Written By Melanie Lockert
Updated on February 25, 2024
If you’re 65 or older, you might qualify for Medicare which is a form of health insurance offered by the government. Generally, you’ll pay a monthly premium for what’s referred to as Medicare Part B, which is your medical coverage.
Many people end up paying a standard amount for this, but if you’re married and file separately, this can increase costs significantly. If you add student loans to the mix, this could derail your financial planning. Learn more about Medicare and the impact of being married and filing taxes separately.
How filing taxes as married, filing separately impacts Medicare premium assistance
If you’re about to go on Medicare and married, filing separately is your tax status, you likely want to reconsider and run the numbers if your income is above a certain threshold.
As of 2024, the standard premium amount is $174.70 per month. This is true if your income is $206,000 or less if filing jointly, and $103,000 or less if married, filing separately.
Note: Typically, your modified adjusted gross income (AGI) on your IRS income tax return from two years prior is used, so 2024 premiums use your 2022 income).
But if you earn $104,000 and decide to file separately? As you can see from the chart below, your Part B premium jumps up to $559 per month. The difference is $384.30 per month which results in paying $4,611.60 more for the plan premium annually.
That’s a significant amount, especially if you’re also dealing with the financial strain of student loan payments. Another way to think about it is that you could have close to an additional $5,000 going toward your student loans just by filing a joint tax return.
If you get Medicare and want to file your taxes separately from your spouse, it might not be an issue if you earn $103,000 or less. However, senior borrowers earning more should consider how filing separately can adversely affect their finances.
If you’re married and filing jointly, the thresholds for premium increases are much higher. For example, married borrowers filing jointly must earn above $386,000 to pay $559 per month, compared to married filing separately which has a threshold of more than $103,000.
Part B premiums by tax filing status
Here's a look at how your tax filing status impacts your Part B premium in 2024 (based on your 2022 income).
| File individual tax return | File joint tax return | File married & separate tax return | You pay each month (in 2024) |
|---|---|---|---|
| $103,000 or less | $206,000 or less | $103,000 or less | $174.70 |
| Above $103,000 up to $129,000 | Above $206,000 up to $258,000 | Not applicable | $244.60 |
| Above $129,000 up to $161,000 | Above $258,000 up to $322,000 | Not applicable | $349.40 |
| Above $161,000 up to $193,000 | Above $322,000 up to $386,000 | Not applicable | $454.20 |
| Above $193 and less than $500,000 | Above $386,000 and less than $750,000 | Above $103,000 and less than $397,000 | $559.00 |
| $500,000 or above | $750,000 or above | $397,000 or above | $594.00 |
Part D premiums by tax filing status
On top of higher premiums, you might also pay an income-related monthly adjustment amount (IRMAA). Social Security might send you a notice about this for Medicare Part B and Part D, which is for drug coverage.
| File individual tax return | File joint tax return | File married & separate tax return | You pay each month (in 2024) |
|---|---|---|---|
| $103,000 or less | $206,000 or less | $103,000 or less | Your plan premium |
| Above $103,000 up to $129,000 | Above $206,000 up to $258,000 | Not applicable | $12.90 + your plan premium |
| Above $129,000 up to $161,000 | Above $258,000 up to $322,000 | Not applicable | $33.30 + your plan premium |
| Above $161,000 up to $193,000 | Above $322,000 up to $386,000 | Not applicable | $53.80 + your plan premium |
| Above $193 and less than $500,000 | Above $386,000 and less than $750,000 | Above $103,000 and less than $397,000 | $74.20 + your plan premium |
| $500,000 or above | $750,000 or above | $397,000 or above | $81.00 + your plan premium |
Medicare premiums and student loan repayments
If you’re a senior student loan borrower who’s paying Medicare premiums, you have to juggle both monthly payments and navigate your tax strategy.
Filing separately might be advantageous for certain student loan plans, like Income-driven repayment (IDR), which only uses your individual income when assessing your eligibility and IDR payment amount. But separately filing your taxes while on Medicare might not be a great option financially if you’re above the income threshold.
Parent PLUS borrowers with Medicare…
If you have Parent PLUS Loans and Medicare premiums, your monthly payments can add up fast. Parent PLUS Loans come with high interest rates relative to other federal loans and have limited repayment options.
As is, Parent PLUS Loans can only be repaid under a Standard, Graduated or Extended Repayment Plan. If managing student loans and Medicare premiums is tough, consider consolidating your student loans to qualify for the Income-Contingent Repayment (ICR) plan. This strategy also might make your PLUS Loans eligible for Public Service Loan Forgiveness (PSLF).
With a Direct Consolidation Loan under an ICR plan, your monthly payments are limited to 20% of your discretionary income. If you go this route, filing separately may be a good idea, but only if your income isn’t above the $103,000 threshold for 2024. Otherwise, you might trigger higher payments.
If you borrowed student loans for your own education…
If you have student loans that were used for your own education, you likely have additional repayment options to choose from. You might be eligible for other income-driven repayment options beyond ICR. These other IDR plans lead to more affordable payments.
If you’re married and filing jointly, your joint income is used to calculate your monthly payment. Filing separately can lower payments, but again, be aware of how your income might impact your Medicare premiums.
If you’re pursuing student loan forgiveness, keeping your income below the threshold can help keep your student loan and Medicare payments more affordable. However, depending on your financial goals, earning a higher income might be worth it in other ways despite how it affects your Medicare premiums and student loan payments. For example, a higher payment might allow more discretionary income for investments or retirement savings.
The best way to balance your tax filing status, Medicare and student loan payments will differ from other borrowers. This illustrates the importance of discussing specifics with a tax and student loan professional. That way, you can compare scenarios and know which one is better for you.
Adjusting IDR repayment to optimize Medicare costs
If you’re above the income threshold and typically file separately to lower IDR payments, calculate how much this approach impacts your Medicare costs. Use IDR calculators to see what your potential IDR payments would be if you file taxes jointly, compared to the Medicare premiums you qualify for.
Then, compare student loan payments with premiums for Medicare and married filing separately. You might have to adjust your tax filing status and how you approach IDR repayment to optimize Medicare costs. Every situation is unique so talk to a professional to help you assess all sides and make an informed decision.
Does being a student loan borrower impact Medicare costs?
Being a student loan borrower doesn’t directly impact Medicare costs or eligibility for the program. However, if you’re married, filing your taxes separately to lower your IDR student loan payments can raise your Medicare costs.
Again, this is only if your income is above the $103,000 threshold for Medicare, and you’re married, filing separately. If you’re below the threshold, there’s no need to worry about it.
Qualifying for student loans on Medicare
There isn’t an age limit associated with student loans, so if you’re on Medicare and want to go back to school and get financial aid, you can. You might also be eligible for scholarships and grants. To find out, submit a Free Application for Federal Student Aid (FAFSA).
Federal student loans are a better option for seniors as they include forgiveness options, extended deferment and forbearance, and offer flexible repayment options.
When married filing separately hurts Medicare recipients
If you're a senior student loan borrower who’s married, filing a joint tax return with your spouse might help you avoid increased Medicare premiums. However, this all depends on your income.
Discuss your specific financial situation with a professional who understands the complex world of student loans, taxes and Medicare. At Student Loan Planner, we can help you come up with a student loan plan and wealth strategy that saves you money on taxes and your student loan repayment. Book a session to get started.
Not sure what to do with your student loans?
Take our 11 question quiz to get a personalized recommendation for 2024 on whether you should pursue PSLF, Biden’s New IDR plan, or refinancing (including the one lender we think could give you the best rate).
