Those nearing age 65 should start familiarizing themselves with their future healthcare coverage, Medicare. Medicare is health insurance provided by the American federal government for those ages 65 years and older, and others who qualify earlier due to receiving Social Security disability. Original Medicare has monthly premiums, and if you want to have cost-sharing help, you will need to purchase an additional Medicare plan. You might now be wondering, “what will I pay for a Medicare plan?” keep reading as we compare plans.
The cost of Original Medicare
Original Medicare has two parts: Part A for inpatient care and Part B for outpatient coverage. Both parts have monthly premiums. However, if you or your spouse have worked ten years (40 quarters) in the U.S. and paid payroll taxes, Medicare Part A will have a $0 premium. The payroll taxes you or your spouse have paid funded your Part A premium over the years.
If you have less than 40 quarters but have at least 30, you will pay a pro-rated premium of $274 per month. Those with less than 30 quarters will pay the total Part A premium of $499 per month in 2022.
Medicare Part B has a monthly premium that you are responsible for regardless of your work history. In 2022, the standard Part B premium is $170.10 per month. Social Security determines your Part B premiums based on your modified adjusted gross income (MAGI); This means that Social Security looks at your tax returns from two years before your Medicare enrollment and sets your monthly premium based on the income bracket you’re in.
If you are in a high-income bracket, you will pay an additional monthly fee on top of your Part B premium, which is called an income-related monthly adjustment amount (IRMAA). You can file an IRMAA appeal if you qualify for a life-changing event, such as retiring or divorce.
How much is Medicare Part D?
Nearly 9 in 10 senior citizens report they’re currently taking a prescription medication. Knowing that many seniors take medications, you might find it as a surprise that Original Medicare does not cover prescription drugs. Due to this, private insurance carriers rolled out Part D plans in 2006 for prescription drug coverage.
Since private insurance carriers sell Part D plans, there is no set Part D premium. You can find Part D plans as low as $7 or as high as $100 per month. In 2022, the average monthly Part D premium is $41. However, know that the Social Security office also looks at your MAGI when applying for a Part D plan. If you are in a high-income bracket, you will pay an IRMAA fee on top of your Part D premium, just like you would with Part B.
What is the cost of a Medicare Supplement?
A Medicare Supplement, also known as a Medigap plan, is sold by private insurance companies. You are still responsible for your Original Medicare premiums whenever you enroll in one of these plans.
There are ten standardized Medigap plans and two high-deductible options, which means that a plan will have the same set of benefits no matter which company you buy the plan through. However, a Supplemental premium depends on multiple factors.
For example, the cost of a Medicare Supplement depends on your gender, age, tobacco use, zip code, and carrier. So, let’s say you are a 65-year-old man who lives in Georgia, smokes, and purchases a plan from Carrier A. You will have a different premium than a 79-year-old woman, who lives in California, non-smoker, and purchases a plan from Carrier B.
Due to these factors, you might find it helpful working with a Medicare broker who represents multiple carriers in your area. Shopping plans among numerous carriers can help ensure you are in the most cost-effective Supplement plan at this time.
What will I pay for a Medicare Advantage plan?
Private insurance carriers also sell Medicare Advantage plans, and these types of plans vary from zip code to zip code. You are still responsible for your Original Medicare premiums when enrolled in one of these plans.
A Medicare Advantage carrier will create your cost-sharing amounts and monthly premiums. You can find Medicare Advantage plans as low as $0 and as high as $55+. If you find a plan that has a $0 monthly premium, keep in mind that although you don’t have to pay a monthly premium, you will likely have more out-of-pocket costs for your healthcare services throughout the year.
Understanding your Medicare plan costs can start you on the right track to your Medicare journey. Again, you might find it helpful working with a Medicare broker while shopping the plans in your area. Shopping Medicare plans among multiple carriers can ensure that you get the coverage you need for the best price!