other hand, you may pay less for your monthly premiums if you are eligible for assistance due to a limited income level.
This article can give you some insight into how much you’ll pay for your monthly premiums for your Medicare coverage.
How does your income affect your Medicare monthly premiums?
Depending on the type of Medicare coverage you have, you may pay more or less for your monthly premiums depending on your income level. Here’s a look at the different types of Medicare:
Original Medicare Part A (hospital insurance)
Most people who are eligible for Medicare insurance, qualify for premium-free Part A. This means that you don’t have to pay a monthly fee for your inpatient hospital insurance.
You qualify for premium-free Part A when you are 65 and meet the following criteria:
- You are currently receiving retirement benefits from the Social Security Administration or the Railroad Retirement Board.
- You are eligible for retirement benefits from either of the above-mentioned administrations, but you haven’t yet filed for them.
- You or your spouse paid Medicare taxes while working for the government
If you’re under 65, you may qualify for premium-free Medicare Part A if either of the following is true for you:
- You have been receiving disability benefits for 24 months from the Social Security Administration or the Railroad Retirement Board.
- You have End-Stage Renal Disease and meet the criteria set by Medicare.
If you don’t qualify for premium-free Part A Medicare, you can purchase Part A coverage. The amount you pay per month depends on how many work credits you or your spouse has. Normally, for premium-free Part A, beneficiaries must have at least 40 work credits or quarters.
If you have between 30 and 39 quarters, you pay $274.00 per month (in 2022) for Part A. If you have less than 30 quarters, your monthly premium for Part A in 2022 is $499.00.
If you purchase Medicare Part A coverage, you must also purchase Part B (medical insurance). In this instance, you pay both Parts A and B monthly premiums. If you don’t purchase Part A, you are still eligible to purchase Medicare Part B alone.
Original Medicare Part B (medical insurance)
Original Medicare Part B carries a monthly premium. Most people qualify to pay the standard amount which is $170.10 per month (in 2022).
However, if you exceed the income limits set by Medicare, you pay a larger premium. The amount depends on your income level and is known as an income-related monthly adjustment amount (IRMAA). Your IRMAA is determined by the Social Security Administration (SSA). It’s based on your gross income on your tax returns filed two years prior to the current year.
If you enroll in Medicare in 2022, the IRS provides your income information from your 2020 tax returns. In 2022, you pay a higher monthly premium for Medicare Part B if your individual income in 2020 was more than $91,000.00. For couples filing joint returns, the amount of income is $182,000.00. The SSA sends you an IRMAA letter to inform you whether you must pay a higher Part B premium based on your income.
Medicare Advantage (Part C) and Medicare Part D – prescription drug coverage
Medicare Part C and Part D plans are sold by private insurance companies that set their own monthly premiums.
However, the national base premium amount for Medicare Part D is $33.37 (in 2022). Costs vary depending on the plan and the insurer, but if you have an income above the preset income level, your monthly premium may be higher.
If you are concerned about your monthly premium for Medicare, you can ask for assistance from an agent at a local CMS office.