Why Your Monthly Medicare Part B Premium Can Range From $170.10 to $578.30

What you pay for Medicare Part B in retirement can vary widely, and it’s because of your Modified Adjusted Gross income.

Most people pay what is called the standard rate for Medicare Part B premiums, but those with higher incomes will pay more. Your Modified Adjusted Income (MAGI) from two years prior will determine how much you pay for the Medicare Part B premiums. Your MAGI is an adjustment of your Adjusted Gross Income (AGI) because of certain tax deductions and credits. 

You’ll have to crunch some numbers to find your MAGI from your tax return, but tax preparation software can make this easy. Sometimes it is automatically provided as part of your analysis for that year’s return. Your tax preparer can also tell you the MAGI amount. 

Once you have your MAGI from two years prior you can use it to find how much your Medicare Part B premium will be. In order to do this, you will need to go to the appropriate Income Related Monthly Adjustment Amount (IRMAA) table. The table is updated annually by the Internal Revenue Service. Then, you will have to see where your MAGI is within the proper columns for MAGI within the table. The higher the MAGI, the higher the IRMAA.

This table shows the relationship between MAGI and Medicare Part B premiums.

If your yearly income in 2020 was

File Individual Tax ReturnFile Joint Tax ReturnFile Married and Separate Tax ReturnYou Pay Each Month (in 2022)
$91,000 or less$182,000 or less$91,000 or less$170.10
above $91,000 up to $114,000above $182,000 up to $228,000Not applicable$238.10
above $114,000 up to $142,000above $228,000 up to $284,000Not applicable$340.20
above $142,000 up to $170,000above $284,000 up to $340,000Not applicable$442.30
above $170,000 and less than $500,000above $340,000 and less than $750,000above $91,000 and less than $409,000$544.30
$500,000 or above$750,000 or above$409,000 or above$578.30

The challenge in retirement is to keep the MAGI low enough so that it does not launch you into a higher tier on the IRMAA table for the Medicare Part B premiums. For instance, if a person filing as an individual has a MAGI over $91,000 or a couple had a MAGI on the 2020 tax return over $182,000 – even if only a dollar more – it will trigger an increase in the monthly premiums. For a single person that extra dollar above $91,000 would be an additional $68 a month or $816 a year. For a couple filing jointly, it would mean $136 a month or $1,632.

Appealing Your Medicare Part B Premiums

One can ask the Social Security Administration to reevaluate the Medicare Part B premium if he or she projects MAGI is going to be lower because of a life-changing event. Such events would be retirement, divorce, and the death of a spouse. Form SSA-44 can be used to request a reduction in the anticipated MAGI.

Let’s consider the case of an individual who retired in 2021. She is now age 65 and filing as a single person and her MAGI was $115,00.00 in 2020. Her Medicare Part B premium will be $340.20 per month. This is because Social Security is using her MAGI from the year 2020’s tax return to calculate the premium for the premium.

This person is a candidate for using Form SSA-44 for an appeal of her premiums. She can request the Social Security Administration to reevaluate her Medicare Part B premium because her current and future income is going to be lower than her 2020 MAGI owing to her recent retirement. She would do this by using Form SSA-44 to request a reduction in the MAGI to be used in the IRMAA table. She should include documentation from the Office of Personnel Management attesting that she became an annuitant in 2021.

Tips to Lower MAGI and Medicare Part B Premiums

Anticipating future MAGI in retirement years and its impact on future Medicare Part B premiums is important to individuals and couples with projected high taxable cash flows. This is because the future premium based on the future IRMMA table is like a rearview mirror always looking back to the MAGI from two years in the past.

Future MAGI can be lowered by planning for tax-free income as a source of relief. Designating a portion of your Thrift Savings Plan contributions to be in a Roth Thrift Savings Plan account while working creates a future tax-free reservoir. The Roth account distributions are exempt from MAGI. 

Roth IRAs can also be used to generate a pool of future tax-free income. Remember, a non-working spouse can also have a Roth IRA if the working spouse has income. 

Contributions to Roth IRAs always require earned income and the contributions begin to be phased out if income is between certain levels in the following table. The option of Roth IRAs is eliminated when the income is above the ranges displayed on this table. 

Filing status2022 income range
Single$129,000–$144,000
Married, filing jointly$204,000–$214,000

Another option is to convert a slice of your TSP Traditional account into a Roth IRA while one’s taxable income is low during the case of early retirement. Such an action will create taxable income during the year of the conversion. Therefore, be attentive to the year of the conversion and the two-year window MAGI uses for calculating the Medicare Part B premiums at age 65. 

About the Author

Francis Xavier (FX) Bergmeister, CLU®, ChFC®, CASL®, ChSNC® has been Certified Financial Planner® for 30 years. He is a graduate of the Wharton School and earned a Doctor of Arts from George Mason University. He provides retirement seminars thru Federal Career Experts.