A very common question we come across is, “how much is Medicare going to cost me?” It’s a great question as it’s crucial to know how much Medicare is going to cost you so that you can plan for your financial future.
As you may know, there are two main parts when it comes to Medicare. It’s Medicare Part A, which is your hospital insurance and Medicare Part B, which is your doctor’s insurance.
Part A – Hospital Insurance
Medicare Part A has a fee of up to $423 a month for 2018. However, you more than likely will not have to pay this fee.
Over the years, through payroll taxes, you’ve been paying into your Medicare Part A. If you, or your spouse, have been paying into Medicare for 40 quarters, which is the equivalent of 10 years, you won’t pay any monthly premiums when it comes to your Medicare Part A.
Part B – Doctor’s Insurance
Medicare Part B has a fee of $134 a month.
Unlike Part A, you have NOT been paying into your Part B insurance through your payroll taxes.
Once you are on Part B, there is $134 monthly premium for Medicare Part B because you have not been paying into it like you did with Part A. With that said there are some people who will pay less than the standard rate of $134, because they qualify under a lower income rule.
There are also others who pay more for Medicare Part B because they are subject to higher income rules.
With that said, if you have a higher income, you may be subject to IRMAA.
IRMAA (Income Related Monthly Adjust Amount)
Based on the IRMAA determination, you could face extra fees with Part B and Part D plans if you make too much money.
Medicare looks two years back and if you file taxes with an adjusted income of $85,000 or higher as an individual or over $170,000 as a couple, you will have to pay extra when it comes to Medicare Part B (and also Part D).
The amount you will owe for Part B and Part D will increase the more money you make. So, the more you make, the more you owe.
If you fall into the category of paying more for Medicare, there are two things to be aware of:
1. Many times these IRMAA fees can be appealed especially if you are no longer working so your income will be decreasing. We are happy to give you more information on this if you have the questions.
2. As long as you know about the rules, you can think strategically about certain spikes in income that can affect these. The more you are aware of the rules, the more you can do with your financial advisor to minimize the impact of these extra fees.
In addition to Medicare Part A and B, there are often times additional costs depending on if you have an Advantage Plan, a Supplement Plan, or a Part D Plan.
As you plan for retirement it is important to understand your Medicare and health related costs.
If you’re not sure what fees or costs you’ll be facing when it comes to Medicare, you’re not alone. We can help you make sure that you know what costs you’ll be facing.
