Written By

Greg Wohl

Licensed Medicare Specialist

Medicare premiums are calculated differently for each part of Medicare, and your income plays a larger role than most people realize. Part B and Part D premiums are adjusted based on your income from two years prior, a system called IRMAA (Income-Related Monthly Adjustment Amount).

Part A premiums depend on your work history. Medicare Advantage and Medigap premiums are set by private insurers and vary by plan, location, and age.

This guide breaks down exactly how each premium is calculated, what the 2026 amounts are, and what you can do to reduce your costs.

Key Takeaways

Most people pay $0 for Medicare Part A: If you or your spouse worked and paid Medicare taxes for at least 40 quarters (10 years), you qualify for premium-free Part A. If you have 30 to 39 quarters, you pay a reduced premium. Fewer than 30 quarters means you pay the full premium.
The standard Part B premium in 2026 is $185.00 per month: This is the base amount. Higher-income beneficiaries pay more through IRMAA surcharges. Your Part B premium is based on your modified adjusted gross income (MAGI) from two years ago.
IRMAA can add up to $443.90 per month to your Part B premium: In 2026, the highest IRMAA bracket adds $443.90 per month to the standard Part B premium, bringing the total to $628.90 per month for the highest earners. Part D also has IRMAA surcharges on top of your plan premium.
Your 2024 tax return determines your 2026 Medicare premium: Social Security uses your MAGI from two years ago to set your current year premium. If your income has dropped significantly since then, you can appeal to have your premium recalculated using more recent income.
Medicare Advantage premiums are set by private insurers: Medicare Advantage plan premiums vary widely. Many Florida plans offer $0 monthly premiums, but you still pay your Part B premium. The total cost of a Medicare Advantage plan includes the plan premium plus your Part B premium.
Medigap premiums are based on age, location, and underwriting: Medicare Supplement (Medigap) premiums are set by private insurers and vary by plan type, your age at enrollment, your location, and whether the insurer uses attained-age, issue-age, or community rating.

How Medicare Part A Premiums Are Calculated

Medicare Part A (hospital insurance) premium is based entirely on your work history, specifically how many quarters you paid Medicare payroll taxes.

Work History (Quarters)	2026 Monthly Premium
40 or more quarters (10+ years)	$0 (premium-free)
30 to 39 quarters	$285 per month
Fewer than 30 quarters	$518 per month

Spousal qualification: If you did not work enough quarters yourself, you may qualify for premium-free Part A based on your spouse's work record. Your spouse must have worked at least 40 quarters and be at least 62 years old.

Part A deductible and cost-sharing: Even with premium-free Part A, you still pay a deductible per benefit period ($1,676 in 2026) and daily coinsurance for extended hospital stays. A Medigap plan can cover these costs.

How Medicare Part B Premiums Are Calculated

Medicare Part B (medical insurance) premiums are set annually by CMS and adjusted based on your income. The standard premium covers roughly 25% of the program's costs; general tax revenue covers the other 75%.

The standard Part B premium in 2026 is $185.00 per month. This applies to most Medicare beneficiaries. However, if your income exceeds certain thresholds, you pay an IRMAA surcharge on top of the standard premium.

How income is measured: CMS uses your Modified Adjusted Gross Income (MAGI) from two years prior. For 2026 premiums, CMS uses your 2024 MAGI. MAGI includes your adjusted gross income plus tax-exempt interest income.

The 2026 Part B IRMAA brackets:

2024 MAGI (Individual)	2024 MAGI (Joint)	2026 Monthly Premium
$106,000 or less	$212,000 or less	$185.00
$106,001 to $133,000	$212,001 to $266,000	$259.00
$133,001 to $167,000	$266,001 to $334,000	$370.00
$167,001 to $200,000	$334,001 to $400,000	$480.90
$200,001 to $500,000	$400,001 to $750,000	$591.90
Above $500,000	Above $750,000	$628.90

For strategies to reduce your IRMAA surcharge, see our detailed guide on how to reduce Medicare premiums based on income.

How Medicare Part D Premiums Are Calculated

Medicare Part D (prescription drug coverage) premiums are set by private insurance companies and vary by plan. The national base beneficiary premium in 2026 is approximately $36.78 per month, but individual plan premiums vary widely.

Part D IRMAA surcharges apply to higher-income beneficiaries in addition to the plan premium:

2024 MAGI (Individual)	2024 MAGI (Joint)	2026 Part D IRMAA Add-On
$106,000 or less	$212,000 or less	$0
$106,001 to $133,000	$212,001 to $266,000	$13.70
$133,001 to $167,000	$266,001 to $334,000	$35.30
$167,001 to $200,000	$334,001 to $400,000	$57.00
$200,001 to $500,000	$400,001 to $750,000	$78.60
Above $500,000	Above $750,000	$85.80

Late enrollment penalty: If you do not enroll in Part D when first eligible and do not have creditable drug coverage, you pay a late enrollment penalty of 1% of the national base beneficiary premium for each month you went without coverage. This penalty is permanent and added to your monthly premium.

For more on Part D enrollment rules, see our guide on reinstating a Part D plan.

How Medicare Advantage Premiums Are Calculated

Medicare Advantage (Part C) plans are offered by private insurers and their premiums are set by the insurer, not by CMS. Premium levels vary significantly by plan, county, and the benefits included.

How Medicare Advantage premiums work: Private insurers receive a fixed payment from Medicare for each enrolled beneficiary. If the insurer can provide coverage for less than that payment, they can offer a $0 premium plan. If their costs exceed the payment, they charge a monthly premium.

In Florida, many Medicare Advantage plans offer $0 monthly premiums, particularly in competitive markets like Hillsborough, Pinellas, and Miami-Dade counties. However, you still pay your Part B premium regardless of your Medicare Advantage plan premium.

Total cost of a Medicare Advantage plan includes the plan premium plus your Part B premium. A $0 premium Medicare Advantage plan still costs you at least $185.00 per month in Part B premiums (or more if you are subject to IRMAA).

Extra Benefits and Premium Trade-offs: Plans with higher premiums often include richer extra benefits (dental, vision, hearing, OTC allowance). Plans with $0 premiums may have higher copays or a higher out-of-pocket maximum. Always compare total estimated annual costs, not just the monthly premium.

How Medigap Premiums Are Calculated

Medicare Supplement (Medigap) premiums are set by private insurers and are not regulated by Medicare. Three different rating methods are used, and the method your insurer uses significantly affects how your premium changes over time.

The three rating methods:

Attained-age rating: Your premium increases as you get older. This is the most common method. Premiums start lower but increase significantly over time, often making this the most expensive option in the long run.
Issue-age rating: Your premium is based on your age when you first buy the policy and does not increase solely because of age. Premiums start higher but are more stable over time.
Community rating: Everyone in the same geographic area pays the same premium regardless of age. Florida does not require community rating, so this method is less common here.

Other factors that affect Medigap premiums: Your location (county and zip code), your gender, whether you smoke, and whether you qualify for any household discounts all affect your premium. Insurers can also apply medical underwriting outside of your guaranteed issue period, which can result in higher premiums or denial of coverage.

For a full comparison of Medigap plan options, see our Medicare Supplement insurance guide.

Medicare Premium Calculation: Quick Reference

Here is a summary of how each Medicare premium is determined:

Part A: Based on your work history; premium-free with 40+ quarters of Medicare taxes paid
Part B: Standard premium of $185.00/month in 2026; higher-income beneficiaries pay IRMAA surcharges based on 2024 income
Part D: Set by private insurers; IRMAA surcharges apply for higher-income beneficiaries on top of the plan premium
Medicare Advantage: Set by private insurers; many Florida plans offer $0 plan premiums, but you still pay Part B
Medigap: Set by private insurers using attained-age, issue-age, or community rating methods

Our licensed specialists can review your income situation, compare your plan options, and help you find strategies to reduce your total Medicare costs. Schedule a free consultation for a personalized cost analysis.