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Does my income affect my monthly premiums for Medicare?

En español | It can. If you are what Social Security considers a “higher-income beneficiary,” you pay more for Medicare Part B, the health-insurance portion of Medicare. (Most enrollees don’t pay for Medicare Part A, which covers hospitalization.)

Medicare premiums are based on your modified adjusted gross income, or MAGI. That’s your total adjusted gross income plus tax-exempt interest, as gleaned from the most recent tax data Social Security has from the IRS. To set your Medicare cost for 2020, Social Security likely relied on the tax return you filed in 2019 that details your 2018 earnings. 

If your MAGI for 2018 was less than or equal to the “higher-income” threshold — $87,000 for an individual taxpayer, $174,000 for a married couple filing jointly — you pay the “standard” Medicare Part B rate for 2020, which is $144.60 a month. At higher incomes, premiums rise, to a maximum of $491.60 a month if your MAGI exceeds $500,000 for an individual, $750,000 for a couple.

You can ask Social Security to adjust your premium if a “life-changing event” caused significant income reduction or financial disruption in the intervening tax year — for example, if your marital status changed, or you lost a job, pension or income-producing property.

You’ll find detailed information on the Social Security web page “Medicare Premiums: Rules for Higher-Income Beneficiaries.”

Keep in mind

  • If you pay a higher premium, you are not covered by “hold harmless,” the rule that prevents most Social Security recipients from seeing their benefit payment go down if Medicare rates go up. “Hold harmless” only applies to people who pay the standard Part B premium and have it deducted from their Social Security benefit.
  • Premiums for Medicare Part D (prescription-drug coverage), if you have it, also rise with higher incomes

Updated September 16, 2020

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