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Many people don’t realize they have to pay for Medicare B and Part D coverage, plus supplemental coverage, and it can come as a surprise. Most people have to pay for Medicare, but it’s pretty easy to estimate what your Medicare costs will be so you can plan ahead.
For the majority of US citizens over age 65, the cost for Part A is zero. If you worked ten years or more (40 quarters), you’ve already paid for your Part A through payroll taxes.
If you have to pay for Medicare Part A, premiums are determined by how long you or your spouse have worked in the United States.
If you worked less than 10 years (40 quarters), but at least 7.5 years (30 quarters), your monthly premium will be pro-rated to $252 per month.
If you worked fewer than 7.5 years (30 quarters), your premium for 2020 is about $458 per month.
If you have a hospital stay in 2020, your Part A deductible will be $1,408. If you have a Medigap plan, it may cover the deductible cost.
The amount of your premium for Medicare Part B is determined by your modified adjusted gross income. The Social Security office will review your tax returns from the previous two years.
Some of the things which contribute to your modified adjusted gross income (MAGI) include:
Distributions from Roth IRAs and Roth 401ks, life insurance, reverse mortgages, and health savings accounts do not count as part of the MAGI calculation.
If you are married and filed taxes jointly, Social Security will use your married household income to determine the premium for both you and your spouse. Additionally, in 2019 they added a new tax group for married filling separately. However, each of you has to purchase individual Part B coverage.
Social Security notifies you of your next year’s premium by mail in December or early January.
Most people pay the standard premium cost for Part B which is $144.60. Your premium is deducted from your Social Security check each month. If you’re not enrolled in Social Security benefits yet, you’ll be billed quarterly. The Medicare Part B deductible for 2020 is $198 per year.
Just as with Medicare Part B, the amount of your premium is determined by your income. The cost also varies depending on the Part D plan you choose. Your state has Part D options; some states have 20 or more different plans. The lowest premium for Part D coverage is about $15.
Medicare premiums are tax deductible as part of medical expenses. In order to qualify for deductions, your medical expenses must total 10% of your adjusted gross income. See your tax adviser for additional information.