Medicare Costs and Premiums

The Medicare costs for Part B and Part D, as well as supplemental coverage, are something that many people don’t anticipate. It can surprise them when they turn 65 and realize that Medicare is not free.

Medicare Cost for Part A

Medicare Part A is free for most people. There is no premium if you have worked. 10+ years (40 quarters) in the US. Payroll taxes collected from you during those years qualify you to have Part A at no charge.

If you have to buy Part A, you will pay up to $505/month for it in 2024. A pro-rated premium is available if you have less than 40 quarters work experience but more than 30 quarters.

Medicare Cost for Part B & D is Based on Income

Part B and Part D premiums are based on your modified adjusted gross income. Medicare will check your latest IRS tax return and use that to determine what you’ll pay for Parts B & D.  The items that contribute to your modified adjusted gross income (MAGI) include any money earned through wages, interest, required minimum dividends from investments, capital gains, Social Security benefits, and tax-deferred pensions. Distributions from Roth IRAs and Roth 401(k)s, life insurance, reverse mortgages, and health savings accounts do not count in the MAGI calculation.

Social Security will send you a letter once a year around December or early January to tell you what your costs are for the upcoming year. Most Americans fall into the standard income bracket – see the chart below.

Medicare Part B Premium for 2023

Most people new to Medicare on or after January 2017 will pay $174.70 in 2023 for Part B, or an adjusted amount as listed below if you have a higher income than most people. The Part B premium is paid in the form of a deduction from your social security check. You will be billed quarterly from Medicare if you are not yet receiving Social Security income benefits.

To determine your Medicare costs, review the table below. It shows the amount that you will pay in 2020 for Part B, per this chart copied from the official Medicare website.

You’ll pay the standard premium amount if:

• You enrolled in Part B for the first time in 2017 or later
• You don’t get Social Security benefits
• Part B premiums are directly billed to you.
• You have Medicare and Medicaid, and Medicare pays your premiums. (Your state will pay the standard $148.50 premium.)
• Your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above a certain amount. If so, you’ll pay the standard premium amount and an Income Related Monthly Adjustment Amount (IRMAA). IRMAA is an extra charge added to your premium.

If you’re in one of these 5 groups, here’s what you’ll pay in 2024:

Part D Premium Chart

To determine your Medicare cost for Part D drug plans, review the table below. It shows the amount that you will pay for Part D in 2024:

For most people, income usually decreases after you retire. If you find yourself in a higher income bracket because your earlier tax returns showed higher income than you now have after retirement, be sure to read our blog post on how to appeal a higher premium.

We can help you determine your potential Medicare costs right over the phone. Call 1-888-228-6119 to speak to a licensed professional agent who can answer your questions. You can also send your inquiry using the form to the right.