When you turn 65 years old in the U.S., you become eligible for Medicare if you are a U.S. citizen or have lived in the U.S. as a permanent resident for five or more years. You can also qualify for Medicare before age 65 if you receive Social Security disability benefits. 10,000 Americans turn 65 years old every day, and many aren’t aware of how much Medicare Part A and Part B cost. Does Medicare have costs? If you are working while on Medicare, is Medicare free? Keep reading to find out!
Is Medicare Part B free?
Medicare Part B covers outpatient services, such as ambulance rides, durable medical equipment, and doctor’s visits. Although many of you have likely paid Medicare payroll taxes while working in the U.S., Medicare Part B is certainly not free. You will pay a monthly premium for Part B, and the standard Part B premium is $170.10 in 2022. However, there is a chance you could pay more monthly for Part B.
The Social Security (S.S.) office looks at your modified adjusted gross income (MAGI) listed on your tax returns from two years before applying for Medicare. For instance, if you apply for Medicare in 2022, they will look at your 2020 tax returns. If S.S. finds that you made a high income two years ago and were in a high-income tax bracket, you will be charged an income-related monthly adjusted amount (IRMAA).
There are seven federal tax brackets. If you filed your taxes as single and made $91K or less, or if you filed jointly and made $182K or less, you will not pay an IRMAA fee. However, if you are in any of the other six tax brackets, you will be subject to IRMAA. You will pay the IRMAA fee on top of your monthly Part B premium, and you will pay this fee until S.S. sees that your MAGI changes in the new year.
The cost of Medicare Part A
Medicare Part A covers inpatient hospital services, skilled nursing, hospice, and home health care. The difference between Medicare Part A and Part B premiums is that the Medicare taxes deducted from your paychecks over the years went towards your Part A premium.
Those who have worked 40 quarters, which is equivalent to ten years, in the U.S. and paid payroll taxes will have a $0 monthly premium for Medicare Part A. If you have less than 40 quarters but have between 30 to 39 quarters, you will pay a pro-rated Part A premium of $274 per month in 2022. If you have less than 30 quarters, you will pay the total Part A premium, which is $499 per month in 2022.
Now, let’s say your spouse has the full 40 quarters. In this case, you will qualify for a $0 premium Part A through your spouse if you have been married for at least one year.
How much is Medicare Part D?
Medicare Parts A and B do not cover prescription medications. You would want to purchase a Part D plan from a private insurance company to have drug coverage. The cost of Part D varies from carrier to carrier, but the average Part D premium in 2022 is $33 per month. However, like Part B, the S.S. office looks at your tax returns from years ago, and if you are in a high-income bracket, you will be charged an IRMAA fee.
How to appeal IRMAA
It’s possible that those who were in a high-income tax bracket two years ago no longer make that same income. Suppose you have experienced a life-changing event that has affected your income, such as retiring, divorce, or loss of income-producing property. In that case, you can appeal your higher Part B and Part D premiums!
You will submit form SSA-44 to the Social Security office. Along with the SSA-44 form, you will also want to include documentation proving that you are no longer high-income. The more documentation you provide, the more it will benefit your case in appealing IRMAA.
Medicare Part B is certainly not free, and neither are any of the other parts of Medicare. However, there is a chance you can get Medicare Part A for $0! To learn more about the cost of Medicare, visit Medicare.gov.