Medicare Part B is not free, but the cost depends on your income

When you turn 65, you become may be able to access for Medicare Part A (hospital insurance) at no monthly premium if you or your spouse paid Medicare taxes for at least 10 years. Part B (medical insurance covering doctor visits, outpatient care, and preventive services) requires a monthly premium that you pay, even at 65. The standard Part B premium for 2024 is $174.70 per month, though this amount changes each year. Higher-income retirees pay more through a system called Income-Related Monthly Adjustment Amounts (IRMAA).

You are not required to take Part B at 65 if you have coverage through an employer or union plan. If you delay Part B beyond your initial enrollment window, you will face a permanent penalty of 10 percent for each year you waited. The exception is if you have creditable coverage (employer or union health insurance) — in that case, you can enroll in Part B later without penalty as long as you sign up within eight months of losing that coverage.

Key Takeaways

  • Part B costs a monthly premium (standard rate $174.70 in 2024) that you pay whether you are 65 or older, and the amount increases each year.
  • If your modified adjusted gross income exceeds certain thresholds, you will pay a higher premium through IRMAA surcharges on top of the standard rate.
  • You do not have to enroll in Part B at 65 if you have employer or union coverage, but delaying it without creditable coverage triggers a permanent 10 percent annual penalty.
  • Part B premiums are usually deducted automatically from your Social Security check, or you can pay Medicare directly by mail or online.
  • You can review your Part B premium and appeal IRMAA determinations if your income has changed due to retirement, marriage, or loss of a spouse.

How Part B premiums are calculated based on income

Medicare uses your tax return from two years prior to determine whether you pay the standard Part B premium or a higher amount. If your modified adjusted gross income (MAGI) is below the threshold for your filing status, you pay the standard premium. For 2024, the income thresholds are $97,000 for single filers and $194,000 for married couples filing jointly. If your income exceeds these amounts, Medicare adds a surcharge called IRMAA.

The surcharge increases in brackets. For example, a single person with MAGI between $97,001 and $123,000 pays an additional $61.80 per month on top of the standard premium in 2024. Someone with MAGI over $500,000 pays an additional $246.90 per month. These amounts change annually. If you believe your income has dropped significantly since the tax return Medicare is using — because you retired, got divorced, or lost a spouse — you can request a recalculation by submitting a Life-Changing Event form to Social Security.

When Part B premiums are deducted from your benefits

If you are receiving Social Security benefits when you turn 65, Medicare will automatically deduct your Part B premium from your monthly Social Security payment. This happens without you having to do anything. The deduction appears on your Social Security statement each month so you can track it.

If you are not yet receiving Social Security, Medicare will send you a bill for Part B premiums, usually monthly. You can pay by mail, phone, or online through the Medicare website. Once you start collecting Social Security later, the premium deduction will switch to your Social Security check automatically. If you want to pay a different way or have questions about your bill, you can contact Medicare at 1-800-MEDICARE.

What happens if you delay Part B enrollment

Your initial enrollment period for Part B is the seven-month window that includes the month you turn 65, plus three months before and three months after. If you do not enroll during this window and you do not have creditable coverage through an employer or union, you will owe a permanent penalty for the rest of your life.

The penalty is 10 percent of the standard Part B premium for each full year you were may be able to access but did not enroll. If you waited five years to sign up, you would pay an extra 50 percent on top of the standard premium forever. This penalty does not go away even if you later enroll. The only way to avoid it is to enroll during your initial window or to have had creditable coverage that kept you from needing Part B.

Employer coverage and Part B enrollment decisions

If you or your spouse is still working and covered by an employer or union health plan at 65, you do not have to enroll in Part B. Your employer coverage is considered creditable, meaning it meets or exceeds Medicare's standards. You can delay Part B without penalty as long as you stay on that plan.

When you or your spouse leaves the job and lose that coverage, you have eight months to enroll in Part B without triggering the late-enrollment penalty. This eight-month window is separate from your initial enrollment period. You will need to provide proof that you had creditable coverage — usually a letter from your employer's benefits department stating the dates of coverage and that the plan was creditable. Keep this documentation in case Medicare asks for it later.

Part B costs beyond the monthly premium

The monthly premium covers Part B, but you will also pay other costs when you use services. You pay a $240 annual deductible (for 2024) before Medicare starts paying its share. After you meet the deductible, you typically pay 20 percent of the cost for doctor visits, lab tests, and other outpatient services, while Medicare pays 80 percent. These out-of-pocket costs are separate from your premium and depend on how much care you use.

Many people buy a Medigap (supplemental insurance) or Medicare Advantage plan to cover some of these out-of-pocket costs. Medigap plans are sold by private insurers and help pay deductibles, copayments, and coinsurance. Medicare Advantage plans are an alternative to Original Medicare that often have lower out-of-pocket costs but restrict which doctors you can see. Understanding these options helps you plan your total healthcare costs beyond the Part B premium alone.

How to review and appeal your Part B premium

You can view your Part B premium and IRMAA information on your Medicare.gov account or by calling 1-800-MEDICARE. If you believe the income Medicare is using is incorrect or if your circumstances have changed, you can request a recalculation. Life-changing events that may have access to for a recalculation include retirement, loss of income, marriage, divorce, death of a spouse, or loss of employer coverage.

To request a recalculation, contact Social Security at 1-800-772-1213 and ask to file a Life-Changing Event form. You will need to provide documentation of the event — such as a retirement letter, divorce decree, or death certificate. Social Security will review your request and send you a new IRMAA information if your income has changed. This process typically takes several weeks, so submit your request as soon as possible after the life-changing event occurs.

Frequently Asked Questions

Can I get Part B for free if I have low income?

No. Part B always has a monthly premium that you must pay, regardless of income. However, if you have very limited income and resources, you may be able to get help paying your premiums through your state's Medicare Savings Program. Contact your state Medicaid office or call 1-800-MEDICARE to learn whether you may have access to.

What if I turn 65 but do not want Medicare yet?

If you have employer or union coverage, you can decline Part B without penalty. If you do not have credible coverage and decline Part B, you will owe a permanent late-enrollment penalty when you eventually sign up. The only way to avoid the penalty is to enroll during your initial seven-month window.

Do I have to take Part A at 65 if I do not want Part B?

You can take Part A without Part B if you have employer coverage. However, if you enroll in Part A, you are automatically enrolled in Part B unless you specifically decline it in writing. If you want Part A but not Part B, you must submit a form to Medicare declining Part B enrollment.

Will my Part B premium increase every year?

Yes. Medicare adjusts Part B premiums annually based on program costs. The standard premium and IRMAA surcharges both increase most years. The exact increase varies and is announced in the fall for the following year. You will receive a notice showing your new premium before it takes effect.

What if Social Security does not cover my full Part B premium?

If your Social Security benefit is smaller than your Part B premium, Medicare will deduct what it can from your check and bill you for the remainder. You can pay the remaining balance by mail, phone, or online. Contact Medicare at 1-800-MEDICARE if you have trouble paying your premium.