Paying for Medicare coverage is different from how you paid for your health insurance during your working years. Instead of one premium payment, Medicare coverage is divided into separate parts that have their own costs. It is important to note that these costs may differ if you have a Medicare Supplement policy or certain Medicare Advantage plans.

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Part A Medicare Costs:

Typically, there's no cost for Medicare Part A (Hospital Insurance) if you or your spouse have worked and paid taxes for at least 10 years. This is often referred to as "premium-free Part A."  If you're eligible for Social Security benefits, you should be eligible for Part A at no cost. 

 

If you need to buy Part A premium and have paid taxes for less than 30 quarters, the cost can be up to $506 per month in 2023. For those who paid Medicare taxes for 30-39 quarters, the standard premium is $278 in 2023.

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Any expenses incurred as an inpatient in the hospital fall under Medicare Part A. In 2023, you have to pay a $1,600 deductible before your hospitalization coverage begins unless you've purchased a supplement, or Medigap, policy. For hospital stays longer than 60 days, there are additional costs to the deductible.

 

Part B Medicare Costs:

Premiums for Part B are based on your modified adjusted gross income (MAGI) from two years ago. This information is provided to Social Security by the IRS. Your MAGI includes various factors like wages, interest, dividends, capital gains, Social Security benefits, and tax-deferred pensions. Medicare uses your tax return from two years ago to determine your Part B and Part D premiums.

 

Most Medicare beneficiaries will pay the standard Part B premium of $164.90 per month in 2023. If your income is higher than certain thresholds, your premium may be higher based on the Income Related Monthly Adjustment (IRMAA). The Part B premium will be automatically deducted from your benefit payment if you receive retirement benefits from certain organizations.

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The Part B deductible for 2023 is $226. After meeting the deductible, Medicare covers 80% of approved services, and you're responsible for the remaining 20%. Part B covers services like doctor visits, lab tests, x-rays, and other outpatient services. It's important to note that there's no cap on your out-of-pocket costs under Part B.