How much does Medicare cost? Is Medicare free? Is Medicare Part B free? What are my Medicare premiums in 2023?
Many don’t realize that Medicare isn’t free. The costs for Medicare Part B and Part D, as well as supplemental coverage, are something that many don’t anticipate in retirement. It can surprise you when you turn 65 and learn that Medicare is NOT free.
Most people do pay Medicare premiums. Fortunately, if you do some planning ahead, it’s fairly easy to figure out what Medicare is going to cost you. Yes, it is a personal calculation.
Looking for current 2023 Medicare costs? View below.
Medicare Cost for Part A in 2023
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 through 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 $506/month. People with less than 40 quarters work experience but more than 30 quarters can get a pro-rated premium of $278/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, your Part A Deductible will be $1,600 in 2023. This is an increase of $44 from the Part A deductible in 2022. (However, if you have a Medigap plan, it will likely cover this cost for you).
Medicare Cost for Part B in 2023
Cost for Medicare Part B is Based on Household Income. Medicare Part B premiums are based upon your modified adjusted household gross (MAGI) income. Your accountant can explain what this is. 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 are also based on income. We have a chart below.)
2023 Medicare Part B Premiums
How much does Medicare cost at age 65? Each year the Medicare premiums, deductibles, and coinsurance rates are adjusted according to the Social Security Act. 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. For 2023, the Medicare Part B monthly premiums are lower than the 2022 amounts. 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.
How Much Does Medicare Cost Per Month?
The amount that you will pay for Medicare each month will vary based upon your income and what type of Medicare supplemental (Medigap) coverage you choose. An example would be the base Part B premium of $164.90 /month plus a Medigap Plan G monthly premium of $115/month plus a Part D premium of $25/month – your total would be $304.90/month in premiums. (*an example)
With this example, if your goal is to ultimately limit your out-of-pocket exposure, Plan G would pick up the majority of your out-of-pocket costs. This would be the way to go. There are many different Medicare plan options to choose from so that you can have a monthly premium within your budget.
How Much Does Part B Cost?
Most people new to Medicare will pay $164.90 for Part B premiums in 2023. 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 table below to determine your personal Medicare cost for Part B. It shows the amount that you will pay in 2023 for Part B, per the preview notice released by the Department of Health and Human Services each year.
Why Do Some People Pay Less for their Medicare Part B Premium?
Some people who get Social Security benefits will still pay less than $165 in 2023. 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 COLA increases, so these individuals have only been paying less than the standard base Part B premium. Though the Social Security COLA increases for the last couple of years have been somewhat 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, Social Security will determine your Part B premium for 2023 and notify you by mail if you exceed the Medicare income limits and must pay a higher adjusted amount. Most People Pay the Standard Part B Premium.
You’ll pay the standard Medicare Part B premium amount if:
- You enroll in Part B for the first time in 2023 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 $164.90 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.
2023 Medicare Part D Premium Chart by Income
Ultimately, the final price of your Part D prescription drug plan is determined by your income. As you see below, making $97,000 or less for a single or $194,000 filing a joint tax return, your premium is the plan premium you selected. Once you file on your tax return as a single, more than $97,000 or jointly making above $194,000, you have an additional charge on top of your Part D premium.
Is Medicare deducted from your Social Security check?
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.
How Much Will Medicare Cost YOU?
Let a Medicare expert from HFC Insurance help determine how much Medicare will cost you. Medicare can be confusing but if you plan wisely, it can be one of the best financial decisions you’ve made. As the numbers show, whether it’s Part B or Part C, cost will be determined by what you file with the IRS. It’s also a good idea to consult your financial advisor.
To further understand Medicare, watch our YouTube Channel videos HERE on everything Medicare.
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