Although Medicare is a budget-friendly way to pay for medical expenses in retirement, the program itself is not without costs. For many seniors, premium payments must be made monthly in order to utilize benefits, and many plans also have deductibles that must be met before benefits begin to apply toward healthcare costs.
Before taking a look at premiums and their costs, however, it’s important to note that Medicare is broken down into different parts. Medicare Part A, which supplies inpatient coverage, is usually provided premium-free to retirees who have contributed enough through payroll deductions over their working lives. In most cases, enrollment in Medicare Part A is automatic, so even if you don’t use your coverage, it will still be there for you if you need it without requiring any type of premium to keep your coverage active.
What Medicare Monthly Premiums Will I Have to Pay?
If you don’t qualify for premium-free Medicare Part A, a monthly premium will be required to carry this coverage. Your cost can vary based on the year, but for 2022, you can expect to pay up to $499 per month for inpatient coverage.
Medicare Part B Premiums
Part B monthly Medicare premiums are for outpatient coverage, and Part B is optional coverage. This is the coverage you use to pay for doctor visits, surgery and lab work. It also covers durable medical equipment like wheelchairs and some diabetic supplies.
For 2022, the standard cost of Medicare Part B premiums starts at $170.10 and goes up based on your modified adjusted gross income. This amount is calculated by taking your household income after any tax-exempt interest income and subtracting tax deductions. For households with a modified adjusted gross income over $500,000, Medicare Part B can cost as much as $578.30 per month.
Medicare Part D Premiums
Part D monthly premiums pay for coverage of prescription medications that you are able to purchase from retail pharmacies. This is optional coverage, and your base price can vary depending on your provider and the options offered in your plan.
For most people, you can expect to pay more as your household income level rises. For example, if your household income falls below $91,000 as a single tax filer or $182,000 when filing jointly, you can expect to pay your plan premium price. If your income is above $500,000 annually, you can expect to pay your plan premium as well as an additional $77.90 per month.
Don’t Forget Deductibles
Although premiums are the out-of-pocket costs associated with Medicare coverage that concern retirees the most, it’s important to remember that deductibles should be factored into your healthcare budget as well. A deductible is an amount that you need to spend in a given benefit period in order to begin accessing your Medicare benefits
Essentially, you pay out-of-pocket for all expenses until you have reached your plan’s deductible. After that, your benefits will apply toward your plan’s stated coverage limits until the next benefit period begins.