How Your Tax Return Impacts Your Medicare Premiums

Did you know that the annual cost of your Medicare premium(s) is determined based on your income level? Read more to learn how your income tax return can impact the cost of your Medicare coverage.

How Medicare Uses Your Tax Return

Medicare uses your income tax return to determine how much you pay in premiums for Medicare Part B and Part D.

Your Medicare premiums for a given year are calculated using your tax return from two years prior. For example, your 2024 Part B and Part D premiums are based on your 2022 tax return.

Medicare Part B Premium

Medicare Part B covers medical visits, including services that are deemed necessary or preventive. Part B is part of Original Medicare (along with Medicare Part A). 

Based on your income level, your monthly premium for Part B could vary. The standard Part B premium for 2024 is $174.70, but high-income households pay an increased premium. See the table below for more detail. 

Keep in mind that even if you and your spouse file a joint tax return, you will each pay an individual Part B monthly premium because all Medicare coverage applies individually.

Medicare Part D Premium

Medicare Part D covers prescription drugs and is separate from Original Medicare. 

If you have Medicare prescription drug coverage (whether a standalone prescription drug plan or coverage included as part of a Medicare Advantage plan) and are in a high-income tax bracket, you may owe a premium for Medicare Part D in addition to your drug plan premium. 

Refer to the table below for more detail about monthly premiums for prescription drug coverage.

How do I know if I will pay a higher premium?

If you are required to pay a higher premium due to income, Social Security will send you a letter informing you of the adjusted premium amount(s). 

If Your Income Changes

If you are in a high-income bracket and have a significant decrease in your income, call Social Security at 800.772.1213. They will need to know about your income change and determine if an adjustment to your premium cost(s) is necessary.

Your income may have changed due to a variety of reasons, including:

• You married, divorced, or became widowed
• You or your spouse stopped working or reduced your work hours
• You or your spouse experienced a scheduled cessation, termination, or reorganization of an employer’s pension plan

Social Security will ask to see documentation confirming the event and change in your income.

Questions? 

If you’re currently a RetireMed client and have questions about your Medicare plan premiums, call 877.222.1942 or schedule a call with a client advisor. 

Not a RetireMed client? Whether you have questions about Medicare costs or choosing the right plan, we’re here for you! Contact an advisor at 855.981.8611 or schedule a call.