How Are Your Medicare Costs Calculated?

If you are a high-income earner, you could potentially pay higher premiums for Medicare Part B (medical insurance) and Medicare prescription drug coverage. But how are these Medicare costs calculated?

$0 premium Medicare Advantage plans may be available where you live.

Compare plans now

Below is a detailed breakdown of how the costs of Medicare are calculated, including premiums and late enrollment penalties.

Couple calculating costs

What is the Medicare Part A premium for 2019?

Most people do not have to pay a premium for Medicare Part A (hospital insurance) because they worked and paid Medicare taxes for at least 40 quarters (10 years). If you or your spouse paid the required amount of Medicare taxes, you should qualify for premium-free Part A coverage.

If you paid Medicare taxes for fewer than 40 quarters, your 2019 Medicare Part A premium is calculated as follows:

  • If you paid Medicare taxes for between 30 and 39 quarters, you will pay $240 per month for Part A in 2019.

  • If you paid Medicare taxes for fewer than 30 quarters, you will pay $437 per month for Part A in 2019.

What does Medicare Part B cost in 2019?

Medicare Part B premiums are calculated based on your income. More specifically, they’re based on the modified adjusted gross income (MAGI) reported on your taxes from two years prior.

This means your 2019 Medicare Part B premium will be calculated using the income you reported on your 2017 taxes. If your reported income was higher than a certain amount, you’ll pay a higher premium.

This is known as the Medicare IRMAA, or the income-related monthly adjustment amount.

The table below illustrates how 2019 Medicare Part B premiums are calculated.

Medicare Part B Premiums

2017 Individual tax return

2017 Joint tax return

2017 Married and separate tax return

2019 Part B premium

$85,000 or less

$170,000 or less

$85,000 or less

$135.50

More than $85,000 and up to $107,000

More than $170,000 and up to $214,000

N/A

$189.60

More than $107,000 up to $133,500

More than $214,000 up to $267,000

N/A

$270.90

More than $133,500 up to $160,000

More than $267,000 up to $320,000

N/A

$352.20

More than $160,000 up to $500,000

More than $320,000 up to $750,000

More than $85,000 up to $415,000

$433.40

More $500,000

More than $750,000

More than $415,000

$460.50

Because IRMAA is based on your reported income from two years prior, the amount you have to pay for a Medicare IRMAA will be calculated again each year.

How much does Medicare Part C cost?

Medicare Part C plans (Medicare Advantage) are sold by private insurance companies. Therefore, premiums will differ according to provider, plan and location.

Some Medicare Advantage plans offer $0 monthly premiums and $0 deductibles, and all Medicare Advantage plans must include an annual out-of-pocket cost limit. $0 premium plans may not be available in all locations.

Find $0 premium Medicare Advantage plans near you.

Compare plans now

How are Medicare Part D premiums calculated?

Medicare Part D prescription drug plans are also sold by private insurance companies, so premiums will vary from one plan to the next.

As with Medicare Part B premiums, Part D plans also calculate premiums based on your income from two years prior and may charge an IRMAA.

The table below illustrates how much you can expect to pay for a Part D plan in 2019.

Medicare Part D Premiums

2017 Individual tax return

2017 Joint tax return

2017 Married and separate tax return

2019 Part D premium

$85,000 or less

$170,000 or less

$85,000 or less

Your plan premium

More than $85,000 and up to $107,000

More than $170,000 and up to $214,000

N/A

You plan premium + $12.40

More than $107,000 up to $133,500

More than $214,000 up to $267,000

N/A

Your plan premium + $31.90

More than $133,500 up to $160,000

More than $267,000 up to $320,000

N/A

Your plan premium + $51.40

More than $160,000 up to $500,000

More than $320,000 up to $750,000

More than $85,000 up to $415,000

Your plan premium + $70.90

More $500,000

More than $750,000

More than $415,000

Your plan premium + $77.40

If you are subject to a Part D IRMAA, you may be able to save money by enrolling in a Medicare Advantage plan that includes prescription drug coverage.

How are Medicare late enrollment penalties calculated?

If you do not sign up for certain parts of Medicare when you first become eligible but choose to add one of these coverage options at a later date, you may have to pay a late enrollment penalty that will be added to your monthly premium.

  • Medicare Part A
    Most people are eligible for premium-free Part A coverage. If you aren’t eligible for premium-free Part A don’t enroll in Part A when you’re first eligible but decide to enroll later, your Part A late enrollment penalty will be calculated based on how long you went without Part A coverage.

    The Part A late enrollment penalty is 10 percent of the Part A premium, which you must pay for twice the number of years for which you were eligible for Part A but didn’t sign up.

  • Medicare Part B
    Medicare Part B is optional coverage, but if you don’t sign up when you’re first eligible, your late enrollment penalty will be calculated based on how long you went without this Medicare coverage.

    The Part B late enrollment penalty is as high as 10 percent of the Part B premium multiplied by each 12-month period that you weren’t enrolled but were eligible.

    For example, if you were eligible for Part B for three years but were not enrolled, your late enrollment penalty could be 30 percent of the Part B premium once you finally do enroll in Part B. You must pay the Part B late enrollment penalty for as long as you have Part B coverage.

Medicare Part D plans can also come with a late enrollment penalty. Learn more about how Part D late enrollment penalties are calculated.

Medicare Advantage plan could help you save on out-of-pocket costs

Do you have more questions about how your Medicare costs are calculated? Are you looking for ways to lower some of your out-of-pocket health care costs?

A Medicare Advantage plan could potentially help you save money on costs such as dental care, prescription drugs and other costs.

Speak with a licensed insurance agent today to compare plans in your area by calling TTY Users: 711 24 hours a day, 7 days a week.

Copyright © 2019 TZ Insurance Solutions LLC. All rights reserved.

MedicareAdvantage.com is a website owned and operated by TZ Insurance Solutions LLC. TZ Insurance Solutions LLC and TruBridge, Inc. represent Medicare Advantage Organizations and Prescription Drug Plans having Medicare contracts; enrollment in any plan depends upon contract renewal.

Plan availability varies by region and state. For a complete list of available plans, please contact 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or consult www.medicare.gov.

Medicare has neither reviewed nor endorsed this information.