Learning Medicare’s coverage is a task in and of its own. When you mix in the cost of Medicare, it can really add to the complexity of this federal health insurance program. Many believe Medicare is free because they paid into it while working and receiving paychecks. But the reality of the situation is Medicare is not free. There are premiums, deductibles, copays, and coinsurance with Medicare. So, how do you get ready for the cost of Medicare? First, you need to know how much Medicare costs.

How Much Does Medicare Cost?

If you worked in the U.S. for at least 40 quarters and paid FICA taxes, you qualify for premium-free Part A. This means you won’t pay a premium for Medicare Part A, which offers inpatient hospital coverage. You would pay a monthly Part A premium if you worked less than 40 quarters. You could pay $274 or $499 per month, depending on the number of quarters you worked.

Get Part A Free From Your Spouse

If you don’t qualify for premium-free Part A because of your work history, don’t stress about the premium just yet. If you have been married for at least one year, your spouse is at least 62 years old and worked at least 40 quarters, you can use their work history to qualify for premium-free Part A. You can learn more about how to prepare for Medicare by visiting boomerbenefits.com/tips-on-how-to-prepare-for-the-cost-of-medicare.

Medicare Part B and Your Income

The other part of Medicare is Part B. Part B helps cover your outpatient medical services. All Medicare beneficiaries enrolled in Part B must pay the Part B premium. This premium is different because there is a standard base premium, but you could actually pay more than the standard premium if you have a higher income.

In 2022, the standard premium is $170.10. However, you could pay as much as $578.30 each month for Medicare Part B. Social Security looks at your modified adjusted gross income from two years before to determine what you will pay each month for Medicare Part B.

How to Pay Your Medicare Premium

An important piece of information you should know is how you will pay your Medicare premium. When you receive Social Security benefits, your Part B premium will automatically be deducted from your monthly check. However, if you aren’t receiving Social Security benefits yet and you’re enrolled in Part B, you will receive a quarterly bill for Part B. You can pay it online or through a monthly bank account.

A quarterly bill can be pretty hefty for many people, so you’ll want to prepare for this ahead of time.

Supplemental Plans and Why You Might Purchase One

Since Medicare does not cover 100% of your healthcare costs, you’ll want to consider enrolling in an additional insurance plan. When you’re enrolled in Medicare, you can choose to pair it with a Medigap plan or a Medicare Advantage plan. No matter which plan you enroll in, you’ll pay the Part B premium.

Medigap plans have monthly premiums, but they will help cover your healthcare expenses during the year, so you’ll pay less out-of-pocket for services. Advantage plans, on the other hand, have lower monthly premiums, but you’ll have copays for services.

Knowing about these options will help you prepare for what you might spend monthly or yearly once you start Medicare.

Know Your Drug Costs

Lastly, you need to think about your prescriptions and how much they cost. While you work and have employer coverage, your prescription costs might be pretty reasonable. However, that will likely change when you are on Medicare.

You will have a monthly premium for a Part D plan, deductible, and cost-sharing. Depending on your drugs, you could be responsible for 25% of their retail cost. That can add up quickly if you have expensive medications. Additionally, there is no cap on your drug costs. Some drugs can be several thousand dollars per month, so you’ll want to know the retail price of your medications before starting Medicare so you can prepare.

Final Thoughts

As you begin your Medicare research, spend time learning about Medicare costs. It’s best to understand what you could pay monthly and during the year for your medical expenses and drugs.