The costs for Medicare Part B and Part D as well as supplemental coverage are something that many don’t anticipate. It can surprise them when they turn 65 and realize that Medicare is not free. Fortunately, it’s fairly easy to put together a Medicare cost estimate so that you can plan ahead.
Medicare Cost for Part A
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, you will pay up to $413/month for it in 2017. People with less than 40 quarters work experience but more than 30 quarters can get a pro-rated premium.
Cost for Medicare Part B is Based on Income
Medicare Part B (and D) premiums are based upon your modified adjusted gross income. Medicare will actually pull your latest IRS tax return and use that to determine what you’ll pay for Parts B & D. The items that contribute to your modified adjusted gross income (MAGI) include any money earned through wages, interest, required minimum dividends from investments, capital gains, 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.
Social Security will send you a letter once a year around December or early January to tell you what your costs are for the upcoming year.
Most Americans fall into the standard income bracket – see the chart below. 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 premiums.
Most people new to Medicare on or after January 2017 will pay $134 for Part B, or an adjusted amount as listed below if you have higher income than most people. 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.
To determine your Medicare cost, review the table below. It shows the amount that you will pay in 2017 for Part B , per this chart reproduced from Medicare’ website.
The standard Part B premium in 2017 will be $134 (or more depending on your household income. Most people who get Social Security benefits will pay less than this amount. This is because the Part B premium increased more than the cost-of-living increase for 2017 Social Security benefits. If you pay your Part B premium through our monthly Social Security benefit, you’ll pay less ($109 on average). Social Security will tell you the exact amount you will pay for Part B in 2017.
You’ll pay the standard premium amount if:
- You enroll in Part B for the first time in 2017
- 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:
Costs for Medicare Part D Is Also Based on Income
Just like Part B, your costs for Part D varies based on income. Your Medicare Part D Premiums also vary by plan. You can find plans that start around $15 – $17/month in most states. Each state may have 30 or more plans to choose from. You will pay the plans published premium unless you are in a higher income bracket. 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 2017.
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.
Now if you find all that just a little confusing – don’t worry. Our professionals can help you figure out exactly what your premium 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