If a person meets the eligibility requirements for Medicare, they may enroll regardless of their income. There are no Medicare income limits that pertain to eligibility, but income can decide some monthly costs.
Those with higher incomes must pay higher monthly premiums for two Medicare programs.
This article discusses the parts of Medicare that higher premiums may, or may not, affect.
Next, it examines the income adjustments for premiums of parts B and D, as well as the basis for them.
Lastly, it tells when to notify Social Security of income changes and how to file an appeal of Medicare’s decision regarding a premium adjustment.
The law requires Medicare parts B and D to make premium adjustments based on a person’s income.
Original Medicare is comprised of Part A, inpatient insurance, and Part B, outpatient insurance.
Part B covers services, such as doctor visits, lab tests, medical equipment, and some home healthcare.
It also covers physical and occupational therapy.
Part D is prescription drug coverage.
A person with original Medicare has the option of enrolling in a plan with a private insurance company.
The law does not require Medicare to adjust premiums based on income for the below programs:
- Medicare Advantage, also known as Part C. This plan combines the benefits of original Medicare parts A and B into one policy.
- Medigap, which is Medicare supplement insurance. This plan is available for purchase to a person with original Medicare.
Private insurance companies administer both Medicare Advantage and Medigap plans.
According to the Kaiser Family Foundation, several congressional acts in recent decades have required Medicare to adjust monthly premiums based on income.
Medicare bases the adjustments on a person’s modified adjusted gross income, which is the total of adjusted gross income and tax-exempt interest income.
To determine the premiums it assigns, Medicare uses someone’s federal tax return from the Internal Revenue Service (IRS). In figuring the premiums of beneficiaries for 2021, Medicare uses tax returns from 2019, which is the most recent year the IRS provides to Social Security.
Most of the income thresholds for premium adjustments are subject to change. Starting in 2020, the government will change all the thresholds every year to reflect general price inflation. The only exception to these changes is the threshold for the top income level.
Social Security reports that the government pays approximately 75% of the Part B premium for most beneficiaries, which means a person would pay the remaining 25%.
In contrast, individuals with higher incomes pay from 35–85% of the premium.
The majority of people fall into the income range associated with the standard rate, which in 2021 is $148.50. This amount can change each year.
The higher premium costs apply to less than 5% of Medicare beneficiaries, according to Social Security.
Medicare provides the chart below to show the yearly 2019 income thresholds associated with adjusted Part B premiums.
|File individual tax return||File joint tax return||File married and separate tax return||2021 Part B premium|
|$88,000 or below||$176,000 or below||$88,000 or below||$148.50|
|above $88,000 up to|
|above $176,000 up to|
|above $111,000 up|
|above $222,000 up to|
|above $138,000 up|
|above $276,000 up to|
|above $165,000 and|
|above $330,000 and|
|above $88,000 and|
|$500,000 or above||$750,000 and above||$412,000 and|
For most individuals, the government pays a large portion of the total expense of Part D, and the beneficiaries pay the rest.
A person with a higher income will pay a premium that consists of an extra amount added to the base rate, which is $33.06 in 2021. This rate can change from year to year.
Medicare provides the chart below to show the yearly 2019 income thresholds associated with adjusted Part D premiums.
|File individual tax return||File joint tax return||File married and separate tax return||2021 Part D premium|
|$88,000 or below||$176,000 or less||$88,000 or below||your plan|
up to $111,000
up to $222,000
|not applicable||$12.30 + your|
up to $138,000
up to $276,000
|not applicable||$31.80 + your|
up to $165,000
up to $330,000
|not applicable||$51.20 + your|
|above $88,000 and|
|$70.70 + your|
|$412,000 and above||$77.10 + your|
Various life events can cause a person’s annual income to change.
Individuals with the following experiences should notify Social Security of income change:
- They get divorced or married, or they become widowed.
- They or their spouse lose income-producing property due to a disaster or event beyond their control.
- They or their spouse work fewer hours or stop working altogether.
- They or their spouse receive a settlement from a former or current employer due to the employer’s reorganization or bankruptcy.
- They or their spouse stop or start receiving a pension.
If an individual does not agree with Medicare’s decision about their income-related premium adjustment, they can file an appeal.
To do this, a person may call Social Security at 800-772-1213.
A deaf or partially deaf person may call 877-486-2048.
A person’s income cannot be so high that it disqualifies them for Medicare. Even those who receive very high incomes may enroll.
However, individuals with higher incomes pay higher premiums for parts B and D, but Medicare income limits that affect premium rates only affect a small percentage of people.
A person who believes Medicare has made a mistake in a decision regarding their premium adjustment may file an appeal with Social Security.