- How Much Does Medicare Cost at Age 65?
- What Are the Penalties If You Don’t Enroll for Medicare?
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? The “Medicare for all” bill has made people assume Medicare is free.
But 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.
It’s estimated that the average male and female American couple spends an eye-watering 285,000 USD on healthcare from the age of 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 Do 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 will pay no periodic premiums for Part A if you’re above 65 years and:
- You get retirement remunerations from Social Security.
- You get retirement remunerations from the Railroad Retirement Board.
- 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:
- You have gotten Social Security disability remunerations for 2 years.
- You have gotten Railroad Retirement Board disability remunerations for 2 years.
- 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. In 2021 the premiums charged for Medicare Part A are 259 USD or 471 USD, subject to how long you or your spouse worked for and paid Medicare charges.
If you decide not to purchase Medicare Part A, you can opt to purchase Part B. 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 charges can instead be automatically subtracted from your monthly benefits if:
- You receive social security benefits.
- You receive remunerations from Railroad Retirement Board.
- You receive remunerations from the Office of Personnel Management.
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:
- You are 65 years and above.
- You have a disability.
- 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 2021, the average premium for Medicare Part B is 148.50 USD.
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). In 2021 your salary is based on your 2019 tax returns.
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. In 2021 Part B deductible is set at 203 USD.
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 most programs will have reduced monthly premiums or no premiums at all.
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 its 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.
According to the Center of Medicare Services, today, the average cost for Medicare Part D is 32.50 USD per month. However, high-income earners are charged more for their premiums. The average deductible for this plan is 415 USD.
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 that you should have signed up. 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 if you qualify for coverage under your company’s plan, you won’t pay the penalty.
To sum it all up, Medicare coverage is a bit complex, and there are many considerations unique to your condition. For instance, how long you have been employed, how much money you make are all factors that will be used to calculate your total Medicare premiums.