Like other types of insurance, you’ll pay monthly premiums for Medicare in retirement. But two things could cause you to pay even more each month—enrolling too late and earning too much.

Here’s why it’s important to plan ahead. (Need to brush up on the basics of Medicare, including its parts and what they cover? Read Five things you should know about Medicare.)

If you don’t sign up when you’re supposed to, you could pay a penalty—for the rest of your life.

Most people must enroll for Medicare near their 65th birthday. There are exceptions for people who have insurance through a qualified employer or who have certain disabilities or conditions. But in general, your initial enrollment period starts three months before you turn 65 and ends three months after.

If you don’t enroll in Medicare Parts B (medical coverage) and D (prescription drug coverage) when you’re first eligible, you’ll likely have to pay a late enrollment fee every month after you do sign up. The fee is permanent and depends on how long you go without coverage:


As you make plans for celebrating your 65th birthday, don’t forget to make plans for enrolling in Medicare. A delay could cost you.


  • For Part B, your monthly premium will be 10% higher for every 12 months you wait.
  • For Part D, you’ll pay an extra 1% per month you delay, although that penalty may increase.

Some people will also have to pay a surcharge if they enroll late in Part A (hospital coverage). Part A is premium-free for most people, because it’s paid for by taxes deducted from their paychecks throughout their careers. However, if you don’t qualify for the free coverage, you’ll need to purchase it—and if you don’t do that when you are first eligible, a 10% penalty will be added to your monthly premiums. You’ll be charged this penalty for twice the number of years you could have enrolled in Part A, but didn’t.

So, as you make plans for celebrating your 65th birthday, don’t forget to make plans for enrolling in Medicare. A delay could cost you.

If you make a lot of money, you'll probably pay more for Parts B and D.

Everyone pays a monthly premium for Part B—typically a standard $170.10. Part D premiums differ by insurer. But if you make a lot of money, you could pay an additional fee each month for each of these parts—called the Income Related Medicare Adjustment Amount (IRMAA).

Medicare looks at the most recent federal tax return the IRS provides to them to determine whether you will pay more and, if so, how much. (They’re currently using tax returns filed in 2020 for tax year 2019—so it’s your income two years before you enroll that they’re interested in.)

For example:

  • If you enrolled now and your adjusted gross income in 2019 was above $91,000 for an individual or $182,000 for a married couple, you’d pay an additional $68.00 per month for Part B, and an additional $12.40 per month for Part D.
  • If you made more than $114,000 per year or are part of a married couple that made over $228,000, you’d owe an extra $170.10 per month for Part B and $32.10 a month for Part D. If you made more than that, your surcharge will be even higher.

So, it pays to plan ahead, and it might make sense to try to lower your taxable income amount used to determine the Medicare Part B premiums. One potential way to do that is to invest a portion of your pre-tax income in an annuity. You might also look into Form SSA-44 (PDF), a Medicare form for noting any “life-changing events” that have affected your income since your last tax return—entering retirement, for example. Ask your financial professional if either of these options is right for you.

When it comes to Medicare, delays and mistakes can cost money, so don’t hesitate to ask for help if you need it. Your financial professional may be able to assist you, or you can contact your State Health Insurance Assistance Program (SHIP) for free, one-on-one Medicare guidance.