How Your Tax Return Impacts Your Medicare Premiums

Did you know that the cost of Medicare can vary based on your income level? Now that tax season is here, your local Medicare advisor team at RetireMEDiQ wants you to know this important information.

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 2021 Part B and Part D premiums are based on your 2019 tax return.

Medicare Part B

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). This means you are automatically eligible for Part B coverage once you are within three months of your 65th birthday.

Based on your income level, your monthly premium for Part B could vary. The Part B premium begins at $148.50. See the table below for more detail.

Single Yearly Income (2019) Joint Yearly Income (2019)

Part B Monthly Premium (2021)

$88,000 or less $176,000 or less


$88,000 – $111,000 $176,000 – $222,000


$111,000 – $138,000 $222,000 – $276,000


$138,000 – $165,000 $276,000 – $330,000


$165,000 – $500,000 $330,000 – $750,000


$500,000+ $750,000+



Medicare Part D

Medicare Part D covers prescription drugs. It is not part of Original Medicare. This means that while you are on Medicare, any prescription drug coverage you receive must be purchased on top of Original Medicare or your chosen Medicare Advantage or Supplement plan.

Based on your income, you may owe a premium for Medicare Part D. If you owe a monthly premium, you owe it on top of your drug plan’s costs.

Many individuals do not pay a premium for prescription drug coverage. Refer to the table below for more detail about monthly premiums for prescription drug coverage.

Single Yearly Income (2019) Joint Yearly Income (2019)

Part D Monthly Premium (2021)

$88,000 or less $176,000 or less

Your plan premium ($0 added)

$88,000 – $111,000 $176,000 – $222,000

Your plan premium + $12.30

$111,000 – $138,000 $222,000 – $276,000

Your plan premium + $31.80

$138,000 – $165,000 $276,000 – $330,000

Your plan premium + $51.20

$165,000 – $500,000 $330,000 – $750,000

Your plan premium + $70.70

$500,000+ $750,000+ Your plan premium + $77.10


Medicare Advantage Plans

If you opt for a Medicare Advantage Prescription Drug (MAPD) plan, your coverage will include Medicare Parts A, B, C, and D in one plan. As such, you will not pay higher costs for a Medicare Advantage plan based on your income.

But you will still owe your premium for Parts B and D (as indicated in the tables above) to the federal government, regardless of your plan type.

Medicare Supplement Plans

Medicare Supplement plans often come with higher annual and monthly premiums, but lower out-of-pocket costs. While you may pay more in premiums on this type of plan, you are likely to pay less when you visit the doctor or hospital.

However, you should note that Supplements do not include prescription drug coverage. If you choose a Supplement plan, you will also be responsible for paying the costs of a Part D plan and/or premium if you want coverage for your medications.

Connect With a Local Medicare Advisor

Our team of experts in Medicare is here to help you find the right plan for your individual needs. Whether you’re learning more about Medicare, ready to enroll, or looking to switch to the right plan, our goal is to make the process easy. If you are new to us, call us at 1-866-407-5180 or email to get started.

Already a RetireMEDiQ client? Your team of client advisors can answer all your Medicare questions. Call us at 1-877-222-1942 or email

Would love your thoughts, please comment.x