Understanding the Premiums You Pay for Original Medicare
Many people mistakenly believe that Medicare is free. They believe that once they turn 65 years old, the cost of going to the doctor or a hospital will be taken care of by Medicare. This is simply not true.
If you choose to enroll in Original Medicare (Medicare Part A and Medicare Part B) there are still monthly insurance premiums you may have to pay.
Medicare Part A (hospital insurance)
- During your working years, your employer deducts Medicare taxes from your paycheck, just like your Social Security contributions.
- If you or your spouse paid these Medicare taxes, you most likely will not have to pay a monthly premium for Medicare Part A.
- If you or your spouse did not pay enough Medicare taxes, you may be able to buy Medicare Part A coverage.
Medicare Part B (medical insurance)
- Nearly everyone must pay a monthly premium for Medicare Part B.
- People with higher incomes may pay a higher monthly amount. The Social Security Administration will use information from the federal tax return you submitted to the IRS two years before you enrolled in Medicare and will notify you if you must pay a higher monthly premium. For instance, for <2013> Medicare Part B premiums, the Social Security Administration looks at your <2011> tax return income amount.
If you have Original Medicare, you can contact your plan administrator to have monthly Part B premiums deducted from your monthly Social Security benefit (or Railroad Retirement Board or Civil Service benefit). If you do not get these types of benefits, you will receive a monthly bill for your Medicare Part B premium, which you must pay out of your own funds.
Help is available for people who cannot afford Original Medicare monthly premiums
Each state has a program called a Medicare Savings Program that may help pay for Original Medicare premiums. The rules are different depending on where you live.
Typically, each state looks at your monthly income and your other resources to determine if you are eligible for this help. Your other resources include things like checking accounts, savings accounts, Individual Retirement Accounts, mutual funds, stocks, and bonds.
The Medicare & You handbook advises people who need help to call or visit the State Medical Assistance (Medicaid) office to ask for information on Medicare Savings Programs. Even if you are unsure or believe you are not eligible, you should call to find out if you qualify for any of these programs. To get the phone number for your state visit the Medicare.gov Helpful Contacts page. You can also call 1-800-MEDICARE (1-800-633-4227), and say "Medicaid." TTY users should call 1-877-486-2048.
Learn more about Original Medicare and monthly premiums
The National Institute on Aging, a part of the National Institutes of Health, has a website called NIH Senior Health. It can be found at nihseniorhealth.gov. This site has a full and rich section that discusses the basics of Medicare. This site even offers videos, so you can watch and learn about your Medicare options, eligibility, premium payments and more.
Another resource is the Social Security Administration's website which includes a section about Medicare. It also offers information about higher incomes and Medicare Part B premiums. This website allows you to apply online for Medicare benefits.