How does late enrollment affect Part B premiums?
If you don’t sign up for Medicare when you’re first eligible or qualify for a special enrollment period, you may have to pay a late enrollment penalty.
The Part B late enrollment penalty adds 10 percent to the standard Part B premium for each full 12-month period when you should have had Part B but didn’t. This penalty lasts for your lifetime.
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So if you delayed enrolling for 40 months after you were eligible, you would pay a penalty based on your lack of coverage for 36 months, three full years. For 2024, that’s more than $50 additional — $174.70 x 0.1 x 3 = $52.41 — you’ll pay each month, amounting to more than $625 a year. In this case, your monthly premium would be $227.10 because the amount is rounded to the nearest 10 cents.
The penalty is recalculated when the next year’s premium is announced.
Video: Does My Income Affect My Medicare Premium?
Usually, you need to sign up for Medicare during your seven-month initial enrollment period, which starts three months before the month you turn 65 and ends three months after your birthday month. However, you may be able to delay if you or your spouse still works and you have health insurance through either of your employers. In that case, you need to sign up for Medicare Part B before your employer coverage ends or within eight months of losing your job-based coverage to avoid the late enrollment penalty.
How does my income affect my Part B premium?
People with higher incomes pay higher premiums for Medicare Part B. If you’re single and your adjusted gross income is above $97,000, or if you’re married filing jointly with income greater than $194,000, you’ll have to pay a high-income surcharge in 2023. The same is true for Medicare Part D prescription drug coverage. The income limits rise to $103,000 for single filers and $206,000 for joint filers in 2024.
This surcharge is officially called the income-related monthly adjustment amount (IRMAA). In 2023, high earners pay $230.80 to $560.50 a month per person for Part B, depending on their income. Those numbers rise to $244.60 to $594.00 per month in 2024.
The surcharge is usually based on your most recent income tax return on file, which would be your 2022 return for most people in 2024. But if your income has dropped since then because of certain life-changing events — such as marriage, divorce, death of a spouse or retirement — you can contest the high-income surcharge and ask the Social Security Administration, which manages these surcharges, to recalculate your premiums based on your most recent income.
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