Medicare payroll taxes, like Social Security taxes, are automatically deducted from your paycheck under the Federal Insurance Contributions Act (FICA).
Ultimately, these accumulated tax payments determine whether you receive Medicare Part A without having to pay a premium. If you or your spouse had Medicare taxes deducted from your paychecks for at least 40 quarters of work, a total of 10 years or more, and you’re 65 or older, you’re eligible for premium-free Part A coverage.
You must earn a certain amount of money each calendar quarter to earn work credits. That amount changes each year.
How do I earn work credits?
In 2024, you earn one work credit for every $1,730 in earnings, up to a maximum of four credits a year. At the federal minimum wage of $7.25, that’s a little less than six 40-hour weeks of work in a 13-week quarter.
What if you haven’t earned 40 work credits?
If neither you nor your spouse earned 40 work credits, you’ll have to pay monthly premiums to receive Part A coverage when you enroll in Medicare at 65 or older. In 2024, if you or your spouse paid Medicare taxes for 30 to 39 quarters, you’ll pay $278 a month for Part A. If you or your spouse paid Medicare taxes for fewer than 30 quarters, you’ll pay $505 a month for Part A.
You may be eligible for Medicare before age 65 under different rules if you qualify because of a disability or if you have end-stage renal disease or amyotrophic lateral sclerosis (ALS), also known as Lou Gehrig’s disease.
Do work credits affect Part B premiums?
No. Work credits don’t affect premiums for Medicare Part B. Most people pay $164.90 a month for Part B in 2023, or $174.70 in 2024. The premiums are higher in 2023 for single filers who earned more than $97,000 and joint filers earning more than $194,000 on their last tax return on file. The income limits for the high-income surcharge rise to $103,000 for single filers and $206,000 for joint filers in 2024.