How does income affect the Medicare Part B monthly premium?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
The standard Part B premium applies to most beneficiaries, but higher-income individuals pay an Income-Related Monthly Adjustment Amount (IRMAA) on top of the standard premium, based on modified adjusted gross income from two years earlier. Thus Part B premiums rise with income. IRMAA also affects Part D premiums. This income-tiering of the Part B premium distinguishes it from a single flat premium paid by every beneficiary. IRMAA tiers are keyed to modified adjusted gross income reported on the most recent federal tax return. Social Security computes the adjustment, deducts the total premium from the beneficiary's monthly check, and updates the tier each year as income and thresholds change.
Why the other options are wrong
- C) Income tiering is built into Part B; the IRMAA raises premiums for higher earners. Income does affect the Part B premium: beneficiaries above the income thresholds pay an income-related monthly adjustment amount on top of the standard premium.
- D) The structure works the other way: higher earners pay more, while most beneficiaries pay the standard premium. The premium structure charges more to higher-income beneficiaries, so the statement that lower-income enrollees pay more is backwards.
- A) Part B premiums are paid by beneficiaries, not by employers through payroll. Part B premiums are the beneficiary's obligation, generally deducted from Social Security, and employers do not pay Part B premiums on a payroll basis.
Memory hook
More income, more Part B premium: the IRMAA surtax for the well-off.