What to Know About Medicare Premiums

Medically Reviewed by Jabeen Begum, MD on December 01, 2021
3 min read

Medicare is government-run health insurance in the U.S. for people ages 65 and older, people with disabilities, and people who have end-stage renal disease. 

General revenues and the Federal Insurance Contributions Act tax fund Medicare, which is administered by the federal government. 

With various programs and plans, it may get confusing to know about your insurance options. Medicare premiums are fees for insurance that covers your medical bills and necessities. 

Medicare Part B covers almost all the expenses not paid by premium-free Part A. This includes outpatient care, physician services, home health services, medical supplies such as limited outpatient drugs, and medical equipment, and doctor's services. 

Medicare recipients pay a premium for Part B Medicare, but it is based on income from two years previous. For example, people who had a higher income in 2019 will pay higher Part B premiums in 2021. This is called the monthly adjustment amount.

Medicare Part A covers the billing for your care in the hospital. This is your basic hospital insurance. It includes a semi-private room, meals, medicines and drugs, and nursing services. 

This insurance plan also covers your stay in many types of hospitals. Moreover, Part A covers mental hospitals, skilled nursing facilities, and various health care programs of hospitals, for a limited time.

Also, if you are admitted to the hospital, Medicare Part A covers hospital costs if you have a Medicare deductible. The Part A deductible is $1,484 per benefit period in 2021.

Once you meet Medicare Part A deductible, you have to pay Part A coinsurance if your hospital stay is extended. The coinsurance rates differ as Part A includes covering premiums, a deductible, and coinsurance.

Medicare Part C and D are private insurance options by which you receive the benefits of both parts A and B premium. In contrast, Part D is only prescription drug coverage. 

For Part B premiums, the government takes the money from your Social Security payment because many seniors do not pay for their monthly premiums. 

But suppose you make a lot of money every year, but you have to repay all of it to someone. So the government will withhold your future Social Security payments.

If you buy Part A, you will pay up to $471 every month in 2021. If you paid Medicare taxes for less than 30 quarters while you were working, the standard cost is $471.

But if you paid 30-40 quarters, then Part A premium costs $259. 

You have to be 65 or older to be eligible for Medicare. If you are younger than age 65 and have received Social Security disability benefits for two years, or you have end-stage renal disease, then you are eligible for Medicare. This is known as a 24-month requirement. You can also buy a private Medigap insurance plan if you delay the enrollment. 

There are many benefits of Medicare from Medicare deductibles to free preventive services. 

You can deduct some of your Medicare premiums when you pay your taxes. This reduces the taxable income. Also, the deductible money is not limited because your premium tax depends on your yearly income and expenses of that year. 

You also get various preventive health services for free. For example, Medicare Part B covers a yearly wellness visit to the doctor, flu shots, screenings for cardiovascular diseases, and diabetes. 

You can apply for Medicare online or by mail. In person, you can apply at a Social Security Administration office. There are enrollment periods during which you can sign up. If you’re signing up for the first time, the enrollment period is three months before, during, and three months after your 65th birthday.

To sign up by phone, you can call Social Security. But before you choose to apply for Medicare, it’s a good idea to familiarize yourself with all the options and health care programs. 

Also remember that you are only eligible at the age of 65 if you are a citizen of the United States or a permanent resident of over five years.