Medicare Costs

What Does Medicare Cost?

Medicare is health insurance, so there are monthly premium costs as well as out-of-pocket costs when you receive medical care.  Like any health insurance plan, it is important to understand your fixed and variable costs associated with your care to budget for your upcoming plan year.

Your actual costs will vary based on your income, what plans you select and where you live. Only Part B Medicare has a fixed premium structure that is the same regardless of where you live. All other parts of Medicare, Parts C and D and Medigap, will  have different premium and out-of-pocket costs.

To understand what categories your costs will be when enrolled in Medicare, we’ve defined each below.

Premiums – The set amount that you are required to pay out-of-pocket monthly, whether through your checking account or Social Security check, for Medicare Part B, Medicare Advantage (Part C), your Medicare Part D prescription drug plan and/or your Medicare Supplement plan.

Deductibles – The set amount that you are required to pay out-of-pocket for covered services before your insurance plan begins to provide benefits. 

Coinsurance/Copayments – The portion of the medical services or prescription drugs that you are responsible to pay. Copayments are fixed dollar amounts;  in comparison, coinsurance is calculated as a percentage.

IRMAA and Medicare Parts B and D

Medicare has implemented a policy where your Part B and Part D premium can be increased based on your modified, adjusted household gross income (MAGI) on your tax return from two years prior. This increase is called Income Related Monthly Adjustment Amount (IRMAA).

IRMAA began in 2006 to help stabilize the funding for Medicare Part B.  In 2011, Part D was added to the IRMAA surcharge calculations. Today about 8% of all Medicare eligibles are impacted by IRMAA.

As an example, in 2024, if your Modified Adjusted Gross Income from 2022 was over $103k single or $206k married, you would have to pay a higher amount each month for Part B and D.

These payments can be appealed if your income in 2024 is lower than in 2022 due to life events such as retirement, work reduction or divorce.

Finally, when enrolling in a Medicare Advantage, Medicare Part D or Medicare Supplement plan, these premiums are NOT impacted by your income.

To better understand how your income can impact your Part B and Part D premiums, download our IRMAA Overview below.

Download our IRMAA Overview today.

Appealing IRMAA

If you’ve experienced a life-changing event, such as work-reduction or retirement, that will reduce your income in the current Medicare plan year, you can appeal your IRMAA payment. 

You can appeal the decision by submitting a completed SSA-44 form,  which is a written request for reconsideration.  This form must be submitted within 60 days of the date on the IRMAA notice.  To complete the appeal process, you will need to provide evidence that your income has decreased or that the information used to calculate your IRMAA is incorrect.

Appealing your IRMAA determination can ensure that you pay the amount reflective of your current income, not past earnings. 

It’s important to understand IRMAA and how it may affect your Medicare costs. Planning ahead and monitoring your income can help you avoid unexpected expenses and ensure you have the right coverage for your healthcare needs.

Keeping costs down when enrolled in Original Medicare

If you are enrolled in Original Medicare, it is beneficial to access care with providers that Accept Assignment.  Accept Assignment simply means that your doctor, provider or medical supplier contractually agrees to accept the Medicare approved payment as payment in full for the services rendered, which prevents them from charging extra. 

Under assignment, the provider agrees to submit your claims and will ask you for payment only after Medicare has processed the claim. Additionally, your out-of-pocket costs could be less.

Most Medicare contracted providers accept assignment, you want to make sure your providers do before receiving care. If your doctor doesn’t accept assignment, you could be exposed to the Part B excess, which is an additional 15% of the cost of care. 

Need help understanding your out-of-pocket costs?

Our licensed Medicare insurance agents are available to help you with cost estimates and budgeting for your various Medicare plan options.

Give us a call today at 703-214-4600. Remember our services are always 100% free.

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