As you approach the age to qualify for medicare, you might be wondering how much you will have to pay for medicare. Is Medicare Part A free? Is Part B free? Will I have a monthly premium? These are all valid questions.
Many people are surprised when they find out that not all of medicare is free. Lets review what medicare can cost you so that you are well prepared when you are ready to apply to medicare.
Medicare Part A
Part A Premium
Medicare Part A Premium is free for most people. If you have worked 10+ years it is free. There are certain situations when it is not free.
- If you paid medicare taxes for less than 30 quarters, you will pay a monthly premium of $458.
- If you paid medicare taxes for 30-39 quarters, you will pay a monthly premium of $252.
Part A Deductible and Coinsurance
If you have a hospital stay, you will most likely have to pay an inpatient deductible. This deductible is $1,408 for each benefit period. . On the 61st day, you will also start to have coinsurance costs. Your coinsurance depends on the length of your hospital stay. Here are some things to keep in mind regarding cost
- Days 61-90 – Daily coinsurance of $352 for each benefit period
- Days 91 and over – Daily coinsurance of $704 for each “lifetime reserve day” in each benefit period (maximum of 60 days over your lifetime)
- After lifetime reserve days are used up: You pay all cost
Medicare Part B
Part B Premium
Medicare Part B is not free. The cost for Medicare Part B depends on your income. The Social Security Office will look at your IRS tax returns from two years ago to help determine what you will pay for Part B.
Some of the things that contribute to modified adjusted gross income are:
- Required minimum dividends from investments
- Capital gains
- Social security benefits
- Tax-deferred pensions
Here is the break down of premiums for individual tax returns:
- $87k or less – $144.60
- $87k to $109k – $202.40
- $109k to $136k – $289.20
- $136k to $163k – $376.00
- $163k to $500k – $462.70
- $500k and higher – $491.60
If you file your IRS tax returns with your spouse, your premium will be based on the joint tax return. This will determine your individual Part B premium.
Here is the break down for joint tax return premiums:
- $174k or less – $144.60
- $174k to $218k – $202.40
- $218k to $272k – $289.20
- $272k to $326k – $376.00
- $326k to $750k – $462.70
- $750k and higher – $491.60
Part B Deductible
The deductible for Medicare Part B is $198 per year and then 20% of the Medicare-approved amount.
Medicare Part D
Medicare Part D will cover prescription drugs. The cost to have Medicare Part D is different for individual and married joint returns.
Individual tax return:
- $87k or less – Your plan premium
- $87k to $109k – $12.20 + your plan premium
- $109k to $136k – $31.50 + your plan premium
- $136k to $163k – $50.70 + your plan premium
- $163k to $500k – $70.00 + your plan premium
- $500k and higher – $76.40 + your plan premium
Joint tax return:
- $174k or less – Your plan premium
- $174k to $218k – $12.20 + your plan premium
- $218k to $272k – $31.50 + your plan premium
- $272k to $326k – $50.70 + your plan premium
- $326k to $750k – $70.00 + your plan premium
- $750k and higher – $76.40 + your plan premium
If you end up having a higher income in your tax return than you do after retirement, you can send an appeal to medicare.