Do you have to pay for Medicare? Is Medicare Part B free?      

There are a lot of people everyday who call us and ask these questions.  The costs for Medicare is something that many did not anticipate. Its very alarming to find out that Medicare is not free when you turn 65.

  • Do you have to pay for Medicare? YES
  • Is Medicare Part B Free? No

A Glance at 2020 Medicare Rates

Part A Premium: Most people don’t pay a monthly premium for Part A. If you have to buy Part A, you’ll pay up to $458 each month. If you paid Medicare taxes for less than 30 quarters, the standard Part A premium is $458. If you paid Medicare taxes for 30-39 quarters, the standard Part A premium is $252.

Part A hospital inpatient deductible and co-insurance You pay:

  • $1,408 deductible for each benefit period (2020)
  • Days 1-60: $0 coinsurance for each benefit period
  • Days 61-90: $352 coinsurance per day of each benefit period
  • Days 91 and beyond: $704 coinsurance per each “lifetime reserve day” after day 90 for each benefit period (up to 60 days over your lifetime)
  • Beyond lifetime reserve days: all costs

Part B Premium: The standard Part B premium amount is $144.60 (or higher depending on your income). Part B deductible and coinsurance is $198 per year. After your deductible is met, you typically pay 20% of the Medicare-approved amount for most doctor services (including most doctor services while you’re a hospital inpatient), outpatient therapy, and durable medical equipment (DME)

Part C Premium: The Part C monthly premium varies by plan and by service area.

Part D Premium: The Part D monthly premium varies by plan (higher-income consumers may pay more).

The cost for Medicare Part A is usually zero. You have already paid for Part A from your payroll taxes if you’ve worked 10+years (40 quarters) in the US. Most medicare recipients qualify for free Part A.

  • If you have to buy Part A, the cost for Medicare Part A will be around $458/month.
  • If you paid Medicare taxes for 30-39 quarters, you can get a pro-rated premium of $252/month.

Should you have a hospital stay in 2020, your Part A Deductible will be $1,408 in 2020. In 2019 the deductible was $1,364.

Things to consider regarding Medicare Part A costs:

  • Some Medicare Supplement Plans can cover this cost for you. You do have to pay the monthly premium of the Supplement plan every month.
  • In a Medicare Advantage plan you you do not pay this cost to Medicare, you will pay the plans co-payment and deductibles. There are some plans that have $0 co-payment and deductible on hospital stays.

Medicare Part B premiums are based on your modified, adjusted, household gross income. Medicare will use your tax return from two years earlier to determine whether you’ll pay monthly surcharges. So for 2020, it would be your 2018 return. To request a reduction in that income-related amount due to a life-changing event like retiring, the Social Security Administration has a form you can fill out. They use that tax return to determine what you’ll pay for Parts B & D. (Part D premiums for 2020 are also based on income.)

Any money earned through wages, interest, dividends from investments, and capital gains are items that contribute to your modified adjusted gross income. Sadly to say this also includes your Social Security benefits and tax-deferred pensions.

  • If you filed jointly with a spouse, Social Security will base your premiums for each of you based on that married income. Your premiums for Part B are always individual, not combined. This means you will each pay for your own Part B premiumSocial Security simply uses your household income to determine where you fall individually in the Part B premiums chart.
  • Social Security will usually 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.
  • Earnings from Roth IRAs and Roth 401(k)s, life insurance, reverse mortgages and health savings accounts do not count in the modified adjusted gross income calculation.

 

If your yearly income in 2018 (for what you pay in 2020) was You pay each month (in 2020)
File individual tax return File joint tax return File married & separate tax return
$85,000 or less $174,000 or less $87,000 or less $144.60
above $87,000 up to $109,000 above $174,000 up to $218,000 Not applicable $202.40
above $109,000 up to $136,000 above $218,000 up to $272,000 Not applicable $289.20
above $136,000 up to $163,000 above $272,000 up to $326,000 Not applicable $376.00
above $163,000 and less than $500,000 above $326,000 and less than $750,000 above $87,000 and less than $415,000 $462.70
$500,000 or above $750,000 and above $413,000 and above $491.60

 

At Nevada Medicare we can make it easy for you – call us for a hassle-free help in understanding your benefits and what’s available to you. Contact Us today and speak to a licensed agent in your area.

Most people new to Medicare will pay the standard Part B monthly premium of $144.60 for 2020. Social Security will deduct your Part B premium from your Social Security check monthly. If you elected not to receive your Social Security income benefits yet, Medicare will bill you every 3 months (Quarterly). You can pay your Part B premium

Some medicare recipients that have higher income will pay more, thus, tables below will illustrate how to determine your Medicare cost for Part B. The Department of Health and Human Services releases a notice every year in November, it will indicate the amount that you will pay in 2020 for Part B.

In 2020 Part B deductible is $198.

There are some people who get Social Security benefits that pay less than $144.60 in 2020. Around 2 million Medicare beneficiaries. 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 “Cost Of Living Adjustment” increase, so these individuals have only been paying around $109/month. Though the Social Security increase for 2020 is considerably larger, there is still a small group of beneficiaries being protected by the “hold harmless” provision.

Caution: Social Security will determine your Part B premium for 2020 and notify you by mail if you exceed the Medicare income limits and must pay a higher adjusted amount. Do not be panic and try to calculate this yourself.

Medicare Part B monthly premium (You’l pay if):

  • You enroll in Part B for the first time in 2020 or after
  • You don’t get Social Security benefits
  • You’re directly billed for your Part B Medicare premiums.
  • You have Medicare and Medicaid, and Medicare pays your premiums. (Your state will pay the standard $144.60 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 in 2020:

 

People in higher income brackets will had an increase on their Medicare Cost 2018 and increased again in 2019 due to the MACRA legislation passed a few years ago. Keep your awareness, stay informed. The future on the Medicare Income limits go through adjustments every few years.

 

At Nevada Medicare we can make it easy for you – call us for a hassle-free help in understanding your rights, benefits and what’s available to you. Contact Us today.

Medicare costs for Part D varies based on income as well. Your Medicare Part D Premiums for 2020 also vary by plan. Nevada has a several plans to choose from.

Unless you are in a higher income bracket, you will pay the plans filed base premium. People with higher income will pay more for Part D. If you belong in a group employer coverage it’s important to factor this in if you are comparing the potential costs for Medicare Part D against your insurance.

To determine your Medicare cost for Part D drug plans in 2020, review the table below.

You can deduct Medicare premiums as part of your medical expenses if your total medical expenses for the year exceed 10% of your Adjusted Gross Income. This basically then excludes a portion of your income from being taxed.

We highly encourage you to consult with your accountant, a CPA or a tax professional for an advise before deducting Medicare premiums or any expenses that pertains to medical.

Do not worry if this seems confusing to you. You are not alone. Medicare premium increases happen almost every year. At Nevada Medicare we can help you figure out exactly what your Medicare costs will be. A lot people find that Medicare and a supplement costs less than costs of their previous employer coverage that they had during their working years prior to Medicare. Be sure to get estimates of your Medicare costs prior to your retirement so you can prepare ahead.

We can help you determine your potential costs right over the phone or in person. We can also help you plan for how much Medicare will cost in 2020.

Contact Us today, or complete our online request form. A licensed agent on our team will assist you.