How much does it cost?
The parts of Medicare do have costs. The prices of Medicare can either been paid monthly, or have already been paid since you were working. Below, I will break down what costs to expect on each part and how they are usually paid.
Medicare Part A (Hospital)
For the most part, Part A has been already paid through Medicare taxes during your working years. This isn’t always the case, but I have rarely seen cases where there is a premium due. This is a very fortunate thing, because it enables you to automatically be covered for catastrophic hospital stays that may arise (minus deductible and everything discussed here).
Medicare Part B (Medical)
Unlike Part A, Medicare Part B does have costs. These are usually deducted from Social Security benefits if you are receiving them. For payment options while you’re outside of Social Security, see Medicare.gov. The premium is based on the income of the earner. Of course, other guidelines may apply. For example, if you don’t take Medicare Part B when it is first available, you can be charged a 10% penalty when you do decide to subscribe. The following are the amounts for 2016:
|If your yearly income in 2014 (for what you pay in 2016) was||You pay (in 2016)|
|File individual tax return||File joint tax return||File married & separate tax return|
|$85,000 or less||$170,000 or less||$85,000 or less||$121.80|
|above $85,000 up to $107,000||above $170,000 up to $214,000||Not applicable||$170.50|
|above $107,000 up to $160,000||above $214,000 up to $320,000||Not applicable||$243.60|
|above $160,000 up to $214,000||above $320,000 up to $428,000||above $85,000 and up to $129,000||$316.70|
|above $214,000||above $428,000||above $129,000||$389.80|
If you have been on Medicare prior to 2016, you will keep your same premium (104.90) since there was no cost of living increase for Social Security. However, the above prices will apply if you in one of the following 5 groups:
- You enroll in Part B for the first time in 2016.
- You don’t get Social Security benefits.
- You’re directly billed for your Part B premiums.
- You have Medicare and Medicaid, and Medicaid pays your premiums. (Your state will pay the standard premium amount of $121.80.)
- Your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above a certain amount.
Medicare Part C (Medicare Advantage)
This one isn’t so easy to answer! The key is to remember that pricing a Medicare Advantage plan is that every single plan is a private plan. You will have to shop, but I advise not just looking at the rates. There are so many different prices and benefit levels (they are not standardized) around that lowest price does not necessarily mean best deal. Some plans may be great for your medical coverage, but lack the proper prescription coverage–making it more expensive. I’d suggest going to Medicare.gov and searching for plans based on your medications and going from there.
Medicare Part D (Prescriptions)
These, too, are privatized plans. If you are on Medicare Part A and Part B and a supplement, you will still need a Part D. The word “need” here is a strong word. You can, like in the other Parts, maintain credible coverage through an employer or other means if it is available to you. If you go without credible prescription coverage and don’t take a Part D plan, you can be penalized 1% per month that you are not on it. Remember this: you have a certain window. If you miss that window, you can have to wait up to 12 months before you can sign up again. That would make a 12% penalty right off the bat! You can shop Part D plans at the same link above.
Did you know that even though Medicare Supplements are standardized, there are three ways that companies can structure their rate increases? When shopping for these, you should always investigate whether the plans are rated as issue-age rated, attained- age rated, or community rated. More information can be found here.