Medicare is the federal health insurance program for people aged 65 and older and certain younger people with disabilities. Deciding when to enroll and understanding the costs can be confusing. Here’s what you need to know about Medicare premiums, deductibles, and other out-of-pocket expenses.
Medicare Part A and Part B premium in 2023
The Original Medicare program has two parts — Part A and Part B. Part A covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care. Part B covers doctor visits, outpatient care, preventive services, ambulance transportation, and durable medical equipment.
Most people don’t pay a premium for Part A. You can get Part A premium-free if you or your spouse paid Medicare taxes while working for at least 10 years. People who aren’t eligible for premium-free Part A may be able to buy it.
Everyone pays a monthly premium for Part B. The standard Part B premium for 2023 is $164.90 per month. Some people pay more based on their income.
Medicare Part B Premiums in 2023
Your Medicare Part B premium for 2023 depends on your annual income from two years ago (your 2021 income as reported on your 2021 tax return). So your monthly Part B payment in 2023 will be based on how much income you had in 2021.
Here are the Part B premium amounts for 2023:
– Individuals with income up to $97,000 and couples with income up to $194,000 pay the standard premium of $164.90 per month.
– Individuals with income between $97,000–$123,000 and couples with income between $194,000–$246,000 pay $230.80 per month.
– Individuals with income between $123,000–$153,000 and couples with income between $246,000–$306,000 pay $297.00 per month.
– Individuals with income between $153,000–$500,000 and couples with income between $306,000–$750,000 pay $386.10 per month.
– Individuals with income above $500,000 and couples with income above $750,000 pay $506.00 per month.
As you can see, higher income earners pay progressively pay a higher monthly Medicare premiums. The Social Security Administration uses your reported income to determine if you’ll pay higher premiums. They look at your modified adjusted gross income plus any tax-exempt interest income you have.
If your income has gone down, you can appeal the decision and possibly pay a lower premium. You’ll need to provide documentation such as pay stubs or tax returns showing reduced income.
When to Enroll in Medicare Part B
You have a 7-month Initial Enrollment Period to sign up for Medicare Part B. It starts 3 months before you turn 65, includes the month you turn 65, and ends 3 months after you turn 65. Most people enroll in Medicare Part B during their Initial Enrollment Period to avoid paying a late enrollment penalty.
If you’re eligible for Medicare at 65 but still working and have health coverage through your employer, you can delay Part B enrollment without penalty in most cases. Once you lose your employer coverage, you can enroll in Part B within 8 months with no penalty.
People who wait to enroll in Part B outside of these special enrollment periods will pay a 10% late enrollment penalty for each full 12-month period they were eligible but didn’t enroll. You’ll have to pay this penalty for as long as you have Part B coverage.
Some choose to enroll in Medicare Part B during the General Enrollment Period from January 1 – March 31 each year. But their coverage won’t start until July 1, and they may have to pay a late enrollment penalty.
Paying Medicare Part B Premiums with Social Security
For most people, Medicare Part B premiums are automatically deducted from your monthly Social Security checks. If you don’t get Social Security, you’ll get a bill quarterly for your Part B premium. You can choose to pay these bills monthly if you prefer.
If you have trouble paying your Part B premiums, ask Social Security about assistance programs like the Medicare Savings Programs. Based on your income, these programs may help cover all or part of your Medicare premiums and other out-of-pocket costs.
You may also qualify for assistance with Medicare costs if you have limited income and resources and meet your state’s Medicaid eligibility rules. The Medicaid program helps pay Medicare premiums and deductibles for those who qualify.