What Every High-Income Retiree Needs to Know About Medicare Before Enrolling

As your 65th birthday gets closer, you may start getting ready to enroll in Medicare. And you’re actually allowed to enroll up to three months before the month you turn 65.

It’s important to read up on what Medicare costs and covers so you know how to budget accurately for healthcare expenses in retirement. But if you’re a higher earner who’s gearing up to enroll in Medicare, there’s a certain “gotcha” to brace for.

Image source: Getty Images.

Will your Medicare premiums cost you more?

While most Medicare enrollees do not pay a premium for Part A, there’s a monthly premium Part B participants are charged. If you’re on Social Security, once you’re eligible for Medicare, your Part B premiums will be paid out of your monthly benefits directly. If you’re not yet on Social Security, you’ll have to make those payments yourself.

The standard monthly premium for Medicare Part B changes yearly. Right now, it’s $202.90. Last year, it was $185. But if you’re a higher earner, you may end up paying more for Medicare Part B due to being subject to surcharges known as income-related monthly adjustment amounts, or IRMAAs.

IRMAAs are based on your income from two years prior. If you’re planning to enroll in Medicare this year but earned a high income in 2024, you may be looking at paying extra for Part B. Worse yet, IRMAAs apply to Part D drug plans, too.

The thresholds at which IRMAAs apply also aren’t all that low. Right now, single tax-filers with a modified adjusted gross income (MAGI) of over $109,000 face IRMAAs. And IRMAAs also increase by income level, so the higher your income, the higher your surcharge is.

Higher earners can be particularly vulnerable to the IRMAA trap when they first enroll in Medicare. If you’re retiring this year and enrolling in Medicare but earned a high salary in 2024, you could end up having to pay more for coverage.

Plan to pay more so there are no surprises

It’s not a given that you’ll face IRMAAs as a higher earner. During retirement, for example, you may not be pushed into IRMAA territory if you have your savings in a Roth account, since withdrawals won’t count toward your MAGI.

But IRMAAs can be harder to avoid early on in retirement if you’re someone who’s traditionally earned a higher salary. So if you can’t get out of paying more for Medicare at the start of retirement, at least know what to expect.

Specifically, find out what the IRMAA thresholds look like so you know what surcharges to plan for. If you’re able to budget for those higher costs, they may not be quite as painful to deal with.