How Much Does Medicare Cost at Age 65?

How Much Does Medicare Cost at Age 65?

After paying for Medicare with payroll deductions at work for several years, many people reach the Medicare eligibility age of 65, believing that their coverage will be free henceforth.

Who can blame them? Misunderstandings around proposals like ‘Medicare for All’ have led some to assume that Medicare is free incorrectly.

However, in reality, Medicare has several accompanying costs, such as premiums, copayments, coinsurance, and deductibles.

If you’re a high-income earner, you pay more for some premiums, and there is no fixed out-of-pocket maximum.

Estimates suggest that a retired couple may need about $300,000 saved to cover healthcare expenses in retirement, not specifically from age 65 onwards.

But this is only the beginning; when you factor in issues not covered by Medicare, such as dental and eye care, it’s so much more.

This makes it very important for you to figure out your Medicare coverage and which expenses you are liable to pay. So here’s what you need to know.

What Are the various parts of Medicare cost?

Medicare Part A (Hospital Insurance)

Premium-Free Part A

Medicare Part A pays for inpatient clinic and hospital care as well as partial expert nursing and home-based healthcare services.

You usually don’t have to pay periodic premiums for Part A coverage if you or your spouse paid for Medicare charges for ten years and above during your employment days.

Therefore, the actual charges of Part A depend on your condition and how long you have worked. You are eligible for premium-free Part A at 65 if you are receiving retirement benefits from Social Security:

1. You get retirement remunerations from Social Security.

2. You get retirement remunerations from the Railroad Retirement Board.

3. You and/or your spouse were employed by the government and got Medicare coverage.

You will pay no periodic premiums for Part A if you’re below 65 years and:

1. You have gotten Social Security disability remunerations for 2 years.

2. You have gotten Railroad Retirement Board disability remunerations for 2 years.

3. If you have ALS (amyotrophic lateral sclerosis) or ESRD (end-stage renal disease).

Part A Premium

If you’re not eligible for premium-free Part A, you can still buy Part A.

Medicare Part B requires a monthly premium from all enrollees, unlike Part A, which may be premium-free for those who qualify.

However, in most instances, if you decide to purchase Part A, you must also have Part B and pay the monthly charges for both Part A and Part B.

Medicare Part B (Medical Insurance)

Although Medicare Part A pays for inpatient services and some home-based healthcare services, you still need Part B coverage for protective care and medical appointments.

Unfortunately, Medicare Part B doesn’t have a premium-free alternative like Part A.

Monthly premiums in Part B are charged based on your salary grade, but still, not everyone gets bills for these charges.

Medicare Part B premiums can be automatically deducted from your Social Security, Railroad Retirement Board, or Office of Personnel Management benefits.

As illustrated above, some individuals automatically qualify for Medicare Part B, and others need to sign up for it. You can sign up for Part B if:

1. You are 65 years and above.

2. You have a disability.

3. You have ALS (amyotrophic lateral sclerosis) or ESRD (end-stage renal disease).

Part B Premium

If you qualify for Medicare Part B, you’ll need to pay some monthly premiums. For instance, in 2024, the average premium for Medicare Part B is $174.70.

Note that this monthly charge is subject to increase if you are a high-income earner.

High-income earners usually pay what’s known as an IRMAA (income-related monthly adjustment amount).

Part B Deductible

A deductible is a sum you have to settle out-of-pocket before Medicare Part B starts paying for your outpatient clinic and hospital services.

Part B Coinsurance

Coinsurance is the proportion that you have to pay after settling your deductibles. For most medical services covered by Medicare Part B, you’re liable to pay 20% of the total cost.

Medicare Part C Medicare Advantage)

Private firms provide Part C plans, and they combine the services in Part A and Part B as well as other aspects.

Private insurance companies receive funding from Medicare so that most programs will have reduced monthly or no premiums.

However, plans with no monthly premiums still have other allied expenses such as deductibles, copayments, and coinsurance.

Medicare has an online tool that you can use to compare the services and costs of Medicare Advantage Plans in your current US state.

Medicare Part D

Medicare Part D pays for treatment drugs and it’s paid via premiums. Although Part D pays for your prescription drugs, you’re still liable for a portion of your medication expenses.

Just like Part D, Medicare Part C is provided by private insurance companies backed by Medicare.

However, high-income earners are charged more for their premiums.

What are the Penalties If You Don’t Enroll for Medicare?

Medicare Part B

If you fail to register for Medicare Part B when you are eligible, you’ll have to pay a 10% fine for each year you should have signed up for.

This amount is added to your monthly premiums, and the penalty goes up the more you delay signing up for Part B.

Normally you won’t be liable to pay the late enrollment penalty if you meet the requirements that enable you to enroll for Medicare Part B in the Special Enrollment Period.

Medicare Part D

Although signing up for Medicare Part D is optional, a penalty is charged for not signing up when you were supposed to.

The penalty given is 1% for each month you were supposed to sign up. But you won’t pay the penalty if you qualify for coverage under your company’s plan.

Final Thought

To sum up, Medicare coverage is somewhat complex, and many considerations are unique to your condition.

For instance, how long you have been employed and how much money you make are all factors that will be used to calculate your total Medicare premiums.

See Also

Free Home Repairs for Senior Citizens

Does Medicare Cover Hearing Aids?

Does Medicare Cover Eye Exams?

Does Medicaid Cover Braces

Current Version
August 19, 2021
Written By
Shubham Grover
April 15, 2024
Updated By
Andrea Morales G.

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