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How Income Impacts Your Medicare Premiums in 2023

Did you know not everyone pays the same for their Medicare premiums? Your income has an impact on your premiums, which often comes as a shock to many people. Yes, there is a standard premium that the majority of beneficiaries pay, but according to a study done by CMS, about 8% of people pay higher premiums for their Part B and Part D premiums.

Let’s take a look at the Medicare premiums in 2023 and how your income may impact how much you pay for Medicare.

How Much Does Medicare Cost in 2023?

Towards the end of this past summer, CMS released the new Medicare premiums for 2023. Many people were pleasantly surprised to see a decrease in premium amounts - for the first time in Medicare’s history! The premium drop comes one year after the program saw its highest increase, mostly due to the FDA approval of a new Alzheimer’s drug called Aduhelm.

Let’s take a look at the standard premiums for Medicare Parts A and B.

For most people, Medicare Part A is premium-free. As long as you or your spouse have worked (and paid taxes) for 40 quarters, you won’t pay a dime to have Part A. However, you will have to pay a premium if you have not met that requirement. The premium is based on how many quarters you did contribute to Social Security taxes.

  • At least 30 quarters = $278/month
  • Less than 30 quarters = $506/month

Part A premiums are not impacted by your income, though you might be eligible to have your Part A premiums paid if you have not met the minimum requirements. We’ll chat more about that at the end of this article.

Beginning in 2023, the standard premium for Part B is $164.90. But, as we mentioned earlier, people with higher incomes could pay more. The additional premium is called IRMAA, the Income Related Monthly Adjustment Amount. IRMAA is based on your adjusted gross income from 2 years ago. So, for 2023, it is based on your income from 2021.

Like the Medicare premiums, IRMAA often changes each year. Take a look at the chart below to determine if you’ll pay IRMAA in 2023.

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Lastly, if IRMAA applies to your Part B premium, you’ll also have to pay it for Medicare Part D. Unlike Part B, Part D does not have a standard premium. Your premium will depend on which of the Part D prescription plans you choose. Below is a table of the IRMAA you’ll pay on top of your Part D premium.

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How to Reduce Your Medicare Premiums

If you pay IRMAA or just find that the standard premiums are too high for your budget, there are options to reduce them. You may not qualify for a premium reduction, but it’s certainly worth looking into.

File an IRMAA Appeal

If you’ve had a significant, life-changing event, you can appeal your IRMAA decision. Some events that might qualify include divorce, marriage, loss of a job, loss of a spouse, loss of a pension, or loss of property income. If you’d like to appeal, you’ll need to fill out form SSA-44 and provide them with your most recent tax return.

Apply for the Medicare Savings Program

There are four Medicare Savings Programs, each with its own eligibility requirements based on your income and assets. The programs have varying benefits, but most of them offer to pay the Medicare Part B premium.

Apply for Extra Help

Like the MSP, Extra Help is also available to those with limited incomes. The Extra Help program will help pay your Part D premium and reduce your copays for medications.

Have questions about your Medicare bills? Call the Local Medicare Specialists. We can help you determine if you’ll pay IRMAA in 2023 and give you options that could reduce your financial expenses.

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