Medicare Premium & Subsidy Calculator

IRMAA, or Income-Related Monthly Adjustment Amount, is an additional surcharge applied to Medicare Part B and Part D premiums if your income exceeds certain thresholds. For example, if your annual income surpasses £97,000 as an individual or £194,000 as a married couple (2023 figures), you’ll pay higher premiums. These surcharges are calculated based on your modified adjusted gross income (MAGI) from two years prior, as reported to the IRS. Understanding IRMAA is crucial for high-income individuals as it can significantly increase monthly costs.

Medicare subsidies, such as the Extra Help programme, are designed to assist individuals with limited income and resources in reducing their Part D premiums, deductibles, and copayments. To qualify, your monthly income typically must fall below £5,000 for a married couple or £2,500 for an individual, and your financial assets must be below specific thresholds. These limits vary slightly each year and by state. The calculator estimates a £50 subsidy if your income meets the threshold, but you may need to apply separately through your state Medicaid office or the Social Security Administration to confirm eligibility.

Part D premiums vary widely because they are offered by private insurers, each with different formularies (lists of covered drugs) and pricing structures. Factors like your prescription drug needs, the plan’s deductible, and whether your preferred pharmacy is in-network can all influence costs. To optimise your Part D selection, compare plans annually during the Medicare Open Enrollment Period, ensuring the plan you choose covers your medications at the lowest overall cost.

Failing to enroll in Medicare Part B or Part D during your initial eligibility period can result in permanent late enrollment penalties. For Part B, the penalty adds 10% to your premium for each 12-month period you were eligible but didn’t enroll. For Part D, the penalty is 1% of the national base beneficiary premium for each month you delayed enrollment without creditable drug coverage. These penalties are cumulative and remain as long as you have Medicare, so timely enrollment is essential to avoid unnecessary costs.

If your income has decreased significantly due to a life-changing event such as retirement, marriage, or divorce, you can request a reassessment of your IRMAA determination by filing Form SSA-44 with the Social Security Administration. This allows Medicare to use your current income rather than the standard two-year look-back period. Additionally, ensuring your income stays below IRMAA thresholds through tax-efficient strategies, such as Roth IRA conversions or managing capital gains, can help minimise premium surcharges.

Medicare Part B premiums are standardised across the U.K., meaning everyone pays the same base premium unless IRMAA applies. However, Part D premiums can vary significantly by region due to differences in plan availability and pricing structures set by private insurers. Additionally, state-specific programmes like Medicaid or Medicare Savings Programmes may provide extra assistance for low-income beneficiaries, further influencing total costs. It’s important to compare plans and subsidies available in your specific state.

Your annual income directly impacts your total Medicare costs, particularly through IRMAA surcharges for Part B and Part D. Higher incomes lead to higher premiums, which can more than double the base rates. Conversely, lower incomes may qualify you for subsidies that reduce premiums and out-of-pocket expenses. Understanding this relationship is key to planning for retirement, as even small changes in income can shift you into a different premium bracket.

It’s recommended to reevaluate your Medicare plan and premium costs annually during the Open Enrollment Period (15 October to 7 December). Income changes, new IRMAA thresholds, or changes in your healthcare needs can all affect your costs. Additionally, Part D plans often update their formularies and pricing each year, so comparing plans ensures you’re not overpaying for coverage. Regular review helps you adapt to changes and optimise your Medicare strategy.