If a person enrolls in Original Medicare, the government covers 80% of their Part B expenses after they meet their annual deductible, which is $257 as of 2025. Medicare beneficiaries can purchase a separate supplemental Medigap policy from a private health insurance provider to help cover the remaining 20%.
If an person decides to enroll in a Medicare Advantage (Part C) plan instead, that plan covers the bulk of Medicare Part B expenses. However, the beneficiary typically must pay copays and coinsurance costs out of pocket. Furthermore, Medicare Advantage beneficiaries aren’t allowed to have a Medigap policy.
Monthly Medicare Part B premiums can be a surprising and costly retirement expense for many people. The monthly Medicare Part B premium in 2025 is $185 per person and is typically deducted from one’s monthly Social Security payment.
Understanding Medicare Part B premiums is an important part of the retirement planning process. While a person usually isn’t eligible for Medicare until age 65, their income at age 63 determines the premium rate they pay during their first year of coverage.
Medicare Part B premiums are calculated based on a person’s modified adjusted gross income (MAGI). For Part B premiums, MAGI is the adjusted gross income an individual reports on line 11 of their federal tax return, plus any tax-exempt interest income, such as municipal bonds (line 2a) earnings.
Current year Medicare Part B premiums are based on MAGI reported on an individual’s tax return from two years prior. For example, 2025 Medicare Part B premiums are based on MAGI reported on 2023 federal tax returns.
Who Pays More for Medicare Part B?
Each year the government calculates and adjusts total costs for providing Medicare Part B coverage. For most enrollees, the government agrees to cover 80% of the cost and charges beneficiaries the Medicare Part B premium to cover the remaining 20%.
In 2025 a single taxpayer whose 2023 return reported MAGI of no more than $106,000 and married couples with MAGI up to $212,000 paid the lowest base Medicare Part B monthly premium (this premium is $185 as of 2025).
When a person’s income is above those levels, the government shifts more of the premium cost to your personal balance sheet. Instead of covering 75% of the premium cost, the government pays anywhere from 65% to as little as 15% of the premium, based on your income-related monthly adjustment amount (IRMAA).
The annual Medicare report estimates that about 5 million beneficiaries currently pay a higher premium, and by 2029, over 10 million enrollees will pay an IRMAA surcharge.
