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Medicare is a federal health insurance program that covers millions of Americans who are 65 or older, disabled, or have certain chronic conditions. Medicare has four parts: Part A (hospital insurance), Part B (medical insurance), Part C (Medicare Advantage), and Part D (prescription drug coverage).

Most people do not pay a premium for Part A, but they do pay a deductible and coinsurance for each benefit period. Part B helps pay for doctors’ visits, outpatient services, preventive care, and some medical equipment and supplies. Part B has a monthly premium, an annual deductible, and coinsurance for most covered services. Part C, also known as Medicare Advantage, is an alternative way to get Medicare coverage through private plans that offer the same benefits as Parts A and B, and often include extra benefits such as vision, dental, hearing, and wellness programs. Part C plans have different premiums, deductibles, copayments, and coinsurance than Original Medicare (Parts A and B). Part D helps pay for prescription drugs and has a monthly premium, an annual deductible, and copayments or coinsurance for each drug tier.

Medicare costs can vary depending on several factors, such as the type of plan you choose, the amount of health care services you use, and your income level. In this blog post, we will focus on how your income affects your Medicare premiums for Part B and Part D. We will also explain how you can get help paying for your Medicare costs if you have limited income and resources.

How Does Your Income Affect Your Medicare Premiums in 2023?

The standard Part B premium for 2023 is $170.10 per month. However, if your modified adjusted gross income (MAGI) is above a certain threshold, you may have to pay more for your Part B premium. This is called the income-related monthly adjustment amount (IRMAA). Your MAGI is your total adjusted gross income plus any tax-exempt interest income that you report on your federal income tax return.

The Social Security Administration (SSA) uses the most recent tax return data available from the Internal Revenue Service (IRS) to determine your IRMAA. For 2023, SSA will use your 2021 tax return that you filed in 20221. The table below shows the Part B premium amounts for 2023 based on your income level1:

If you file your taxes as…And your MAGI in 2021 was…You pay each month in 2023
Single$91,000 or less$170.10
Married filing jointly$182,000 or less$170.10
Married filing separately$91,000 or less$170.10
SingleMore than $91,000 up to $114,000$238.10
Married filing jointlyMore than $182,000 up to $228,000$238.10
Married filing separatelyN/AN/A
SingleMore than $114,000 up to $142,000$340.20
Married filing jointlyMore than $228,000 up to $284,000$340.20
Married filing separatelyN/AN/A
SingleMore than $142,000 up to $170,000$442.30
Married filing jointlyMore than $284,000 up to $340,000$442.30
Married filing separatelyN/AN/A
SingleMore than $170,000 up to $500,000$544.30
Married filing jointlyMore than $340,000 up to $750,000$544.30
Married filing separatelyMore than $91,000 up to $409,000$544.30
SingleMore than or equal to $500,000$578.30
Married filing jointlyMore than or equal to $750,000$578.30
Married filing separatelyMore than or equal to $409,000$578.30

Similarly, if you have Medicare prescription drug coverage (either through a standalone Part D Plan or a Medicare Advantage Plan that includes drug coverage), you may have to pay an extra amount for your Part D premium if your income is above a certain level. This is also called the IRMAA. The extra amount is added to your monthly premium and is paid directly to Medicare, not to your plan. The table below shows the Part D premium amounts for 2023 based on your income level2:

If you file your taxes as…And your MAGI in 2021 was…You pay each month in 2023
Single$91,000 or lessYour plan premium
Married filing jointly$182,000 or lessYour plan premium
Married filing separately$91,000 or lessYour plan premium
SingleMore than $91,000 up to $114,000Your plan premium + $12.40
Married filing jointlyMore than $182,000 up to $228,000Your plan premium + $12.40
Married filing separatelyN/AN/A
SingleMore than $114,000 up to $142,000Your plan premium + $31.90
Married filing jointlyMore than $228,000 up to $284,000Your plan premium + $31.90
Married filing separatelyN/AN/A
SingleMore than $142,000 up to $170,000Your plan premium + $51.40
Married filing jointlyMore than $284,000 up to $340,000Your plan premium + $51.40
Married filing separatelyN/AN/A
SingleMore than $170,000 up to $500,000Your plan premium + $70.90
Married filing jointlyMore than $340,000 up to $750,000Your plan premium + $70.90
Married filing separatelyMore than $91,000 up to $409,000Your plan premium + $70.90
SingleMore than or equal to $500,000Your plan premium + $77.90
Married filing jointlyMore than or equal to $750,000Your plan premium + $77.90
Married filing separatelyMore than or equal to $409,000Your plan premium + $77.90

How Can You Get Help Paying for Your Medicare Costs?

If you have limited income and resources, you may qualify for one of the following programs that can help you pay for some or all of your Medicare costs:

  • Medicare Savings Programs (MSPs): These are state-run programs that help pay for your Part B premiums and may also help pay for your Part A and Part B deductibles, coinsurance, and copayments. There are four types of MSPs: Qualified Medicare Beneficiary (QMB), Specified Low-Income Medicare Beneficiary (SLMB), Qualifying Individual (QI), and Qualified Disabled and Working Individuals (QDWI). The eligibility criteria and benefits vary by state and by program. You can apply for an MSP through your state Medicaid agency.
  • Extra Help: This is a federal program that helps pay for your Part D premiums, deductibles, and copayments. It also lowers the cost of your drugs and eliminates the coverage gap (also known as the donut hole). To qualify for Extra Help, you must have an income below 150% of the federal poverty level and resources below a certain limit. You can apply for Extra Help through the Social Security Administration (SSA) or your state Medicaid agency.
  • Medicaid: This is a joint federal and state program that provides health coverage for low-income people of all ages. Medicaid covers most of the same services as Medicare, and may also cover some services that Medicare does not cover, such as long-term care and dental care. If you have both Medicare and Medicaid, Medicaid will pay for some or all of your Medicare premiums, deductibles, coinsurance, and copayments. You can apply for Medicaid through your state Medicaid agency.
  • Programs of All-Inclusive Care for the Elderly (PACE): This is a special type of Medicare Advantage Plan that provides comprehensive medical and social services to frail older adults who need a high level of care but prefer to live in their own homes rather than in a nursing home. PACE covers all the services that Medicare and Medicaid cover, as well as additional services such as adult day care, transportation, personal care, and home health care. PACE also coordinates all the care you receive from different providers. To qualify for PACE, you must be 55 or older, live in a PACE service area, need a nursing home level of care, and be able to live safely in the community with PACE support. You can enroll in PACE through a local PACE organization.

How Can You Lower Your Medicare Costs?

Besides applying for the programs mentioned above, there are some other ways you can lower your Medicare costs:

  • Compare plans: Each year during the Annual Enrollment Period (AEP), which runs from October 15 to December 7,

    you can compare and switch your Medicare Plans to find the best option for your needs and budget. You can use the [Medicare Plan Finder] tool to compare the costs, benefits, and quality ratings of different Medicare Advantage and Part D Plans in your area. You can also call 1-800-MEDICARE (1-800-633-4227) or contact your State Health Insurance Assistance Program (SHIP) for free personalized counseling and assistance.

    • Review your coverage: Each year, you should review your Medicare coverage and make sure it still meets your health care needs. You should also check your plan’s Annual Notice of Change (ANOC) and Evidence of Coverage (EOC) documents, which are sent to you by your plan in September or October. These documents explain any changes in your plan’s costs, benefits, and rules for the next year. If you are not satisfied with your current plan, you can switch to a different plan during the AEP or other special enrollment periods (SEPs) that may apply to your situation.
    • Use preventive services: Medicare covers many preventive services that can help you stay healthy and detect health problems early, when they are easier to treat. Some of these services include screenings for cancer, diabetes, cardiovascular disease, depression, and osteoporosis; immunizations for flu, pneumonia, and hepatitis B; and wellness visits and personalized prevention plans. Most of these services are free if you get them from a provider who accepts Medicare assignment. You can find out more about the preventive services covered by Medicare on the [Medicare website].
    • Ask for discounts: You can save money on your Medicare costs by asking for discounts from your providers, pharmacies, and plans. For example, you can ask your doctor or hospital if they offer any discounts for paying in cash or within a certain time frame. You can also ask your pharmacy if they have any lower-cost generic or preferred brand-name drugs that are equivalent to the ones you are taking. You can also ask your plan if they have any programs or incentives that can lower your premiums, deductibles, or copayments, such as wellness rewards, mail-order pharmacy options, or preferred provider networks.
    • Consider supplemental coverage: If you have Original Medicare, you may want to consider getting a Medicare Supplement (Medigap) Plan that can help pay for some of the out-of-pocket costs that Medicare does not cover, such as Part A and Part B deductibles, coinsurance, and copayments. Medigap Plans are sold by private insurance companies and have different premiums, benefits, and rules than Medicare Advantage Plans. You can compare Medigap Plans using the [Medigap Policy Search] tool on the Medicare website.

    Conclusion

    Medicare is a valuable program that provides health insurance coverage for millions of Americans. However, Medicare costs can vary depending on several factors, such as your income level, the type of plan you choose, and the amount of health care services you use. In this blog post, we have explained how your income affects your Medicare premiums for Part B and Part D, how you can get help paying for your Medicare costs if you have limited income and resources, and how you can lower your Medicare costs by comparing plans, reviewing your coverage, using preventive services, asking for discounts, and considering supplemental coverage. We hope this information has been helpful and informative for you. If you have any questions or comments about this topic, please feel free to leave them below. Thank you for reading!

    We’re Here to Help

    You do not have to spend hours reading articles on the internet to get answers to your Medicare questions. Give the licensed insurance agents at Glidden Group a Call at (208) 962-0077. You will get the answers you seek in a matter of minutes, with no pressure and no sales pitch. We are truly here to help.

    FAQS:

    How does Medicare determine my Part B premium for 2023?

    Medicare uses your recent federal tax return filed in 2022 for tax year 2021 to learn how your income from two years ago could affect your 2023 Part B premiums. Premiums are based on the income brackets Medicare sets each year.

    Why did I receive a letter from Medicare about an income-related monthly adjustment amount?

    If your modified adjusted gross income as reported on your tax return you filed in 2022 for tax year 2021 is above a certain limit, you may have to pay an income-related monthly adjustment amount (IRMAA) which is an increased premium for your Part B and Part D prescription drug plan.

    How much more will I have to pay in premiums for a Medicare Advantage Plan if my income has gone up?

    The total costs and premium amounts for Medicare Advantage Plans can vary greatly depending on your location and the individual plan you choose. However, higher income individuals may pay an additional amount above the base beneficiary premium the same way Medicare Part B premiums are adjusted.

    I’m still working and my income from my employer’s pension plan will be higher this year. Will this affect what I pay for Medicare?

    If your modified adjusted gross income from your tax return filed in 2022 is above the set income limits for the given year, you may have to pay an increased premium amount for 2023 Part B and Part D prescription drug plan. Even income like pensions is used to determine your 2023 income-related monthly adjustment.

    Why do I have to pay higher premiums if I haven’t yet applied for Medicare?

    Even though you haven’t enrolled in Medicare yet, Medicare uses your modified adjusted gross income from your most recent tax return to see if you’ll be required to pay higher premiums once you do apply for Medicare Part B and Part D. Premiums are based on your income from two years prior as reported to the IRS.

    Where can I find out how much my monthly premiums will be if I get income from a Railroad Retirement Board pension?

    You can contact the Railroad Retirement Board to learn how your monthly income like a pension is reported and if it affects your income-related monthly adjustment amount (IRMAA) for Medicare Part B premiums. The Railroad Retirement Board can also help determine your 2023 income-related premium amount based on your tax return filed in 2022.

    What should I do if I have a life-changing event like losing my job that lowers my income after I’ve already paid an adjusted Medicare premium?

    If your income decreases due to a life-changing event after you’ve already paid an income-related monthly adjustment amount (IRMAA) based on a previous tax return, you can request an appeal from Medicare. In the appeal, you would send information about the qualifying life-changing event that lowers your income to request a new determination of premium costs.

    How can I find out if I qualify to pay the standard Medicare Part B premium or if I’ll have to pay the increased amount?

    Check your modified adjusted gross income on your most recent tax return filed in 2022 for tax year 2021. If it falls below the income limits Medicare sets for that year, you would pay the standard base beneficiary premium. If your income exceeds the limit, you’ll likely have to pay an additional income-related monthly adjustment amount.

    Where can I get more information about the income limits used to determine if I’ll have to pay an extra amount above the standard Part B premium?

    You can contact Medicare or visit their website for details on the current income brackets and limits used to determine if you’ll have to pay an income-related monthly adjustment amount (IRMAA) above the base Part B premium. Understanding these income thresholds based on your tax return can help you estimate your total costs for Medicare in 2023.

    What if I’ve filed an amended tax return since my original tax filing for last year?

    If you’ve filed an amended tax return that would change your modified adjusted gross income from what Medicare has on file, you should also request an appeal. In the appeal letter, include a copy of the amended tax return to ensure Medicare uses the accurate income information to determine your 2023 Part B premium amount. The amended return would need to be processed before the end of the year.