Most Medicare enrollees pay a standard monthly premium for Part B that’s set each year by the federal government. For 2025, that amount is $185.00 per month. But your actual premium can be higher or lower depending on your income, when you enrolled, and whether you chose Original Medicare or a Medicare Advantage plan. Here’s how each piece of the calculation works.
The Standard Part B Premium
Every fall, the Centers for Medicare & Medicaid Services announces the standard Part B premium for the following year. This amount is designed to cover roughly 25% of the projected cost of Part B services (doctor visits, outpatient care, preventive screenings), with the federal government picking up the remaining 75%. For 2025, the standard premium rose $10.30 from the previous year, landing at $185.00 per month.
If your income falls below certain thresholds, this is the only Part B premium you’ll pay. For individuals filing taxes with modified adjusted gross income (MAGI) at or below $109,000, or married couples filing jointly at or below $218,000, the standard premium applies with no surcharge.
How Income Raises Your Premium
Higher earners pay more through a system called the Income-Related Monthly Adjustment Amount, or IRMAA. This surcharge applies to both Part B and Part D (prescription drug) premiums and is based on your tax return from two years prior. So your 2025 premiums are determined by your 2023 tax return, and your 2026 premiums will use your 2024 return.
The surcharges follow a tiered structure. Using the 2026 brackets (based on 2024 income) as an example for individuals:
- $109,001 to $137,000: Part B premium rises to $284.10, plus a $14.50 surcharge on Part D
- $137,001 to $171,000: Part B jumps to $405.80, with a $37.50 Part D surcharge
- $171,001 to $205,000: Part B reaches $527.50, Part D surcharge is $60.40
- $205,001 to $499,999: Part B hits $649.20, Part D surcharge is $83.30
- $500,000 or more: Part B tops out at $689.90, Part D surcharge is $91.00
For married couples filing jointly, each bracket threshold is roughly doubled. If you’re married filing separately, the brackets are much less favorable: income above $109,000 immediately triggers the second-highest surcharge tier.
Requesting an IRMAA Adjustment
Because the calculation uses a two-year-old tax return, your premium might not reflect your current financial situation. If you’ve experienced a life-changing event like retirement, divorce, the death of a spouse, or a significant drop in income, you can ask Social Security to use a more recent tax year instead. This request is made through a form called the SSA-44.
Part D Prescription Drug Premiums
Part D works differently from Part B because you choose a private plan, and each plan sets its own premium. On top of your plan’s premium, higher-income enrollees pay the IRMAA surcharges listed above. The national base beneficiary premium for Part D in 2025 is $36.78, though your actual plan premium will vary depending on the coverage you select and where you live.
How Medicare Advantage Plans Set Premiums
If you choose a Medicare Advantage plan (Part C) instead of Original Medicare, your premium calculation involves a completely different process. Each year, private insurers submit bids to CMS estimating what it will cost them to cover standard Part A and Part B benefits for an average enrollee, including their administrative costs and profit margin.
CMS separately calculates a benchmark for each plan based on what Original Medicare spends per enrollee in that county, adjusted for the health status of the plan’s members and the plan’s quality star rating. What happens next depends on how the bid compares to the benchmark:
- Bid below the benchmark: The plan receives its bid amount plus a rebate (50% to 70% of the difference, depending on star ratings). Plans must spend these rebate dollars on extras for enrollees, such as dental coverage, lower copays, or reduced premiums. This is why many Medicare Advantage plans can offer $0 monthly premiums.
- Bid at or above the benchmark: The plan receives the benchmark amount, and enrollees pay the difference as a higher monthly premium.
Regardless of which type of plan you choose, you still pay your standard Part B premium (and any IRMAA surcharge) on top of whatever the Medicare Advantage plan charges.
Late Enrollment Penalties
If you don’t sign up for Medicare when you’re first eligible and don’t have qualifying coverage through an employer, penalties get added to your premium. These aren’t one-time fees. For most people, they last as long as you have that coverage, which typically means for life.
The Part B penalty is 10% of the standard premium for each full 12-month period you delayed enrollment. If you waited two years past your initial eligibility, you’d pay a 20% penalty on top of your standard premium every month going forward. That adds up quickly: 20% of $185.00 is an extra $37.00 per month, permanently.
Part D penalties work on a monthly basis. You’re charged an extra 1% of the national base beneficiary premium for each month you went without creditable drug coverage (coverage at least as good as a standard Part D plan). Going without coverage for 25 months, for instance, would mean a 25% penalty applied to the $36.78 base premium, adding about $9.20 to your monthly bill for as long as you have Part D coverage.
Part A penalties apply only to the small number of people who must purchase Part A (those without enough work history to qualify for premium-free coverage). That penalty is a 10% increase lasting twice the number of years you delayed.
The Hold Harmless Protection
There’s one more wrinkle that can affect what you actually pay. A federal rule called the “hold harmless provision” prevents a Part B premium increase from reducing your Social Security check. If your annual cost-of-living adjustment from Social Security isn’t large enough to absorb the full premium increase, your Part B premium rises only by the amount of your cost-of-living increase, keeping your net Social Security payment the same.
This protection applies to most people who have Part B premiums deducted directly from their Social Security benefits. It does not apply if you’re enrolling in Part B for the first time, if you pay IRMAA surcharges, or if Medicaid pays your premiums. In years with very small or zero cost-of-living adjustments, this provision can result in some enrollees paying less than the official standard premium.
What Counts as Income
The income figure Medicare uses isn’t just your salary or pension. Modified adjusted gross income includes wages, Social Security benefits, tax-exempt interest, capital gains, rental income, and retirement account withdrawals. A large Roth conversion or the sale of a property can push you into a higher IRMAA bracket two years later, even if it was a one-time event. Planning the timing of major income events around those two-year lookback windows is one of the most common strategies retirees use to manage Medicare costs.