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Medicare Costs

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.

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.

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.

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.


Part D Medicare Costs:

Most Part D plans charge a monthly premium that varies by plan carrier. If you're enrolled in a Medicare Advantage Plan or a Medicare Cost Plan that includes prescription drug coverage, your drug coverage will likely be included in your monthly premium. Some Part C (Advantage) plans may not have a premium.

Monthly Part D premiums are set by individual insurance companies and vary based on factors like the carrier, location, and drug formulary. The projected national average monthly premium in 2023 is $34.71 for a Part D drug plan. However, premiums can range from $10 to $100 depending on various factors.


If you have a high income, you may pay an additional amount called the Income Related Monthly Adjustment Amount (IRMAA) on top of your standard plan premium. Just like with Part B, if your income exceeds certain thresholds, you'll pay an extra amount. The exact IRMAA can be determined using a chart provided by Medicare.


The maximum annual deductible for Part D plans in 2023 is $505, although insurance carriers can charge less or even waive the deductible entirely. After satisfying the deductible, you enter the Initial Coverage Phase and pay the network-discounted price for your medications.

If you have any questions or want more information, we are here to help.

Give us a call at 800-275-1844

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