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For all Medicare plans, costs will vary depending on what plans you decide to purchase, the company you purchase your plan from, your income and sometimes your age. For this reason, you should carefully balance your coverage needs and the costs of the plans when choosing the right mix of Medicare policies.
How much does Medicare cost?
The total cost of Medicare for you will depend on what parts and plans you select for your coverage. Costs will vary greatly depending on your work history, monthly premiums and deductibles. Below is an overview of what you could be paying on a monthly basis in premiums for Medicare coverage:
Monthly premium range
|Part A||$0 or $471|
|Part B||$148.50 (will depend on your income)|
|Part D||$7–$95 (will depend on your income)|
|Medicare Supplement||$62–$784 (will depend on the Supplement policy you elect and pricing structure)|
Premiums for Part C and D are based on an individual in New York state.
Medicare Part A cost
Medicare Part A costs nothing for most individuals who enroll in Medicare due to their previous participation in the workforce. If you have worked for more than 10 years or 40 quarters, then you are eligible to pay $0 for Medicare Part A. This is because, during your working years, you contributed to Social Security and Medicare payroll taxes.
If you do not meet this threshold, then you are required to pay full price for Medicare Part A health insurance, which is $471 per month.
In addition, a large cost for Medicare Part A is the deductible. Enrollees will find that in 2021, the deductible is $1,484, which represents an increase of $76 from the previous year. However, this cost is usually covered if you enroll in a Medigap policy or Medicare Advantage.
Cost of Medicare Part B
The cost of Medicare Part B will depend on your adjusted gross income (AGI). Generally, when you file your taxes, if you make less than $88,000 a year, then you would pay $148.50 per month. Below you can find an exact breakdown of the different income thresholds for Medicare Part B premiums. If you file joint taxes, then you can double these income levels to figure out what your monthly Part B premium would be. These figures are updated annually by the Social Security Administration (SSA).
|Less than $88,000||$148.50|
|Greater than $500,001||$504.90|
Besides the monthly premium, enrollees in Medicare Part B are also responsible for paying the deductible if they do not have another policy — such as Medicare Supplement — that covers it. For 2021, the Part B deductible is $203, which means you would need to pay $203 before coinsurance benefits would kick in.
Medicare Part C cost
For Medicare Part C, also called Medicare Advantage, costs will vary depending on the health insurance company you purchase your policy from. Part C is a pure private health insurance product, meaning that it is not standardized across companies, and every policy has different levels of coverage, premiums and deductibles. Therefore, you should shop around on the Medicare.gov website to find the best Medicare Advantage policy.
Typically, enrollees in Medicare Advantage can expect to pay a monthly premium between $0 and $302, with the price varying due to differences in the coverage. In addition to the premium, potential policyholders for Medicare Advantage policies should take note of the deductibles for these plans, as they can be higher than other Medicare deductibles.
Medicare Part D cost
Costs for Medicare Part D will be similar in nature to Medicare Part B costs — they will vary depending on your household income. But you will also need to pay an adjustment over whatever your plan costs. Premiums will also vary by plan since these policies are offered through private health insurance companies.
Income levels for premium adjustments are exactly the same as with Medicare Part B. Notice that the values in the table are what you pay in addition to the monthly regular Part D premium.
|Less than $87,000||$0|
|Greater than $500,001||$77.10|
For example, let's say you decided to purchase a Medicare Part D policy with a stated premium of $50 per month, and your income for the previous year was $150,000. In this case, your new income-adjusted monthly premium would be $101.20 ($50 + $51.20).
Cost of Medicare Supplement
The cost of a Medigap policy, also called a Medicare Supplement policy, will depend on two factors: the policy you choose and the pricing structure of the company. Firstly, different plan letters have different prices since each policy provides a different level of coverage. For example, the Medigap Plan G is a more comprehensive plan when compared to Plan K and thus warrants a higher monthly premium.
Below we have outlined the monthly premium of each Medigap policy. Notice that a range is given since different plan providers offer different premiums.
Secondly, Medigap prices will differ based on the pricing structure, which can include your age, depending on what the health insurance company selects. There are three different ways in which Medigap policies can be priced:
The simplest rating system is community-rated, which means the same monthly premium is charged to everyone who has the same Medigap policy. This means your premium will not be based on your age but could go up because of inflation.
Issue-age-rated has a premium structure in which your monthly premium is based on the age you are when you buy the Medicare Supplement plan. In this case, premiums will be lower for people who buy at a younger age. For example, if you bought a Medigap policy at age 65, your premium could be $200, but if you bought the same plan at 80, that policy might cost $300.
The final pricing structure is attained-age-rated, in which the monthly premium is based on your current age every year. In other words, your premium will renew every year and increase as you continue to get older. For example, you may have started paying $150 per month for your Medigap policy at age 65, but by the time you are 75, you could be paying $175 per month.
As you can see, differences in pricing structure can vastly change the amount you will pay for Medigap coverage during your lifetime. It is for this reason that comparing the same letter plan across multiple companies is vital if you want to find the best Medigap plan available.