Medicare Income Limits - Paying More For Premiums

Medicare income limits determine just how much you’ll end up paying in premium each month. They are based on the amount of money you’re still making in your senior years and can end up costing you.
Agnus Smith
Published on
October 11, 2018
Updated on
January 22, 2024

The more money you make, the more money you pay in taxes. Meaning, if you make more money than most, you’re inevitably funneling more money into public programs like Medicare than most. The concept doesn’t stop once you become eligible for Medicare, in fact, there are still Medicare income limits that may end up costing even more. Here’s what you need to know.

Does Your Income Affect Medicare Costs?

Individuals with higher incomes may pay the higher Medicare premiums for Parts B and D. Part D is the prescription drug plan or your Medicare Advantage Prescription Drug plan. Very few people have Medicare income limits that make them pay the higher Medicare premiums. If you have a lower income, you could qualify for reduced Medicare premiums cost programs.

What Are The Medicare Income Limits

Medicare income limits change each year. Americans filing an individual tax return in 2018 and have an income of $85,000 or less, and joint returns of $170,000 or less pay $134 each month. If your individual income was $85,000 up to $107,000 and a joint of $170,000 up to $214,000 you would pay $187.50 each month.

If filing an individual return with an income of $107,000 up to $133,500 or a joint return for $214,000 up to $267,000 you would pay $267.90 each month. Individuals with income above $160,000 and join returns above $320,000 would pay $428.60 per month. These Medicare income limits are for tax returns in 2016 and payments made for the year 2018.

Medicare Part A

Most people do not have to pay anything for Part A in a monthly premium. If an individual buys Part A they could be paying $422 each month. If they paid Medicare taxes through their payroll for less than 30 quarters then the person would pay the $422 in premiums each month. For those who paid Medicare taxes 30-39 quarters the premium would be $232 per month. Individuals would pay a Part A inpatient hospital deductible and coinsurance of;

  • Each benefit period deductible of $1,340.
  • Coinsurance for each benefit period, 1-60 days would be $0.
  • For 61-90 days the coinsurance would be $335 per day each period.
  • For days 91 and after the coinsurance would be $670 for each “lifetime reserve day”, After 90 days in the hospital per each period (for 60 days throughout your life).
  • Patient pays all costs after lifetime reserve days.

Medicare Part B

Medicare Part B has a premium of $134 or higher if your income exceeds the limits. Some people pay less but the average is $130. Part B coinsurance and deductible is $183 each year after the deductible is met. Medicare has an approved amount and individuals pay their 20% of doctor bills, hospital services, and outpatient therapy. Payment of 20% would apply for durable equipment for medical reasons.

Medicare Part C

In 2018 the average Medicare Advantage plan cost is $30, but that also depends on the premium and it could range as high as $200 a month. In order to get a Medicare Advantage Plan, the individual must have Medicare Parts A and B. There would be additional premium amounts above what you pay for your Part B plan.

There are some advantage plans that will pay for part of the B plan. Copayments are usually a one set fee for doctors. Most plans will charge higher copays for out of network doctors.

Medicare Part D

Medicare pays for some of the cost of drugs. You can also qualify for extra help for covering drug costs. The monthly premium is about $34, but plans charge different amounts depending on where you live. Preferred drugs could cost you $25, while generic may only cost you $5 and non-preferred drugs can run up to $40. For more expensive drugs in tier 4 or 5 you will pay a percentage of the cost of the drug. Usually around 25%.

Does Income-related Monthly Adjustment Amount (IRMAA) Change Each Year?

IRS provides Medicare with two years of income statements to determine your income-related monthly adjustment amount, (IRMAA). They also use your MAGI, modified adjusted gross income from your income tax returns to find your income-related monthly adjustment amount. In the fall, Medicare asks IRS for information to finalize the following year's premiums.

Medicare asks for the records to show any changes in your (IRMAA), income-related monthly adjustment amount if there are any. When a change is found from the IRS information and what Medicare had, and the difference will make a change in your income-related monthly adjustment amounts, Medicare will notify that person of the changes.

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