The good news is that anyone who is 65 years old or older, or receiving disability insurance through Social Security for two years or more, qualifies for Medicare coverage, regardless of their income. However, the amount you pay for certain Medicare premiums is determined by your income. To calculate your income for premium calculations, you should reference your tax return from the previous year. If you experienced a significant drop in income due to a life event like a divorce or death of a spouse, you can apply for a reduction in your premium.
For Medicare Part A, which covers care in hospitals, hospices, skilled nursing facilities, and at home, almost every beneficiary has no premium because they have accumulated 40 or more quarters of Medicare-covered employment. On the other hand, income has the most significant effect on premiums for Medicare Part B, which covers doctor visits, tests, outpatient care, home health services, and medical equipment. The standard monthly premium amount for Part B in 2023 is $164.90, but premiums increase based on higher incomes, with the maximum monthly premium reaching $560.50 for individuals with a MAGI greater than or equal to $500,000.
Medicare Part C, also known as Medicare Advantage plans, provides additional coverage but still requires individuals to be enrolled in and pay premiums for Parts A and B. Premiums for these plans are not based on income. Medicare Part D plans offer additional prescription drug coverage, with premium amounts determined by income. Beneficiaries paying only the standard premium have free coverage, but those with higher incomes pay additional rates. Finally, there are several programs available for Medicare beneficiaries with low incomes and assets, such as Medicare Savings Programs and the Medicare Extra Help program, which help cover deductibles, coinsurance, and other costs.