How to avoid high Medicare premiums?

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To avoid higher Medicare premiums caused by the Income-Related Monthly Adjustment Amount (IRMAA) surcharge, you need to manage your Modified Adjusted Gross Income (MAGI) from two years prior.

Manage Your Taxable Income

  • Use Qualified Charitable Distributions (QCDs): If you are 70½ or older, donate directly from your traditional IRA to a charity. This counts toward your required minimum distributions (RMDs) without adding to your taxable MAGI.
  • Rely on Roth Accounts: Withdrawals from Roth IRAs do not count toward your MAGI, letting you access money in retirement without triggering a higher surcharge.
  • Spread Out Large Withdrawals: Avoid taking large lump sums from traditional IRAs or 401(k)s in a single year. Stagger the withdrawals over multiple tax years to stay below the IRMAA limits.
  • Time Roth Conversions Wisely: Do large Roth conversions in lower-income years before you enroll in Medicare so they do not spike your taxable income later.

File an Appeal for Life-Changing Events

  • Submit Form SSA-44: If your income dropped because of a qualifying life event—such as retirement, work reduction, divorce, or the death of a spouse—you can ask the government to lower or waive your surcharge. You can read more about the process through resources like the Financial Planning Association. You can also review general guidance on qualifying changes with AARP.
  • Provide Proof: Fill out the appeal form from the Social Security Administration and attach official documentation showing your reduced income or life event.

What is the income limit to avoid higher Medicare premiums?

To avoid higher Medicare premiums (known as the Income-Related Monthly Adjustment Amount or IRMAA surcharge) in 2026, your modified adjusted gross income (MAGI) must be $109,000 or less for single filers, and $218,000 or less for married couples filing jointly.

How Medicare Calculates Surcharges

  • Two-Year Lookback: Your 2026 premiums are based on the tax return you filed for 2024.
  • Income Definition: Medicare looks at your Modified Adjusted Gross Income (MAGI), which is your adjusted gross income plus any tax-exempt interest income.
  • Impacted Parts: If you earn above the threshold, a surcharge is added to your Medicare Part B and/or Part D (prescription drug) monthly premiums.

2026 First Tier Thresholds

  • Single Filers: Up to $109,000 pays the standard Part B premium ($202.90/month); over $109,000 triggers an IRMAA surcharge.
  • Married Filing Jointly: Up to $218,000 pays the standard rate; over $218,000 triggers a surcharge.

What does the average 65 year old pay for Medicare?

The average 65-year-old enrolled in standard Original Medicare pays a base premium of $202.90 per month for Part B, while Part A is $0 for most people who have a sufficient work history.

Standard Breakdown of Medicare Costs

  • Part A (Hospital Insurance): $0 per month for most individuals (who worked and paid Medicare taxes for at least 10 years); otherwise, it costs up to $565 per month. The inpatient hospital deductible is $1,736 per benefit period.
  • Part B (Medical Insurance): $202.90 per month standard premium for most beneficiaries, with an annual deductible of $283. Higher-income earners pay an adjusted monthly amount (IRMAA).

Additional Coverage Costs

Because Original Medicare does not cover everything or include an out-of-pocket maximum, many 65-year-olds add extra plans, bringing the typical total monthly cost to roughly $388 to $458+:

  • Part D (Prescription Drugs): Averages about $34 to $35 per month.
  • Medigap (Supplemental Insurance): Averages roughly $150 to $220 per month (such as Plan G) to cover out-of-pocket gaps.
  • Medicare Advantage (Part C): Varies by private plan, but you must still continue paying your Part B premium.

What is the big mistake people make with Medicare?

The single biggest and most costly mistake people make with Medicare is missing enrollment deadlines, leading to permanent late-enrollment penalties and gaps in coverage.

Missing Enrollment Deadlines

  • Initial Enrollment Period (IEP): This window lasts for seven months. It starts three months before the month you turn 65, includes your birthday month, and ends three months after.
  • Late Penalties: Failing to sign up for Part B or Part D on time can trigger permanent monthly or yearly financial penalties added to your premiums.
  • Delayed Enrollment Confusion: Many people wrongly assume they can delay Medicare past age 65 just because they have health coverage like COBRA, a marketplace plan, or small-employer insurance.

Other Costly Medicare Mistakes

  • Ignoring Annual Changes: Sticking with automatic renewal without reading the Annual Notice of Change (ANOC) can result in unexpected costs, as drug lists and doctor networks shift every year.
  • Choosing Solely by Low Premiums: Picking a plan based only on a low monthly cost while ignoring total out-of-pocket expenses like deductibles, copays, and coinsurance.
  • Missing the Medigap Window: Forgetting to apply for a Medigap (Medicare Supplement) policy during your open enrollment window. After this six-month period, insurers can use medical underwriting to charge more or deny coverage.
  • Skipping Financial Assistance: Overlooking programs like Medicare Savings Programs or Part D Extra Help that assist with out-of-pocket medical and prescription expenses.

What triggers higher Medicare premiums?

Higher Medicare premiums are primarily triggered by the Income-Related Monthly Adjustment Amount (IRMAA), which adds a surcharge to Medicare Part B and Part D when your modified adjusted gross income (MAGI) exceeds specific federal thresholds.

Income Thresholds and Lookback

  • Two-year lookback: Medicare checks your IRS tax return from two years prior to determine if you owe an IRMAA surcharge (for example, 2026 premiums are based on 2024 tax data).
  • Single filers: Surcharges begin if your MAGI crosses $109,000.
  • Joint filers: Surcharges begin if your combined MAGI crosses $218,000.
  • Maximum impact: Surcharges scale across tiers, pushing Part B monthly costs up to $689.90 for incomes over $500,000 (individual) or $750,000 (joint).

Common Financial Triggers

  • Retirement account distributions: Taking large traditional IRA or 401(k) withdrawals, or reaching the age for Required Minimum Distributions (RMDs).
  • Investment events: Post-retirement work income, large capital gains from selling a home or real estate, and major stock sales.
  • Tax strategy shifts: Executing Roth IRA conversions or realizing high municipal bond interest.
  • Inheritances: Withdrawing funds from an inherited IRA.

You can learn more about managing these costs directly through the Social Security Administration or review baseline limits via KFF Open Enrollment FAQs. If you experience a life-changing event like retirement or a drop in income, you can appeal the surcharge using Form SSA-44.

Medicare Part B Premium is Very High, How To Lower It

9 related questions found

Which Medicare is free for seniors?

Medicare Part A (Hospital Insurance) is free of a monthly premium for most seniors who worked and paid Medicare taxes for at least 10 years (40 quarters).

Medicare is not entirely free, and no single part covers everything without other potential out-of-pocket costs. Here is how the costs break down by part:

Premium-Free vs. Paid Parts of Medicare

  • Medicare Part A (Hospital Insurance): $0 monthly premium for about 99% of seniors who have enough work history. However, it still has a deductible ($1,736 per benefit period in 2026) and coinsurance for long hospital or skilled nursing stays. If you lack the required work credits, you can buy Part A for a monthly fee.
  • Medicare Part B (Medical Insurance): Not free. Most people pay a standard monthly premium ($202.90 in 2026), plus an annual deductible and 20% coinsurance for most doctor services.
  • Medicare Part C (Medicare Advantage): Sometimes $0 plan premium. These are private plans, and some feature a $0 additional monthly charge, but you must still pay your standard Part B premium.
  • Medicare Part D (Prescription Drug Coverage): Not automatically free, though private plan prices vary.

How to Get Help With Costs

  • Medicare Savings Programs (MSPs): If you have a low income, your state may pay for your Part B premiums, deductibles, and co-pays.
  • Extra Help Program: Low-income seniors can get assistance with prescription drug costs through the federal Extra Help program, which lowers or eliminates Part D premiums and deductibles.

Does Social Security count as income towards Medicare premiums?

Yes, a portion of your Social Security benefits can count as income toward determining your Medicare premiums, but only the taxable portion is included.

Medicare premiums are calculated based on your Modified Adjusted Gross Income (MAGI). For Medicare purposes, your MAGI is your Adjusted Gross Income (AGI) plus any tax-exempt interest (such as municipal bond interest).

How Social Security Affects Your Premiums

  1. The Taxable Portion Counts: When you file your federal taxes, depending on your overall "combined income," up to 85% of your Social Security benefits may be considered taxable income. This taxable amount is included in your AGI and directly flows into your Medicare MAGI calculation.
  2. The Non-Taxable Portion is Excluded: The remaining percentage of your Social Security benefit that is not subject to federal income tax is entirely excluded and does not count toward your Medicare calculation.

Why This Matters: IRMAA

Most people pay the standard premium for Medicare Part B ($202.90 per month) and a baseline premium for Part D. However, if your total MAGI—including that taxable Social Security portion—crosses a certain threshold, you will be hit with a high-income surcharge called the Income-Related Monthly Adjustment Amount (IRMAA).

  • The Thresholds: For Medicare premiums, the Social Security Administration uses a two-year tax lookback. Your premiums are determined by the MAGI reported on your tax return from two years prior.
  • The Cliffs: IRMAA is a "cliff" surcharge. If your taxable Social Security pushes you even $1 over the threshold, your monthly premium for both Part B and Part D will jump to the next bracket.

A Note on Premium Deductions

If you are already collecting Social Security benefits, Medicare will automatically deduct your Part B (and sometimes Part D) premiums directly from your monthly Social Security check before it is deposited. Even though you do not "see" this money, the gross amount of your benefit is still used by the IRS to figure out what portion is taxable and subsequently counted toward future Medicare adjustments.

Who does not pay Medicare premiums?

Most people do not pay a premium for Medicare Part A if they or their spouse worked and paid Medicare taxes for at least 10 years (40 quarters).

Almost everyone must pay a standard monthly premium for Medicare Part B, but certain groups receive financial assistance that covers or eliminates these costs.

Premium-Free Medicare Part A

You get premium-free Part A if you meet any of these rules:

  • You or your spouse worked and paid Medicare taxes for at least 10 years.
  • You are eligible for or receive Social Security or Railroad Retirement benefits.
  • You worked as a government employee in a job where you paid Medicare taxes.

Who Receives Help With Part B Premiums

While standard Part B premiums are required for most enrollees, specific programs pay the premium for low-income individuals:

  • Qualified Medicare Beneficiary (QMB) Program: State programs that pay Part A and/or Part B premiums, deductibles, and coinsurance for low-income individuals.
  • Specified Low-Income Medicare Beneficiary (SLMB) and Qualifying Individual (QI) Programs: State programs that help pay the Part B premium.
  • Medicaid: Low-income beneficiaries who qualify for both Medicare and full Medicaid receive assistance with their medicare costs.
  • Extra Help Program: Helps eliminate or reduce prescription drug plan (Part D) premiums for qualifying low-income individuals. You can check guidelines via the National Council on Aging.

What are the four things Medicare doesn't cover?

Original Medicare does not cover four major categories of health needs: routine dental care, eyeglasses and routine eye exams, hearing aids and exams, and long-term (custodial) care.

Key Uncovered Services

  • Routine Dental Care: Original Medicare excludes cleanings, fillings, tooth extractions, root canals, and dentures. It only covers very limited, specific procedures tied to another medical treatment (such as a dental exam before certain organ transplants or jaw reconstruction).
  • Vision Care: Routine eye exams, eyeglasses, and contact lenses are not covered. Medicare does cover medically necessary treatments for specific eye diseases like cataracts or glaucoma, but not the glasses needed afterward.
  • Hearing Care: Routine hearing tests, hearing aid fittings, and hearing aids themselves are excluded from Original Medicare. Diagnostic exams are covered only if ordered by a physician to evaluate a medical problem.
  • Long-Term Care: Custodial care—such as help with daily activities like bathing, dressing, eating, or using the bathroom—is not covered when it is the main kind of care you need. Medicare Part A only covers short-term skilled nursing care after a qualifying hospital stay.

Other common exclusions include care received outside the United States, cosmetic surgery, and routine foot care. You can find comprehensive details on Original Medicare Coverage Exclusions directly from Medicare.gov.

Is it better to have straight Medicare or a Medicare Advantage plan?

Neither option is universally "better"; Original Medicare (straight Medicare) and Medicare Advantage suit different health needs, budgets, and preferences.

To decide which is right for you, compare how each option handles key factors:

Original Medicare (Parts A and B)

  • Doctor Choice: You can see any doctor or go to any hospital in the U.S. that accepts Medicare. You do not need referrals to see specialists.
  • Approvals: You rarely need prior authorization or permission from an insurance company for tests or treatments.
  • Costs: It does not have an annual out-of-pocket maximum unless you buy a separate Medigap (Medicare Supplement) policy.
  • Extras: It does not cover prescription drugs (you need a separate Part D plan) or routine dental, vision, and hearing.

Medicare Advantage (Part C)

  • All-in-One Bundles: These private plans combine Part A, Part B, and usually Part D (prescription drugs), often with low or zero monthly premiums.
  • Extra Benefits: They frequently include routine dental, vision, hearing, and gym memberships.
  • Financial Protection: They include a mandatory annual out-of-pocket spending cap (capped at $9,250 for in-network care).
  • Restrictions: You are usually limited to local provider networks (like HMOs or PPOs), and you may need referrals or prior authorization for care.

Which Should You Choose?

  • Choose Original Medicare (with Medigap) if you travel often within the U.S., want the freedom to see any specialist without a referral, and prefer predictable medical bills with fewer coverage denials.
  • Choose Medicare Advantage if you want lower monthly premiums, extra perks like dental or vision care, and a hard cap on your yearly out-of-pocket costs, and you are comfortable using a specific local network of doctors.

You can compare specific local options using the official Medicare Plan Finder.