Debunking the Myth: Eligibility vs. Cost
The most important distinction to understand is the difference between Medicare eligibility and the cost of your premiums. The vast majority of Americans become eligible for Medicare when they turn 65, primarily based on their work history and contributions to Medicare taxes. For these individuals, eligibility is virtually automatic and is not tied to a specific income level. However, a higher income can lead to a higher monthly premium, while a lower income may qualify you for financial assistance programs.
The Income-Related Monthly Adjustment Amount (IRMAA)
For higher-income beneficiaries, the Social Security Administration (SSA) applies a monthly surcharge called the Income-Related Monthly Adjustment Amount (IRMAA) to their standard premiums for Medicare Part B (Medical Insurance) and Part D (Prescription Drug Coverage). This means that while you still get Medicare, you simply pay more for it.
How IRMAA Is Calculated
Your IRMAA is based on your modified adjusted gross income (MAGI) from your tax return two years prior. For instance, the IRMAA for 2025 is determined by the income reported on your 2023 tax return. The calculation takes into account your adjusted gross income plus any tax-exempt interest, such as from municipal bonds.
Here are the 2025 IRMAA brackets based on 2023 income levels:
Can You Appeal an IRMAA? The Life-Changing Event Clause
If your income has significantly dropped due to a major life-changing event, you can appeal your IRMAA determination. The SSA may use your more recent income to adjust your premium. A life-changing event can include:
- Marriage or divorce
- Death of a spouse
- Reduction or cessation of work
- Loss of income-producing property
- Loss of a pension
- Settlement from an employer
To appeal, you will need to fill out Form SSA-44, the Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event form, and provide documentation of the change in circumstances. The Social Security Administration is the body responsible for handling these appeals.
Programs for Low-Income Beneficiaries
Just as high income affects premiums, low income can lead to financial assistance. The government offers several programs for those with limited income and resources.
- Medicare Savings Programs (MSPs): These state-level programs help pay for Medicare premiums and, in some cases, deductibles, coinsurance, and copayments. The four main MSPs are Qualified Medicare Beneficiary (QMB), Specified Low-Income Medicare Beneficiary (SLMB), Qualifying Individual (QI), and Qualified Disabled & Working Individual (QDWI). Each has its own income and resource limits, which vary by state and are typically tied to the federal poverty level.
- Extra Help: Also known as the Low-Income Subsidy (LIS), this program helps cover the costs of Medicare Part D prescription drug coverage. It helps pay for the monthly premiums, deductibles, and copayments associated with Part D.
Medicare Parts and Their Relationship to Income
Medicare Part A (Hospital Insurance)
For most people, Part A is premium-free because they or their spouse paid Medicare taxes while working for at least 10 years. For those who didn't meet the work requirement, a premium is necessary, but income does not determine eligibility or affect the cost of this premium.
Medicare Part B (Medical Insurance)
This is the part of Medicare most directly affected by income. As previously discussed, a Modified Adjusted Gross Income (MAGI) above the set annual limit results in an IRMAA surcharge in addition to the standard monthly premium. In 2025, the standard premium for individuals with a MAGI of $106,000 or less (or couples with a MAGI of $212,000 or less) is $185 per month. Higher earners face a tiered premium structure based on their income bracket.
Medicare Part D (Prescription Drug Coverage)
Similar to Part B, higher-income earners are subject to an IRMAA for their Part D premiums. This is an additional amount added to the premium of the specific plan you choose. Like Part B, the surcharge is based on the same MAGI brackets from two years prior.
Comparison of 2025 IRMAA for Medicare Parts B & D
| Filing Status | 2023 Modified Adjusted Gross Income | 2025 Part B Premium | 2025 Part D IRMAA Surcharge |
|---|---|---|---|
| Individual | Less than or equal to $106,000 | $185.00 | $0 |
| Individual | $106,001 to $133,000 | $259.00 | $13.70 |
| Individual | $133,001 to $167,000 | $370.00 | $35.30 |
| Individual | $167,001 to $200,000 | $480.90 | $57.00 |
| Individual | $200,001 to $500,000 | $591.90 | $78.60 |
| Individual | $500,001 and above | $628.90 | $85.80 |
| Married, Joint | Less than or equal to $212,000 | $185.00 | $0 |
| Married, Joint | $212,001 to $266,000 | $259.00 | $13.70 |
| Married, Joint | $266,001 to $334,000 | $370.00 | $35.30 |
| Married, Joint | $334,001 to $400,000 | $480.90 | $57.00 |
| Married, Joint | $400,001 to $750,000 | $591.90 | $78.60 |
| Married, Joint | $750,001 and above | $628.90 | $85.80 |
Conclusion: Income Affects Cost, Not Eligibility
To be perfectly clear, your income is not a disqualifying factor for Medicare eligibility. If you meet the age or disability requirements, you will be able to enroll. The key takeaway is that your income level will determine what you pay for your coverage, and you should plan accordingly. High-income earners should budget for the IRMAA surcharges on Part B and D, while low-income individuals should explore the various assistance programs available to help with costs. Staying informed about your income and eligibility for these programs is the best way to manage your healthcare expenses in retirement. For more information, visit the official Medicare website at Medicare.gov.
