How much does Medicare cost? Do you have to pay for Medicare? Is Medicare Part B free? What will be my Medicare premiums in 2019?
These are very common questions about the costs for Medicare. The costs for Medicare Part B and Part D, as well as supplemental coverage, are something that many don’t anticipate. It can surprise you when you turn 65 and learn that Medicare is not free.
So do you have to pay for Medicare? Yes, most people do pay Medicare premiums. Fortunately, it’s fairly easy to put together a Medicare cost estimate so that you can plan ahead.
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. (99% of beneficiaries qualify for free Part A.)
If you have to buy Part A, the cost for Medicare Part A will be around $437/month. People with less than 40 quarters work experience but more than 30 quarters can get a pro-rated premium of $240/month.
To be eligible to buy Part A, you must have been a legal resident or have had a green card for at least 5 years.
Should you have a hospital stay in 2019, your Part A Deductible will be $1,364 in 2019. This is an increase of $24 from the Part A deductible in 2018, which was $1,340. (However, if you have a Medigap plan, it will likely cover this cost for you).
Learn more about costs for Medicare Parts A, B and D here in our Youtube video:
Medicare Part B premiums are based upon your modified, adjusted, household gross income. The Social Security office will pull your IRS tax return from two years prior. They use that tax return to determine what you’ll pay for Parts B & D. (Part D premiums for 2019 are also based on income.)
The items that contribute to your modified adjusted gross income (MAGI) include any money earned through wages, interest, required minimum dividends from investments, and capital gains. It also includes 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.
If you filed jointly with a spouse, Social Security will base your premiums for each of you based on that married income. However, you will EACH pay your own Part B premium. Your premiums for Part B are always individual, not combined. Social 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.
However, in 2018, Medicare adjusted the top three income brackets downward. This means that affluent retirees were placed into higher brackets than the previous years. It resulted in larger percentage of Americans paying higher Medicare Part B premiums.
Most people new to Medicare will pay $135.50 for Part B premiums in 2019. This is the standard premium that most people pay based on income. 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.
Since some people pay more based on income, use the tables below to determine your personal Medicare cost for Part B. It shows the amount that you will pay in 2019 for Part B, per the preview notice released by the Department of Health and Human Services in November.
The Medicare Part B deductible for 2019 is $185.
Some people who get Social Security benefits will still pay less than $135.50 in 2019. This affects 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 COLA increase, so these individuals have only been paying around $109/month. Though the SS increase for 2019 is considerably larger, there is still a small group of beneficiaries being protected by the “hold harmless” provision.
Though this all very confusing, remember that you do not have to calculate this yourself. Again, SS will determine your Part B premium for 2019 and notify you by mail if you exceed the Medicare income limits and must pay a higher adjusted amount.
You’ll pay the standard Medicare Part B premium amount if:
The Medicare Cost for some people in higher income brackets went up in 2018 and will increase again in 2019 due to the MACRA legislation passed a few years ago.It’s a good idea to keep an eye on these Medicare income limits in the future because they may be adjusted every few years.
Just like Part B, your Medicare costs for Part D varies based on income. Your Medicare Part D Premiums for 2019 also vary by plan. Each state may have 20 or more plans to choose from.
You can find plans that start around $20/month in most states. This the base premium for Part D.
You will pay the plans published base premium unless you are in a higher income bracket. People with higher incomes pay more for Part D. 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.
Yes, once you sign up for Social Security income benefits, your Medicare premiums will be deducted from Social Security payments monthly. This is usually just Part B premiums that are deducted automatically, since most people pay nothing for Part A.
Medicare premiums are tax deductible as part of your medical expenses. If your total medical expenses for the year exceed 10% of your Adjusted Gross Income, then you can deduct them. This essentially then excludes a portion of your income from being taxed.
Always consult a tax professional for guidance before deducting Medicare premiums or any other medical expenses.
Now if you find all that just a little confusing – don’t worry. Medicare premium increases happen almost every year, and our professionals can help you figure out exactly what your Medicare costs 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 retirement.