How much does Medicare cost? Is Medicare Part B free? What will be my Medicare premiums in 2018?
The costs for Medicare Part B and Part D, as well as supplemental coverage, are something that many don’t anticipate. It can surprise you when you turn 65 and learn that Medicare is not free.
So do you have to pay for Medicare? Yes, most people do. Fortunately, it’s fairly easy to put together a Medicare cost estimate so that you can plan ahead.
Medicare Cost for Part A in 2018
The cost for Medicare Part A for most people is usually zero. If you’ve worked 10+years (40 quarters) in the U.S., you have already paid for Part A via payroll taxes.
If you have to buy Part A, the cost for Medicare Part A will be around $421/month in 2018. People with less than 40 quarters work experience but more than 30 quarters can get a pro-rated premium of $232/month.
Should you have a hospital stay in 2018, your Part A Deductible will $1340. (However, if you have a Medigap plan, it may cover this cost for you).
Medicare Cost for Part B in 2018
Cost for Medicare Part B is Based on Household Income
Medicare Part B premiums for 2018 are based upon your modified, adjusted, household gross income. The Social Security office will pull your IRS tax return from two years prior. They use that tax return to determine what you’ll pay for Parts B & D. (Part D premiums for 2018 are also based on income.
The items that contribute to your modified adjusted gross income (MAGI) include any money earned through wages, interest, required minimum dividends from investments, and capital gains. It also includes Social Security benefits and tax-deferred pensions. Distributions from Roth IRAs and Roth 401(k)s, life insurance, reverse mortgages and health savings accounts do not count in the MAGI calculation.
If you filed jointly with a spouse, Social Security will base your premiums for each of you based on that married income. However, you will EACH pay your own Part B premium. Your premiums for Part B are always individual, not combined. Social Security simply uses your household income to determine where you fall individually in the Part B premiums chart.
Social Security will notify you of your next year’s premium annually in December or early January by mail.
Only about 5% of all Medicare beneficiaries currently pay higher Medicare premiums.
However, in 2018, Medicare will adjust the top three income brackets downward. This means that affluent retirees will be placed into higher brackets than today. This means that starting in 2018, a larger percentage of Americans will be paying higher Medicare Part B premiums.
How Much Does Part B Cost for Most Enrollees?
Most people new to Medicare will pay $134 for Part B premiums in 2018. This is the standard premium that most people pay based on income. Social Security will deduct your Part B premium from your Social Security check monthly. If you have not enrolled in Social Security income benefits yet, they’ll bill you quarterly.
Since some people pay more based on income, use the tables below to determine your personal Medicare cost for Part B. It shows the amount that you will pay in 2018 for Part B, per the preview notice released by the Department of Health and Human Services in November.
The Medicare Part B deductible for 2018 remains the same as in 2017: $183 per year. Considering that the Medicare Part premium increases for 2018, it’s nice that the Part B deductible remains the same.
Why Do Some People Pay Less for their Medicare Part B Premium?
Some people who get Social Security benefits will still pay less than $134. Legislation prevents the cost of Medicare Part B from increasing more than the Social Security annual cost-of-living increase. In recent years, we have had low or no COLA increase, so these individuals have only been paying around $109/month.
This year, if the Part B premium increased more than the 2% cost-of-living increase (COLA) for their person 2018 Social Security monthly income amount, they will pay more than $109 but less than $134. Approximately 30% of Medicare beneficiaries will be in this scenario.
For everyone else who was paying $109, the Medicare Part B premium will increase by $25/month in 2018.
Though this all very confusing, remember that you do not have to calculate this yourself. SS will determine your Part B premium for 2018 and notify you by mail.
Most People Pay The Standard Part B Premium
You’ll pay the standard Medicare Part B premium amount if:
- You enroll in Part B for the first time in 2018
- You don’t get Social Security benefits
- You’re directly billed for your Part B premiums.
- You have Medicare and Medicaid, and Medicare pays your premiums. (Your state will pay the standard $134 premium.)
- Your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above a certain amount. If so, you’ll pay the standard premium amount and an Income Related Monthly Adjustment Amount (IRMAA). IRMAA is an extra charge added to your premium.
If you’re in one of these 5 groups, here’s what you’ll pay:
The Medicare Cost for some people in higher income brackets is going up in 2018 due to the MACRA legislation of 2015.
Medicare Cost for Part D in 2018
Just like Part B, your Medicare costs for Part D varies based on income. Your Medicare Part D Premiums for 2018 also vary by plan. Each state may have 20 or more plans to choose from.
You can find plans that start around $20/month in most states. This the base premium for Part D.
You will pay the plans published base premium unless you are in a higher income bracket. People with higher incomes pay more for Part D. It’s important to factor this in if you are comparing the potential costs for Medicare Part D against other insurance, such as employer insurance.
Medicare Part D Premiums Chart
To determine your Medicare cost for Part D drug plans, review the table below. It shows the amount that you will pay for Part D in 2018.
If you find yourself in a higher income bracket because your earlier tax returns showed higher income than you now have after retirement, be sure to read our blog post on how to appeal a higher premium.
You can learn more about Medicare Part D costs on this page.
Are Medicare Premiums Tax Deductible?
Medicare premiums are tax deductible as part of your medical expenses. If your total medical expenses for the year exceed 10% of your Adusted Gross Income, then you can deduct them. This essentially then excludes a portion of your income from being taxed.
Always consult a tax professional for guidance before deducting Medicare premiums or any other medical expenses.
How Much Will Medicare Cost YOU?
Now if you find all that just a little confusing – don’t worry. Medicare premium increases happen almost every year, and our professionals can help you figure out exactly what your Medicare costs will be. Many people find that Medicare and a supplement costs less than private insurance they had prior to Medicare. Either way, you’ll want to get some estimates of your Medicare costs you before you retire. This way you can plan ahead to have enough savings for the future.
We can help you determine your potential costs right over the phone. Call (855) 732-9055 today, or complete our online request form below. A friendly licensed insurance agent on our team will assist you.
To continue learning Medicare, go next to: Apply for Medicare