- There are no income limits to receive Medicare benefits.
- You may pay more for your premiums based on your level of income.
- If you have limited income, you might qualify for assistance in paying Medicare premiums.
Medicare is available to all Americans who are 65 years or older, regardless of income. However, your income can impact how much you pay for coverage.
If you make a higher income, you’ll pay more for your premiums, even though your Medicare benefits won’t change. On the other hand, you might be eligible for assistance paying your premiums if you have a limited income.
Medicare coverage is divided into parts:
- Medicare Part A. This is considered hospital insurance and covers inpatient stays in hospitals and nursing facilities.
- Medicare Part B. This is medical insurance and covers visits to doctors and specialists, as well as ambulance rides, vaccines, medical supplies, and other necessities.
Together, parts A and B are often referred to as “original Medicare.” Your costs for original Medicare can vary depending on your income and circumstances.
Medicare Part A premiums
Most people will pay nothing for Medicare Part A. Your Part A coverage is free as long as you’re eligible to receive Social Security or Railroad Retirement Board benefits.
You can also get premium-free Part A coverage even if you’re not ready to receive Social Security retirement benefits yet. So if you’re 65 and not ready to retire, you can still take advantage of Medicare coverage.
Part A does have a yearly deductible. In 2020, the deductible is $1,408. You’ll need to spend this amount before your Part A coverage takes over.
Medicare Part B premiums
For Part B coverage, you’ll pay a premium each year. Most people will pay the standard premium amount. In 2020, the standard premium is $144.60. However, if you make more than the preset income limits, you’ll pay more for your premium.
The added premium amount is known as an income-related monthly adjustment amount (IRMAA). The Social Security Administration (SSA) determines your IRMAA based on the gross income on your tax return. Medicare uses your tax return from 2 years ago.
For example, when you apply for Medicare in 2020, the IRS will provide Medicare with your income from your 2018 tax return. You may pay more depending on your income.
In 2020, higher premium amounts start when individuals make more than $87,000 per year, and it goes up from there. You’ll receive an IRMAA letter in the mail from SSA if it is determined you need to pay a higher premium.
Medicare Part D premiums
Your Part D Premium will depend on the plan you choose. You can use the Medicare website to shop for plans in your area. Just like with your Part B coverage, you’ll pay an increased cost if you make more than the preset income level.
If your income is more than $87,000 per year, you’ll pay an IRMAA of $12.20 each month on top of the cost of your Part D premium. IRMAA amounts go up from there at higher levels of income.
This means that if you make $95,000 per year, and you select a Part D plan with a monthly premium of $36.00, your total monthly cost will actually be $48.20.
What about Medicare Advantage plans?
The price for Medicare Advantage plans, or Medicare Part C, varies greatly. Depending on your location, you may have dozens of options, all with different premium amounts. Because Part C plans don’t have a standard plan amount, there are no set income brackets for higher prices.
Most people will pay the standard amount for their Medicare Part B premium. However, you’ll owe an IRMAA if you make more than $87,000 in a given year.
For Part D, you’ll pay the premium for the plan you select. Depending on your income, you’ll also pay an additional amount to Medicare. Premium payment amounts are broken down into these income brackets:
|Yearly income in 2018: single||Yearly income in 2018: married, joint filing||2020 monthly Medicare Part B premium (per month)||2020 monthly Medicare Part D premium (per month)|
|< $87,000||< $174,000||$144.60||just your plan’s premium|
|$87,000–$109,000||$174,000–$218,000||$202.40||your plan’s premium + $12.20|
|$109,000–$136,000||$218,000–$272,000||$289.20||your plan’s premium + $31.50|
|$136,000–$163,000||$272,000–$326,000||$376.00||your plan’s premium + $50.70|
|$163,000–$500,000||$326,000–$750,000||$462.70||your plan’s premium + $70.00|
|> $500,000||> $750,000||$491.60||your plan’s premium + $76.40|
There are different brackets for married couples who file separately. If this is your filing situation, you’ll pay the following amounts for Part B:
- $144.60 per month if you make < $87,000
- $462.70 per month if you make between $87,000 and $413,000
- $491.60 per month if you make > $413,000
Your Part B premium costs will be deducted directly from your Social Security or Railroad Retirement Board benefits. If you don’t receive either benefit, you’ll get a bill from Medicare every 3 months.
Just like with Part B, there are different brackets for married couples who file separately. In this case, you’ll pay the following premiums for Part D:
- Only the plan premium if you make < $87,000
- The plan premium plus $70 if you make between $87,000 and $413,000
- The plan premium plus $76.40 if you make > $413,000
When you have an IRMAA, Medicare will bill you monthly for the additional Part D amount.
You can appeal your IRMAA if you believe it is incorrect or if you’ve had a major change in life circumstance. You’ll need to contact Social Security to request a reconsideration. You can request an appeal if:
- The IRS data sent was incorrect
- You amended your tax return and believe SSA received the wrong version
- The data sent by the IRS is outdated
You can also request an appeal if you’ve had a major change to your financial circumstances, including:
- Death of a spouse
- Working less hours
- Retiring or losing your job
- Loss of income from another source
- Loss or reduction of pension
For example, if you were employed in 2018 and made $120,000, but you retired in 2019 and are now only making $65,000 from benefits, you could appeal your IRMAA.
You can fill out the Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event form and provide supporting documentation about your income changes.
Those with limited income can get help paying costs for original Medicare and Part D. Medicare savings programs are available to help pay premiums, deductibles, coinsurance, and other costs.
There are three primary Medicare savings programs, which are discussed in more detail in the following sections.
Qualified Medicare Beneficiary (QMB) Program
You can qualify for the QMB program if you have a monthly income of less than $1,084 and total resources of less than $7,860. For married couples, the limit is less than $1,457 monthly and less than $11,800 in total. You won’t be responsible for the costs of premiums, deductibles, copayments, or coinsurance amounts under a QMB plan.
Specified Low-Income Medicare Beneficiary (SLMB) Program
If you make less than $1,296 a month and have less than $7,860 in resources, you can qualify for SLMB. Married couples need to make less than $1,744 and have less than $11,800 in resources to qualify. This program covers your Part B premiums.
Qualifying Individual (QI) Program
The QI program also covers Part B costs and is run by each state. You’ll need to reapply yearly, and applications are approved on a first-come, first-served basis. You can’t qualify for the QI program if you have Medicaid.
If you have a monthly income of less than $1,456 or a joint monthly income of less than $1,960, you are eligible to apply for the QI program. You’ll need to have less than $7,860 in resources. Married couples need to have less than $11,800 in resources.
Income limits are higher in Alaska and Hawaii for all programs. Additionally, if your income is from employment and benefits, you could qualify for these programs even if you make slightly above the limit. You can contact your state Medicaid office if you think you might qualify.
Can I get help with Part D costs?
You can also get assistance paying your Part D costs. This program is called Extra Help. With the Extra Help program, you can get prescriptions at much lower costs. In 2020, you’ll pay a max of $3.60 for generics or $8.95 for brand-name medications.
You can qualify for this program if you make less than $19,140 a year and have less than $14,610 in resources. Married couples who make less than $25,860 a year and have less than $29,160 in resources can also qualify.
What about Medicaid?
If you qualify for Medicaid, your costs will be covered. You won’t be responsible for premiums or other plan costs.
Each state has different rules for Medicaid eligibility. You can use this tool from the Health Insurance Marketplace to see if you might qualify for Medicaid in your state.
You can get Medicare coverage no matter your income. Keep in mind that:
- Once you hit certain income levels, you’ll need to pay higher premium costs.
- If your income is more than $87,000, you’ll receive an IRMAA and pay additional costs for Part B and Part D coverage.
- You can appeal an IRMAA if your circumstances change.
- If you’re in a lower income bracket, you can get help paying for Medicare.
- You can apply through your state’s Medicaid office for special programs and Medicare assistance.