Costs of Medicare

There are many common questions about the costs of Medicare. For example, people want to know, Do you have to pay for Medicare? Is Medicare Part B free? And, What will be my Medicare premiums in 2020? 

Many people don’t expect the costs for Medicare Part B and Part D, along with supplemental coverage. It can surprise people when they turn 65 and discover that Medicare isn’t free.

While most people pay Medicare premiums, it’s relatively easy to construct a Medicare cost estimate so that you can prepare in advance.

Medicare Cost for Part A in 2020

For most people, the cost for Medicare Part A is typically zero. In fact, 99% of Medicare beneficiaries qualify for free Part A. If you have worked 10 years or longer in the U.S., you have already paid for Medicare Part A through payroll taxes.  

If you have to purchase Part A, the cost will be about $460/month. Depending on your work experience, a pro-rated premium may be available. Eligibility for buying Part A looks like this: you must have had a green card or been a legal resident for a minimum of five years.

If you have a hospital stay in 2020, your Part A deductible will be $1,408. However, if you have a Medigap plan, it will probably cover this cost.

Medicare Cost for Part B in 2020

Most Medicare beneficiaries pay the standard Part B premium, which is $144.60 in 2020. Medicare Part B premiums are based on your household income. Having a higher income means you pay more. 

The Social Security office will use your IRS tax return from two years prior to decide what you’ll pay for Parts B and D. 

The following items contribute to your modified adjusted gross income (MAGI):

  • Money earned through wages
  • Interest 
  • Capital gains
  • Required minimum dividends from investments
  • Social Security benefits
  • Tax-deferred pensions

If you filed with a spouse, Social Security will establish premiums for each of you based on your married income. But you will each pay your own Part B premium. Your Part B premiums are not combined. Social Security uses your household income to decide where you land individually in the premiums chart. Social Security will typically inform you of your next year’s premium each year in December or early January by mail.

For 2020, the Medicare Part B deductible is $198.

How Much Does Medicare Cost Per Month?

The amount that you’ll pay each month will vary, depending on your income and the type of supplemental coverage you select. For example, with the base Part B premium of $144.60/month plus a Part D premium of $27.50/month plus a Medigap Plan G monthly premium of $125/month, your sum would be $297.10/month in premiums. In this particular example, you would have minimum additional out-of-pocket spending since Plan G would acquire the majority of your out-of-pocket expenses. 

When it comes to Medicare plans, you have many different options to choose from so that your monthly premium can align within your budget.

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Medicare Cost for Part D in 2020

Similar to Part B, your Medicare costs for Part D will vary based on income. Your Part D premiums, too, will vary by plan. Every state might have 20 plans (or more) to choose from.  

In most states, you can find plans that start around $10 – $15/month, which is the base premium for Medicare Part D. 

You will pay the plan’s base premium unless you fall under a higher income bracket. If you have a higher income, you’ll pay more for Part D. Make sure you consider this if you’re weighing the potential costs for Part D against other insurance, like employer insurance.

How Much Will Medicare Cost You?

All of this information can be a bit confusing, but our professionals are here for you. Medicare premiums increase almost every year, and we can help you determine your potential Medicare costs.

It’s important to get some estimates of your expenses before you retire so you can plan ahead and save for the future. Call 800-515-4031 today to see how we can help!