Medicare Income Limits: What Are They and How Do They Work?

Medicare is accessible to U.S. citizens ages 65 and older, regardless of their financial situation. However, the amount you pay for Medicare coverage may be influenced by your income. Continue reading to gain a better understanding of how income restrictions affect Medicare coverage.

Medicare Income Limits

Medicare is a government health insurance program for adults 65 and older, certain younger disabled people and end-stage renal disease patients (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD). With Medicare, there’s no income limit, but your income does determine your premium. 

Here is a breakdown of the Medicare costs based on your income. 

Medicare Part A (Hospital Insurance) Costs

Part A Monthly Premium

Because they paid Medicare taxes while working, most people don't pay Part A premiums. Without premium-free Part A, you spend $499 per month.

If you don't buy Medicare Part A when you're first eligible (typically age 65), you may be penalized.

Hospital Stays

In 2022, you pay a $1,556 deductible every benefit period, $0 for the first 60 days, $389 per day for days 61–90 and $778 per "lifetime reserve day" beyond day 90 (up to 60 days over your lifetime).

Skilled Nursing Facility

In 2022, you pay $0 for the first 20 days of each benefit period, $194.50 for days 21–100, and all expenditures beyond 100.

Medicare Part B (Medical Insurance) Costs

Part B Monthly Premium

The average Part B monthly premium is $170.10 in 2022. Social Security will inform you of your 2022 Part B premium. 

First-time Part B enrollees in 2022 pay the standard premium if:

• You don't get SSI.
• Part B premiums are direct-billed.
• Medicaid pays your premiums.

(Your state pays the standard premium of $170.10 in 2022.)

Medicare Part B Costs 2022

If your 2-year-old modified adjusted gross income  (MAGI) is above a specific threshold, you'll pay the usual Part B premium and an income-related monthly adjustment. The Part B deductible is $233 per year.

If your 2020 yearly income was:

• $91,000 or less for individuals: $170.10
• $182,000 or less for joint tax return: $170.10
• $91,000 or less for married filing separate tax return: $170.10
• $91,001 to $114,000 for individuals: $238.10
• $182,001 to $228,000 for joint tax return: $238.10
• $114,001 to $142,000 for individuals: $340.20
• $228,001 to $284,000 for joint tax return: $340.20
• $142,001 to $170,000 for individuals: $442.30
• $284,001 to $340,000 for joint tax return: $442.30
• $170,001 to $500,000 for individuals: $544.30
• $340,001 to $750,000 for joint tax return: $544.30
• $500,000 or above for individuals: $578.30
• $750,000 or above for joint tax return: $578.30

Medicare Advantage Plans (Part C) & Medicare Drug Plans (Part D) Premiums

Medicare.gov/plan-compare has Medicare Advantage plan premiums. Call 1-800-MEDICARE (1-800-633-4227). Dial 1-877-486-2048 for TTY. You may also visit the State Health Insurance Assistance Program (SHIP) at shiphelp.org. For SHIP phone numbers, contact 1-800-MEDICARE.

Medicare Part D Costs 2022

If your 2020 yearly income was:

• $91,000 or less for individuals: Your plan premium
• $182,000 or less for joint tax return: Your plan premium
• $91,000 or less married filing separate tax return: Your plan premium 
• $91,001 to $114,000 for individuals: $12.40 plus your plan premium
• $182,001 to $228,000 for joint tax return: $12.40 plus your plan premium
• $114,001 to $142,000 for individuals: $32.10 plus your plan premium
• $228,001 to $284,000 for joint tax return: $32.10 plus your plan premium
• $142,001 to $170,000 for individuals: $51.70 plus your plan premium
• $284,001 to $340,000 for joint tax return: $51.70 plus your plan premium
• $170,001 to $500,000 for individuals: $71.30 plus your plan premium
• $340,001 to $750,000 for joint tax return: $71.30 plus your plan premium
• $91,001 to $409,000 for married filing separate tax return: $71.30 plus your plan premium
• $500,000 or above for individuals: $77.90 plus your plan premium
• $750,000 or above for joint tax return:  $77.90 plus your plan premium
• $400,000 or above for married filing separate tax return: $71.30 plus your plan premium

How Does Your Income Impact Your Medicare Premium?

Part B coverage will cost you a yearly payment. Most people will pay the usual premium amount. The average monthly premium in 2022 is $170.10. However, if your income exceeds the established restrictions, you will be required to pay a higher premium.

The additional payment is known as an income-related monthly adjustment amount (IRMAA) based on income. The Social Security Administration (SSA) calculates your IRMAA by looking at the gross income on your tax return. Medicare makes use of your tax return from two years ago.

The IRS will give Medicare your income from your 2020 tax return when you apply for Medicare coverage in 2022. Your income may force you to pay more.

People earning more than $91,000 per year will have to pay extra for their premiums in 2022, and the amount will rise from there. If the SSA determines that you must pay a higher premium, you will receive an IRMAA letter.

Prescription medications are covered under Medicare Part D. Part D plans are not all the same price. The nationwide base beneficiary premium for Medicare Part D in 2022 is $33.37, but costs can vary.

Your Part D premium will vary depending on the plan you select. As with Part B, if your income exceeds a certain amount, you will pay more for your coverage.

Starting in 2022, if you earn more than $91,000 per year, you will be required to pay an IRMAA of $12.40 per month in addition to your Part D premium. IRMAA levels increase as income increases.

This means that if you earn $95,000 per year and select a Part D plan with a $36 monthly premium, your total monthly cost will be $48.40.

There are a lot of different prices for Medicare Advantage (Part C) plans. Depending on where you live, you may have dozens of options, each with its own premium. There are no fixed income bands for higher pricing because there is no standard plan amount for Part C plans.

The majority of consumers will pay the normal Medicare Part B premium. However, if you earn more than $91,000 in a given year, you must pay an IRMAA. You must pay the plan's premium for Part D. You may also have to pay more to Medicare depending on your income.

Can You Appeal Your IRMAA?

The IRMAA sliding scale is a set of percentage-based tables that are required by law and are used to change the premiums for Medicare Part B and Part D prescription drug coverage. IRMAA is higher when the beneficiary's modified adjusted gross income (MAGI) is higher.

You can appeal your IRMAA if you think it's wrong or if your circumstances have changed. To appeal, contact Social Security.

You may be eligible to appeal if:

• IRS submitted erroneous or outdated data
• You revised your tax return and believe SSA received the wrong version
• IRS submitted erroneous or outdated data 

You can also appeal if your financial situation has changed in such circumstances as:

• The death of a spouse
• Change in marital status
• Change in work hours
• You lost your job
• You lost a source of additional income
• You lost or had a reduction in your pension

If you made $120,000 in 2020 and retired in 2021, you might appeal your IRMAA. To appeal, complete the Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event form.

Compare Medicare Health Insurance

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