We pay into Medicare our entire lives, only to realize once we reach the magical age of 65…we still have to pay for it. As you already read from the Medicare Quick Facts Sheet, there are a couple of different parts to Medicare. You are automatically enrolled in Medicare Part A as soon as you turn 65. You do not have to make any payments for Medicare Part A, so long as you have worked for at least 40 quarters (ten years). If you have not yet earned all of these credits, you still qualify for Medicare, but will have to pay a premium for Part A.
Most people will not need to pay for Part A. Part B is a different story. Everyone will be required to pay for Medicare Part B as soon as you decide to enroll in the coverage (exceptions apply for certain Medicaid benefits). These payments, also called premiums, will be automatically taken out of any sort of benefit payment that you receive, such as Social Security, Railroad Retirement, and Office of Personnel Management. Those who do not receive any of these benefits will have a bill sent to them for the Part B premium.
It is important to note that those of higher incomes will be impacted by an Income Related Monthly Adjustment Amount. This is a higher charge for the Part B premium for those who have a higher income, and based off of your tax return from two years ago. For 2018, this threshold begins at income greater than $85,000 if single and $170,000 if you filed taxes jointly. The Income Related Monthly Adjustment Amount works similarly to tax brackets – the more you make, the more you pay.
You should always take out a Prescription Drug Plan (Medicare Part D), even if you do not currently take any drugs; there is a penalty that builds the longer you go without Part D. Monthly premiums for this coverage typically starts at about $20/month, but can be much higher depending on the number and type of prescriptions that you take. You will also need to pay out of pockets on top of your monthly premiums for most drugs when you go to pick them up. If you would like help with enrolling in the Prescription Plan that best fits your needs, please click here.
In addition to premium payments to Part B, you could potentially have thousands of dollars in out-of-pocket requirements for copays, deductibles, and coinsurance if you just have Original Medicare. This leads the vast majority of people to enroll in a Medicare Supplement in order to minimize their total costs. You can learn more about Medicare Supplements by clicking here. Medicare Advantage Plans are an alternative to Medicare Supplements; however, they typically have MUCH LARGER max out-of-pockets. You can learn more about Advantage Plans by clicking here.