If someone is permanently disabled and under 65, they are also eligible for Medicare after receiving Social Security disability benefits for at least 24 months.
If someone has less than 40 quarters, Part A is available for a monthly premium based on the number of quarters paid in.
For 2020, if you have between 30 - 39 quarters, the monthly premium is $252. If you have less than 30 quarters, the premium is $458.
Part B covers doctor’s services, diagnostic X-rays, lab tests and more. It is available to everyone who is eligible for Medicare.
For 2020, the monthly premium is $144.60.
However, if your Modified Adjusted Gross Income (MAGI) is greater than $87,000 for singles and $174,000 for married filing jointly, monthly premiums are higher.
MAGI is adjusted gross income plus tax-exempt interest based on the 2018 federal tax return. See IRMAA chart above.
IRMAA stands for Income-Related Monthly Adjustment Amount. Basically, it’s a tax for higher income earners on their Medicare.
As an example, if a married couple has a MAGI of $800,000 and both are on Medicare, then each would pay $491.60 each month for Medicare Part B.
In other words, they are each paying an additional surcharge or tax of $491.60 - $144.60 = $347.00 per month or $4,164 annually for Medicare Part B.
Combined, their surcharge is $8,328 annually. And we still haven’t figured in any premiums for Medigap insurance yet.
Even if this couple were to sign up for a Medicare Advantage plan that may be advertised as FREE, they would still be required to pay a total of $11,798.40 for Part B premiums.
So is that advertised Medicare Advantage plan really free?
Part D is Medicare’s prescription drug coverage plan. It was started in 2006.
Private insurance companies contract with Medicare to provide this benefit. Everyone that is Medicare eligible qualifies as long as they sign up within a specified time period.
Like Medicare Part B, there is an additional surcharge for higher income people.
In the married couple example above, each person would pay an additional $76.40 a month or $916.80 annually.
Combined, their annual surcharge would be $1,833.60 before any Part D premiums are paid to the drug companies.
Monthly premiums for Part D coverage range from $15 - $130 per month. The average is $42.00.
For this couple as an example, their annual cost for Medicare Part B and D would be $13,632.00 excluding any insurance company premiums. This also excludes deductibles and co-pays.
Many people mistakenly believe that Medicare is free.
Don’t let this be you.