If you’re enrolled in Medicare or considering enrollment, you might have wondered: How are Medicare premiums calculated? The answer depends on which part of Medicare you have, your work history, and your income. Let’s walk through the basics to help you understand what affects your monthly costs.

 Medicare Parts and What You Pay.

Part A (Hospital Insurance)

• Most people don’t pay a monthly premium for Part A; it’s “premium-free.” That’s because they (or their spouse) worked and paid Medicare taxes for at least 40 quarters (about 10 years).

• If you don’t qualify for premium-free Part A, you can buy it. For example, in 2025, depending on how many quarters you paid taxes, the monthly premium may be $285 or $518.

So if you have enough work history, Part A may cost you nothing each month. If not, you’ll pay based on how much you contributed over the years.

Part B (Medical Insurance; doctor visits, outpatient care, etc.)

The premium for Part B is more complicated; and this is where income plays a big role.

• There is a standard base premium for Part B each year (for 2025, it’s $185/month).

• But that’s only for beneficiaries whose income falls below certain thresholds. If your income is higher; as determined by your tax return from two years ago, you may pay more.

• The additional cost is called an “income-related monthly adjustment amount” (IRMAA). The higher your income, the higher the premium surcharge.

Why Income Matters: Understanding IRMAA

Your Medicare premiums for Part B (and Part D – prescription drug coverage) are often based on what you earned (or reported) two years earlier. Specifically, they use the figure called Modified Adjusted Gross Income (MAGI).

Here’s how it works:

• Every two years, the government reviews your tax return to see what your MAGI was.

• If your income was above certain thresholds; for individual or joint filers, you pay the standard premium plus an additional surcharge.

• That means two people with the same Medicare coverage might pay very different premiums simply based on income.

This system helps Medicare share costs more fairly: those with higher income contribute more, while those with lower income pay the standard rate.

What About Other Parts? : Part D & Supplements.

• Part D (Prescription Drug Coverage): Premiums for drug coverage are set by private plans and can vary depending on the plan, coverage level, and even medications you use.

• Supplemental Insurance (Medigap) or additional plans: If you buy a Medigap policy or an Advantage Plan instead of Original Medicare, separate premiums and factors will apply; outside these federal Part A/B calculations.

What This Means for You : Smart Takeaways

• If you paid Medicare taxes for enough years, you might get Part A for free – a huge benefit.

• For Part B, your income matters. Even if two people enroll at the same time, one might pay more because of higher past income.

• If you expect income fluctuations (retirement, investment gains, etc.), it’s worth thinking ahead; as these can affect your future premiums.

• Review your tax returns carefully and consider how income-related premiums might change if your earnings change.

 Have Questions? We’re Here to Help!

Understanding how Medicare premiums are calculated can feel complicated — especially when you add income, tax history, and plan choices into the mix. If you want a clear picture tailored to your situation, reach out to Brian at I Know Medicare. He’ll help you understand what you’ll pay, why, and what options make the most sense for you.

Call or text Brian today at 540-662-4432 for a free, no-obligation consultation. Let’s get your Medicare costs as clear as possible!

Sources & Further Reading

• Medicare.gov – What does Medicare cost? Medicare

• Healthline – How are Medicare premiums calculated? Healthline

• Social Security / Medicare Premiums – Income-related premiums rules Social Security

• CMS Fact Sheet – 2025 standard premiums & IRMAA thresholds Medicare+1

• Smart Asset – How income affects Medicare premiums SmartAsset