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HOW MUCH DOES MEDICARE COST?

What Are the Part A  costs

How much does Part A cost?

Premium-free Part A

You usually don’t have to pay a monthly premium when you enrol in Medicare Part A (Hospital Insurance) coverage if you or your spouse worked enough quarters and paid Medicare taxes for a certain amount of time while working.  This is called “premium-free Part A.” Most people are eligible for premium-free Part A. You can get premium-free Part A at age 65 if you already get retirement benefits from the Railroad Retirement Board or Social Security or if you’re eligible to get Railroad benefits or Social Security but haven’t filed for them yet. You or your spouse had Medicare-covered government employment. If you’re under age 65, then you can get “premium-free” Part A if you got Social Security or Railroad Retirement Board disability benefits for 24 months. You have End-Stage Renal Disease (ESRD) and meet certain requirements.

Part A premiums

If you decide to buy Part A, you’ll have to pay up as much as $422 each month in 2018. If you have paid Medicare taxes for less than 30 quarters, you’ll pay only the standard Part A premium is $422. If you paid Medicare taxes for 30-39 quarters, the standard Medicare Part A premium is only $232. In most cases, if you choose to buy Part A, you must also have Medicare Part B (Medical Insurance) You’ll also have monthly premiums to pay for both Part A and Part B.

 

Part A late enrollment penalty

If you aren’t eligible for “premium-free” Part A, and you don’t get it when you’re first eligible, your monthly premiums will go up by 10%. As a penalty, you’ll have to pay the higher premium for twice the number of years you could have had Part A, but didn’t sign up. For example if you were eligible for Part A for 2 years but didn’t sign up, you’ll have to pay the higher premium for 4 years. Usually, you don’t have to pay a penalty if you meet certain conditions that allow you to sign up for Part A during a special enrollment period. Additionally, if you have limited income and resources, your state may help you pay for Medicare Part A and Part B.  You may also qualify for Extra Help to pay for your Medicare prescription drug coverage.

 

What Does Part B cost?

Some individuals automatically get Medicare Part B (Medical Insurance), while others need to sign up for Part B. Learn how and when you can sign up for Part B.

If you don’t sign up for Part B when you’re first eligible, you may have to pay a late enrollment penalty.

How much does Part B cost?

Part B premiums

You’ll have to pay a premium each month for Part B. If you get Social Security, Railroad Retirement Board, or Office of Personnel Management benefits, your Part B premiums will be automatically deducted from your retirement benefit payments. If you don’t get these benefit payments, you’ll receive a billing statement.

Most people will pay the standard premium amount. If your modified adjusted gross income is above a certain amount, you may pay an Income Related Monthly Adjustment Amount (IRMAA). Medicare uses the modified adjusted gross income reported on your IRS tax return from 2 years ago (the most recent tax return information provided to Social Security by the IRS).

2018 Costs

For 2018, the standard Part B premium amount will be $134 (or higher depending on your income). However, some people who receive Social Security retirement benefits pay less than this amount ($130 on average). You’ll pay the standard premium amount (or higher) if you enroll in Part B for the first time in 2018 or if you don’t get Social Security benefits and if you’re being directly billed for your Medicare Part B premiums (meaning they aren’t being taken out of your Social Security benefits check), you have Medicare and Medicaid, and your premiums are paid by Medicaid, (Your state government pays the standard premium amount of $134 for you.), your modified adjusted gross income(MAGI) 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.

Part B deductible & coinsurance

You pay $183 per year for your Part B deductible. After your deductible is met, you typically pay 20% of the Medicare-approved amount for most Doctor services (including most doctor services while you’re a hospital inpatient), Outpatient therapy, Durable medical equipment.

 

What Is the Part B late enrollment penalty

In most cases, if you don’t sign up for Part B when you’re first eligible, you’ll have to pay a late enrollment penalty. You’ll have to pay this penalty for as long as you have Part B. Your monthly premium for Part B may go up 10% for each full 12-month period that you could have had Part B, but didn’t sign up for it. Also, you may have to wait until the General Enrollment Period (from January 1 to March 31) to enroll in Part B. Coverage will start July 1 of that year.

Usually, you don’t pay a late enrollment penalty if you meet certain conditions that allow you to sign up for Part B during a Special Enrollment Period.

 

Example

Your Initial Enrollment Period ended September 30, 2009. You waited to sign up for Part B until the General Enrollment Period in March 2012. Your Part B premium penalty is 20%. (While you waited a total of 30 months to sign up, this included only 2 full 12-month periods.) You’ll have to pay this penalty for as long as you have Part B.

 

Costs for Medicare drug coverage

You’ll make these payments throughout the year in a Medicare drug plan:

  • Premium
  • Monthly premium for drug plans
  • Most Medicare Prescription Drug Plans charge a monthly fee that varies by plan. You pay this in addition to the Medicare Part B premium. If you join a Medicare Advantage Plan (Part C)or Medicare Cost Plan that includes Medicare prescription drug coverage, the plan’s monthly premium may include an amount for drug coverage.

 

Note

The same insurance company may offer Medigap policies and Medicare Prescription Drug Plans. 

If you join a Medigap policy and a Medicare drug plan offered by the same company, you may need to make 2 separate premium payments for your coverage. Contact your insurance company for more details.

How much does Part D cost?

Most people only pay their Part D premium. If you don’t sign up for Part D when you’re first eligible, you may have to pay a Part D late enrollment penalty.

If your modified adjusted gross income is above a certain amount, you may pay a Part D income-related monthly adjustment amount (Part D-IRMAA). Medicare uses the modified adjusted gross income reported on your IRS tax return from 2 years ago (the most recent tax return information provided to Social Security by the IRS). You’ll pay the Part D-IRMAA amount in addition to your monthly plan premium, and this extra amount is paid directly to Medicare, not to your plan. The chart below lists the extra amount costs by income.

Social Security will contact you if you have to pay Part D-IRMAA, based on your income. The amount you pay can change each year. If you have to pay a higher amount for your Part D premium and you disagree (for example, if your income goes down), use this form to contact Social Security [PDF, 125 KB].  If you have questions about your Medicare prescription drug coverage, contact your plan.

Note

The extra amount you have to pay isn’t part of your plan premium. You don’t pay the extra amount to your plan. Most people have the extra amount taken from their Social Security check. If the amount isn’t taken from your check, you’ll get a bill from Medicare or the Railroad Retirement Board. You must pay this amount to keep your Part D coverage.

If Social Security notifies you about paying a higher amount for your Part D coverage, you’re required by law to pay the Part D-Income Related Monthly Adjustment Amount (Part D-IRMAA).  If you don’t pay the Part D-IRMAA, you’ll lose your Part D coverage.

Employer/Union coverage and Part D-IRMAA

Note

You pay your Part D-IRMAA directly to Medicare, not to your plan or employer.

You’re required to pay the Part D-IRMAA, even if your employer or a third party (like a teacher’s union or a retirement system) pays for your Part D plan premiums. If you don’t pay the Part D-IRMAA and get disenrolled, you may also lose your retirement coverage and you may not be able to get it back.

Here Are Some Things to remember

  • Pay your Part D-IRMAA bill to Medicare as soon as you get it. Find out how to pay your bill.
  • Keep your address current with Social Security, even if you don’t get a Social Security check.

Part D premiums by income

The chart below shows your estimated prescription drug plan monthly premium based on your income as reported on your IRS tax return. If your income is above a certain limit, you’ll pay an income-related monthly adjustment amount in addition to your plan premium.

 

2018

  • Yearly deductible
  • Yearly deductible for drug plans
  • This is the amount you must pay each year for your prescriptions before your Medicare drug plan pays its share.
  • Deductibles vary between Medicare drug plans. No Medicare drug plan may have a deductible more than $405 in 2018. Some Medicare drug plans don’t have a deductible.
  • Copayments or coinsurance

 

Copayment/coinsurance in drug plans

The amount you pay for each of your prescriptions after you have paid the deductible (if your plan has one) is either a copayment or coinsurance. Some Medicare Prescription Drug Plans have different levels or ” tiers ” of copayments or coinsurance, with different costs for different types of drugs.

  • With a copayment, you pay a set amount (like, $10) for all drugs on a tier. For example, you may pay a lower copayment for generic drugs than brand-name drugs.
  • Coinsurance means you pay a percentage of the cost (like, 25%) of the drug.

Note

Usually, the amount you pay for a covered prescription is for a one-month supply of a drug. However, you can request less than a one-month supply for most types of drugs. You might do this if you’re trying a new medication that’s known to have significant side effects or you want to synchronize the refills for all your medications. If you do this, the amount you pay is reduced based on the amount you actually get. Talk with your prescriber to get a prescription for less than a one-month supply.

Part D late enrollment penalty

The late enrollment penalty is an amount added to your Medicare Part D monthly premium.

You may owe a late enrollment penalty if, for any continuous period of 63 days or more after your Initial Enrollment Period is over, you go without one of these:

  • A Medicare Prescription Drug Plan (Part D)
  • A Medicare Advantage Plan (Part C) (like an HMO or PPO)
  • Another Medicare health plan that offers Medicare prescription drug coverage
  • Creditable prescription drug coverage

 Learn how to avoid the late enrollment penalty.

Note

If you get Extra Help, you don’t pay the late enrollment penalty.

How much is the Part D penalty?

The cost of the late enrollment penalty depends on how long you went without Part D or creditable prescription drug coverage.

Medicare calculates the penalty by multiplying 1% of the “national base beneficiary premium” ($35.02 in 2018) times the number of full, uncovered months you didn’t have Part D or creditable coverage. The monthly premium is rounded to the nearest $.10 and added to your monthly Part D premium.

The national base beneficiary premium may increase each year, so your penalty amount may also increase each year.

Example

Mrs. Martinez is currently eligible for Medicare, and her Initial Enrollment Period ended on May 31, 2014. She doesn’t have prescription drug coverage from any other source. She didn’t join by May 31, 2014, and instead joined during the Open Enrollment Period that ended December 7, 2016. Her drug coverage was effective January 1, 2017.

2017

Since Mrs. Martinez was without creditable prescription drug coverage from June 2014–December 2016, her penalty in 2017 was 31% (1% for each of the 31 months) of $35.63 (the national base beneficiary premium for 2017) or $11.05. Since the monthly penalty is always rounded to the nearest $0.10, she paid $11.10 each month in addition to her plan’s monthly premium.

Here’s the math:

.31 (31% penalty) × $35.63 (2017 base beneficiary premium) = $11.05

$11.05 rounded to the nearest $0.10 = $11.10

$11.10 = Mrs. Martinez’s monthly late enrollment penalty for 2017

2018

In 2018, Medicare recalculated Mrs. Martinez’s penalty using the 2018 base beneficiary premium ($35.02). So, Mrs. Martinez’s new monthly penalty in 2018 is 31% of $35.02 or $10.86 each month. Since the monthly penalty is always rounded to the nearest $0.10, she pays $10.90 each month in addition to her plan’s monthly premium.

Here’s the math:

.31 (31% penalty) × $35.02 (2018 base beneficiary premium) = $10.86

$10.86 rounded to the nearest $0.10 = $10.90

$10.90 = Mrs. Martinez’s monthly late enrollment penalty for 2018

How do I know if I owe a penalty?

After you join a Medicare drug plan, the plan will tell you if you owe a penalty and what your premium will be. In general, you’ll have to pay this penalty for as long as you have a Medicare drug plan.

What if I don’t agree with the late enrollment penalty?

You may be able to ask for a “reconsideration.” Your drug plan will send information about how to request a reconsideration.

Complete the form, and return it to the address or fax number listed on the form.  You must do this within 60 days from the date on the letter telling you that you owe a late enrollment penalty. Also send any proof that supports your case, like a copy of your notice of creditable prescription drug coverage from an employer or union plan.

Do I have to pay the penalty even if I don’t agree with it?

By law, the late enrollment penalty is part of the premium, so you must pay the penalty with the premium. You must also pay the penalty even if you’ve asked for a reconsideration. Medicare drug plans can disenroll members who don’t pay their premiums, including the late enrollment penalty portion of the premium.

How soon will I get a reconsideration decision?

In general, Medicare’s contractor makes reconsideration decisions within 90 days. The contractor will try to make a decision as quickly as possible. However, you may request an extension. Or, for good cause, Medicare’s contractor may take an additional 14 days to resolve your case.

What happens if Medicare’s contractor decides the penalty is wrong?

If Medicare’s contractor decides that all or part of your late enrollment penalty is wrong, the Medicare contractor will send you and your drug plan a letter explaining its decision. Your Medicare drug plan will remove or reduce your late enrollment penalty. The plan will send you a letter that shows the correct premium amount and explains whether you’ll get a refund.

What happens if Medicare’s contractor decides the penalty is correct?

If Medicare’s contractor decides that your late enrollment penalty is correct, the Medicare contractor will send you a letter explaining the decision, and you must pay the penalty.

 

 

Your actual drug plan costs will vary depending on:

  • The drugs you use
  • The plan you choose
  • Whether you go to a pharmacy in your plan’s network
  • Whether the drugs you use are on your plan’s formulary
  • Whether you get Extra Helppaying your Medicare Part D costs

Look for specific Medicare drug plan costs, and then call the plans you’re interested in to get more details.

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