Medicare Part B costs will vary depending on a person’s income.
Medicare Part B is the portion of Medicare that covers medical appointments, such as doctor’s visits, and some medical equipment. Unlike Medicare Part A, Part B has a monthly premium regardless of a person’s work history.
This article will cover Medicare Part B-related costs, including how Medicare adjusts the monthly premium based on a person’s income.
A person can enroll in Medicare Part B when they qualify for Medicare. Qualification is usually when a person reaches 65 years of age.
Enrollment is usually automatic if a person receives retirement benefits from the Social Security Administration or the Railroad Retirement Board. Before a person’s 65th birthday, Medicare will send them a membership card and details of their plan.
If a person is not currently receiving retirement benefits, they can enroll with Medicare through the Social Security Administration as early as 3 months before they turn 65 years old. Applying as early as possible can ensure that the benefits start on time.
If a person waits and applies 3 months after they turn 65 years old, they may have to pay a penalty in addition to their Medicare Part B premium.
Some people may qualify for Medicare at an earlier age if they meet the following criteria:
- their doctor declares that they have a disability, and they receive Social Security disability benefits
- they have end stage renal disease
- they have amyotrophic lateral sclerosis
Under these circumstances, a person may enroll in Medicare Part B at an earlier time. If they qualify based on a disability or end stage renal disease, they may have to wait a certain amount of time before they can enroll in Part B.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Part B monthly premiums may vary from year to year. The standard premium in 2021 is $148.50 per month, but a person may have to pay more based on their regular income.
Medicare will notify a person on an annual basis of how their Medicare Part B premium may change for the following year.
If a person receives a benefit check, the Social Security Administration or Railroad Retirement Board will deduct this amount automatically, so it is not necessary to remember to pay Medicare each month.
Medicare resources
For more resources to help guide you through the complex world of medical insurance, visit our Medicare hub.
Paying a monthly Part B premium does not mean that medical services are free of charge. A person will also need to pay deductibles and coinsurances for certain services.
Under traditional Medicare, a person’s Part B deductible is $203 per year. After they have met this deductible, a person will usually pay 20% of the Medicare-approved amount for most physician services, therapies, and durable medical equipment.
Some people may choose to obtain their insurance coverage under Medicare Advantage, or Medicare Part C.
Medicare Advantage, wherein a person will need to choose a private insurance company to administer their plan, is an alternative to traditional Medicare.
When someone chooses Medicare Advantage, they will still pay a monthly Part B premium, but their out-of-pocket costs may differ based on their chosen plan. In addition to the Part B premium, a Medicare Advantage premium may also apply.
Some people may pay more (or less) for their monthly premium based on their income. An estimated 7% of those receiving Medicare benefits pay an income-adjusted monthly premium.
Medicare determines a person’s income-related monthly adjustment based on the income they reported to the Internal Revenue Service 2 years prior. For 2021, this means that Medicare will consider a person’s modified adjusted gross income from 2019.
The income adjustment will depend on which type of tax return an individual has filed, be it individual or joint.
The table below details these :
| 2019 yearly income | 2021 monthly premium | ||
| Individual tax return | Joint tax return | Married and separate tax return | |
| $88,000 or under | $176,000 or less | $88,000 or under | $148.50 |
| $88,000 up to $111,000 | $176,000 up to $222,000 | Does not apply | $207.90 |
| $111,000 up to $138,000 | $222,000 up to $276,000 | Does not apply | $297.00 |
| $138,000 up to $165,000 | $276,000 up to $330,000 | Does not apply | $386.10 |
| $165,000 and less than $500,000 | $330,000 up to $750,000 | $88,000 up to $412,000 | $475.20 |
| $500,000 or above | $500,000 or above | $412,000 or above | $504.90 |
Sometimes, a person may receive additional help in paying for their Medicare premiums. If a person is eligible for Medicaid, for example — which is a state-funded insurance assistance program — this may help them pay their Part B premiums.
A person receives Medicaid based on their income level, and Medicaid qualifications may vary based on the state’s rules.
More information about Medicaid and its state-by-state income requirements are available on its website.
Medicare Part B costs include a standard monthly premium, deductible, and coinsurance. The deductible and coinsurance may vary if a person has a Medicare Advantage plan.
If a person’s income exceeds a certain amount, they may pay a higher premium based on income adjustments.
Individuals may receive help to pay their Part B premiums if they qualify for Medicaid benefits under their state’s rules.