Medicare Part A and Part B provide the exact same benefits for all Medicare beneficiaries throughout the country no matter their age or location. Why is it, then, that premiums for that coverage can vary greatly?
High-Income Levels Mean Higher Premiums
Higher premium rates apply to individuals who have incomes above $109,000 and couples above $218,000. The income-related monthly adjustment amount (IRMAA) is determined by Medicare through one’s modified adjusted gross income (MAGI).
For example, the Medicare IRMAA premiums for 2026 were based on the beneficiary’s tax return filed for the 2024 tax year. That said, Medicare reports that fewer than 5% of all beneficiaries fall into this income threshold and shoulder the cost-sharing structure.
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While Medicare asks for higher premiums from higher-earning individuals, it also helps to protect those who depend upon Social Security for their main source of income via the Hold Harmless Rule.
COLA and the Hold Harmless Rule
As the cost of living around us increases, the Cost of Living Adjustment provision helps combat rising costs. COLA is calculated each year through the Consumer Price Index for Urban Wage Earners. This adjustment helps to steady cash flow for retired seniors by counteracting the effects of inflation.
For example: If Ms. Johnson received $10,000 last year in Social Security benefits and the COLA that year was 4%, her benefits would then become $10,400.
Even if the inflation that year is negative, the COLA adjustment will never be lower than 0.0%. The Hold Harmless Rule is a stipulation to COLA that states Medicare Part B premiums cannot rise faster than what Social Security pays out.
This ensures that Social Security payments do not decrease if Medicare Part B premiums rise. “The Hold Harmless Rule is calculated based on the change in net benefits payments (Social Security benefits minus Medicare premiums).” For those who are Medicaid beneficiaries, delay Social Security, or are subject to higher premiums through the IRMAA, the rule does not apply.
Exceptions
As is with most Medicare topics, there are specific situations in which Medicare won’t give a beneficiary with a higher income the surcharge. This chart shows the MAGI breakdown and what premiums will cost that beneficiary for 2025. If you have any questions, contact Social Security.
