Medicare Costs

An overview of Medicare Costs

One of the most common misconceptions about Medicare costs is that Medicare is free. Unfortunately, even though beneficiaries pay Medicare taxes through their paycheck their whole lives, they still have to pay for Medicare when they begin their Medicare benefits. Original Medicare includes two parts: Part A and Part B. However, a beneficiary must also consider Part D for their prescription drugs and supplemental coverage such as a Medigap or Medicare Advantage plan.

Medicare Part A Costs

Most people will qualify for premium-free Part A as long as they have worked at least 40 quarters or ten years in the U.S. If an individual has not worked enough quarters, they can qualify through their spouse. However, if they are not married and worked for more than 30 quarters but less than 40, they would pay $274 per month in 2022. However, if they worked less than 30 quarters, they would pay $499 per month in 2022.

Medicare Part A provides inpatient hospital coverage, home health care, skilled nursing facility care, hospice care, and more. In 2022, there is a Part A deductible of $1,556 per benefit period.

Medicare Part B Costs

Medicare Part B provides outpatient medical coverage, and there is an annual Part B deductible of $233 in 2022. There is a standard base premium that all enrollees must pay, and in 2022 that base premium is $170.10. However, if a beneficiary is a high-income earner, they will pay more for Parts B and Part D.

Social Security looks at the modified adjusted gross income from tax returns from two years prior. So, filing individually or jointly does make a difference. There are five income brackets, and if a beneficiary falls in one of those brackets, they will be subject to Income Related Monthly Adjustment Amount (IRMAA) and pay a higher premium.

For example, if someone filed individually and made more than $91,000 but less than $114,000, they would pay $238.10 for Part B. However, if they file jointly, the income bracket is more than $182,000 but less than $228,000 for the same premium.

Medicare Part D Costs

All Medicare Part D plans have a different monthly premium, and those premiums will vary based on location. However, a beneficiary will pay an additional amount if subject to IRMAA.

For example, someone who falls in the income brackets mentioned above will pay an additional $12.40 per month.

Conclusion

All beneficiaries should be aware of the costs associated with Medicare and what they will pay once they start their benefits. The costs change each year, so staying up to date with these numbers is beneficial.