As most people are obligated to pay Medicare premiums, it is valuable to educate yourself on the topic. Especially if you’re close to turning 65 or you’re about to retire, you may have some questions regarding how much you will have to pay with every coverage part.
Since it might be a little challenging to understand the full scope of this topic, we prepared this guide to the costs of Medicare, including Medicare Part D. From it, you will learn about various costs and monthly premiums you may need to pay with different Medicare parts.
We will also answer some common questions regarding the costs of insurance in various situations. So if you have any doubts about your Medicare monthly premium, this is the article for you.
How Much Does Medicare Cost at Age 65?
In our Medicare Explained – What Is Medicare? article, we talked about what Medicare is and for whom it was created. In a nutshell, this insurance is for people 65 and older and for those under 65 who have been on Social Security disability insurance income for at least 24 months.
The standard monthly rate for Medicare Part B is $164.90 in 2023. People earning more than $97,000 individually or $194,000 jointly may pay more. Medicare’s cost for Part B is over $650 per month. The higher a persons income, the less they are subsidized by Medicare.
You will find the breakdown of Medicare costs for specific parts below.
How Much Does Medicare Part A Cost?
In many cases, the costs of Medicare Part A (Hospital insurance) amount to zero. This is the case for people who have worked, or whose spouse has worked, and paid Medicare taxes for at least 40 quarters (10+ years) in the US.
You must be a U.S. resident or legal immigrant to qualify for Medicare. If you or your spouse qualify, but have not paid Medicare taxes long enough, you might be eligible to purchase this insurance.
The Medicare Part A costs will be $274 or $499 for each monthly premium, depending on how long you or your spouse paid Medicare taxes. In 2023 these costs will amount to $278 or $506.
It’s also crucial to talk about your deductibles. In 2023 you will pay $1,600 for each inpatient hospital benefit period before the Original Medicare Part A pays a benefit. The hospital benefit period is the time you’ve spent in the hospital or skilled nursing facility, counted from the day you are admitted to the day you haven’t received such services for 60 days for hospitals and 100 days for SNF in a row.
There are no limits to how many benefit periods you can have in a year. Once you’ve met your Part A deductible, the inpatient stay costs are:
- Days 1-60: $0;
- Days 61-90: $389 copayment each day (this will be $400 in 2023);
- Days 91-150: $778 copayment each day ($800 in 2023) when you’re using your 60 lifetime reserve days;
- Above 150 days, you are obligated to pay the total cost of hospitalization.
The costs for a skilled nursing facility stay look like this:
- Days 1-20: $0 copayment;
- Days 21-100: $194.50 copayment each day (this will be $200 in 2023);
- Above 101 days, all the costs are paid by the patient.
Medicare pays for home health care treatments if you meet certain eligibility requirements. You might be obliged to pay for durable medical equipment, though. This often comes down to 20% of what Medicare pays for the service or an item.
The costs of hospice care look similar, meaning patients don’t pay for these services out of pocket. In this case, you may pay a 5% copayment for each prescription drug you’re taking as a part of your therapy, as well as 5% of the Medicare-approved amount (the costs Medicare covers) for inpatient respite care.
It’s important to mention that only US citizens and people who have had green cards for more than 5 years are legally eligible to acquire Medicare Part A insurance.
- If you have worked over 40 quarters in the US, or you’re receiving retirement benefits (or you’re eligible to receive them), your monthly premiums will amount to zero.
- If you have worked at least 30 quarters, in 2023 you will have to pay a monthly premium of $278.
- Those who worked less than 30 quarters will pay $506 of a monthly premium in 2023.
- The Medicare Part A deductible will amount to $1,600 per benefit period.
How Much Does Medicare Part B Cost?
Medicare Part B premiums are calculated based on modified adjusted household gross income, and they have to be paid each month, even if you don’t benefit from any Part B insurance benefits.
These monthly premiums will be calculated by The Social Security office, which will consider your IRS tax return from the last two years. This includes Part D insurance as well since the premiums are calculated the same way.
Things that will be taken into account are any profits made through work, dividends from investments, interest, Social Security benefits, as well as a capital gain.
The costs of this medical insurance won’t be calculated based on distributions from Roth IRAs and Roth 401(k)s, life insurance costs, reverse mortgages, and health savings accounts. If you are married, the premiums will be calculated based on marital income.
The standard monthly Part B premium for most is $170.10, but in 2023, this cost will be reduced to $164.90.
You can expect to pay higher premiums if your income from the last two years has been more significant than $91,000. The monthly costs of this insurance in 2023 will be:
- $230.80 for those with income exceeding $97,000 up to $123,000;
- $329.70 for those with income exceeding $123,000 up to $153,000;
- $428.60 for those with income exceeding $153,000 up to $183,000;
- $527.50 for those with income exceeding $183,000 up to $500,000;
- $560.50 for those with income exceeding $500,000.
For married couples who file joint tax returns, these costs will amount to:
- $164.90 for those with income less significant than $194,000;
- $230.80 for those with income exceeding $194,000 up to $246,000;
- $329.70 for those with income exceeding $246,000 up to $306,000;
- $428.60 for those with income exceeding $306,000 up to $366,000;
- $527.50 for those with income exceeding $366,000 and less than $750,000;
- $560.50 for those with an income of $750,000 or higher.
Important information to keep in mind is that there is a penalty for people who don’t sign up for Part B medical insurance once they are eligible for Medicare. This will exclude those who maintain creditable health insurance coverage, like employer health care. Keep in mind, your employer must have 20 or more employees for the group healthcare to be creditable.
The penalty for not enrolling in Part B when you were supposed to adds 10% of the additional payment to your monthly premiums for every full year you should be enrolled for this insurance, and you haven’t been. This means that if you waited 3 years to get this coverage, you would be forced to pay an extra 30% to your monthly premiums for as long as you are benefiting from the insurance (it’s not a one-time late fee.)
For this reason, it’s crucial to enroll for Medicare Part B when you are eligible for it, which for most people is when they turn 65.
The annual deductible for this Part is $233 now and will be $226 in 2023. You may also pay 20% as coinsurance for different services or items added to your deductible.
Parts A and B have copays, which means they are partially funded by individuals who benefit from them. But if you can’t afford these costs, you may qualify to benefit from one of the Medicaid programs.
Medicaid services are dedicated to people who need financial aid in order to pay for insurance. If you are in that situation, contact your State Medical Assistance office to receive all the information.
If you are also taking your Social Security Income, there is a Medicare Hold Harmless rule that protects you from experiencing a decline in income when your Part B premiums increase more than your income. See our article on the hold harmless provision for details.
How Much Does Medicare Part C Cost?
Medicare Part C is provided by private insurance companies and is also known as Managed Medicare or Medicare Advantage. This coverage is supposed to offer everything that you would find in Parts A and B and may include some additional services as well.
It is important to know, if you want to purchase this type of coverage, you still must be enrolled in Medicare Part B and pay monthly premiums for it. Some Medicare Advantage plans offer help in this regard, though, so you might be able to lower your insurance costs overall.
Another aspect worth discussing is that Part C is not a Medicare supplement insurance, and it shouldn’t be viewed that way. Medicare Part C replaces Medicare Part A and Part B. Medicare Part C is also referred to as Medicare Advantage or Medicare replacement polices. It is a privatized version of Medicare Part A & B without a supplement.
The costs of Medicare Advantage will differ depending on the insurance provider, the coverage and the state you’re living in. Keep in mind, you pay a monthly premium for Original Medicare. You pay the same premium even if you trade it in for Part C.
One of the advantages of Medicare Part C is that it adds a maximum out of pocket limit on your healthcare. The maximum out of pocket limit for 2023 is $8,300 if you stay in-network and over $12,000 if you go out of network. Each Medicare Advantage plan can set its own maximum out of pocket. It can be less than or equal to the maximum set by Medicare, but it cannot be more.
How Much Does Medicare Part D Cost?
Part D is prescription drug coverage, and it is mostly voluntary. There are some cases in which this insurance is required and some in which you shouldn’t enroll for it. For example, people who have Medicare and simultaneously receive aid from federal government programs like Medicaid or SSI are under obligation to enroll for Medicare Part D.
It might be crucial to know that, although it is not required to enroll for a Medicare drug plan, you can face a late-enrollment penalty for enrolling for this plan after a period of 63 days without the creditable prescription drug coverage.
So if you change your mind later and purchase this insurance, you should be prepared to pay an extra 1% for each month you could have been on this plan and you weren’t. And again, just like in the case of Part B, this is a constant added cost that doesn’t expire even when you change plans.
Medicare Part D is coverage that completes Parts A and B. And similarly to Part B, the monthly costs of the coverage will vary, depending on the plan you’re on and your yearly income.
If you pay an Income Related Monthly Adjustment Amount (IRMAA) for Medicare Part B, you will also have a surcharge for Part D. In 2023 the IRMAA surcharge for Part D starts at $12.20 and increases to $76.40 for those in the highest bracket.
How Much Does Medicare Supplement Insurance (Medigap) Cost?
Medigap plans are all the coverages sold by private insurance companies and are meant to complete Medicare Part A and B. The premiums vary in different insurance plans and companies, so your costs with this coverage will be different depending on these factors.
It might be beneficial to consider Medigap policies, as some of them offer extra benefits, such as travel insurance. They also help you cover the costs of your primary insurance, such as copayments, deductibles and coinsurance.
If you want to learn more about these plans’ different benefits and potential disadvantages, head to our Do I Really Need Supplemental Insurance With Medicare? article, where you can find more information about this topic.
How much does Medicare cost each month?
The costs of Medicare insurance may vary depending on your coverage, the state you live in, and your income. The standard cost of Part A insurance is zero, but for some, it might be $274 or $499 for each month ($278 or $506 in 2023.)
Part B premiums vary as well, but for most, it starts at $164.90 per month in 2023. The costs of your medical insurance will be calculated individually, so to receive that information you should contact a licensed agent representing your insurance company or your local Social Security office.
How much does Medicare cost if you are still working?
After the age of 65, if you’re still professionally active, you can choose to enroll for Medicare or stay on your employer’s insurance as long as that insurance is considered creditable by Medicare.
If you choose to stay on the group’s insurance, you should not enroll in Medicare Part B.
Remember that if you’re working at a company with less than 20 employees, you should enroll for Medicare insurance at the age of 65 because the employer insurance is not creditable.
How much does Medicare cost for a married couple?
The costs of insurance for married couples are calculated based on the modified adjusted gross income as of two years ago. If taxes are filed jointly, each person will pay based on the modified adjusted gross income. Please see the IRMAA table linked here and read my article “What is IRMAA” for more details.
As we can see, the costs of Medicare often vary, depending on the individual circumstances. They can also change over the years, so it’s valuable to stay on top of this issue and consult with the insurance agent or your local Social Security office if needed.
You may also benefit from our resources to find answers on the topic of Medicare coverage and its costs. If you have any questions or would like more details on your specific options, please contact us.
Keep in mind, we also offer Medicare Advocate Services to our clients, for free, to help you understand your Medicare bills.