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How Are Medicare Premiums Calculated?

how are Medicare premiums calculated?

Are you finding the costs of your current Medicare premiums too much to bear? Call (800) 950-0608 to connect with one of our licensed insurance agents. We can help you find a Medicare plan with premiums that suit your budget.

Just the Essentials:

  • Medicare premiums are the monthly costs you pay to maintain enrollment in a Medicare plan.

  • Costs of Medicare premiums are calculated based on income.

  • Medicare premiums in 2023 have decreased to meet the cost of living, but still may be tough to manage if you’re a senior on a low fixed income.

  • Medicare Advantage plans can sometimes save you more money on healthcare costs than Original Medicare.

  • Call (800) 950-0608 to learn more about Medicare Advantage plans with affordable Medicare premium costs!

Calculating Medicare premiums

I Heard What They Said on TV - Is Medicare Free?

If you watch TV, you’ve probably seen the commercials. You know the ones, claiming you can sign up for free Medicare plans. Some of them even seem to go out of their way to claim that they cover your every healthcare-related expense.

“That sounds great!” You may think to yourself. “Free health insurance and all or most of my medical costs are going to be covered? It sounds too good to be true.”

When it comes to any healthcare cost, including the cost of health insurance (including Medicare) if it sounds too good to be true, it probably is too good to be true. When it comes to health insurance (again, this includes Medicare), “free” is a very misleading word. You’ll always need to incur some kind of cost out-of-pocket.

So, is Medicare free in any form? The answer is not a simple “yes” or “no”. There will always be costs related to your Medicare plan. 

Typically, the highest cost you’ll face is the cost of your Medicare premiums. Once you realize that you’ll have to cover the cost of your Medicare premiums, it brings another set of questions to mind:

  • “How much does Medicare cost?”
  • “How much are Medicare premiums?”
  • “How much do Medicare premiums cost in 2023?”

In this article, we’ll take a closer look at Medicare premiums, how much they cost, and how some of the burden of cost can be relieved.

How Much Does Medicare Cost?

We get plenty of questions about Medicare plans every day. One of the most popular questions we get day in and day out happens to be:

“Is Medicare free?”

Typically followed, for good reason, by:

“How much does Medicare cost?”

Determining how much your Medicare premiums will be depends on a few different factors. For some plans, your premium may be what is known as “zero-cost”. This means you won’t pay a monthly premium. If you have to pay a monthly premium, the cost will depend on one of the following:

  • Whether or not you qualify for “premium-free” plans (typically Medicare Part A)
  • Your yearly household income
  • The company carrying your Medicare Advantage plan

Let’s break down the costs by plan, shall we?

The Cost of Medicare Part A

Most people pay $0 in premiums for Medicare Part A. Whether or not you qualify for “premium-free” Medicare Part A depends on whether or not you paid Medicare taxes for a long-enough period of time. If not, you may be able to purchase Medicare Part A from the federal government.

If you have to purchase Medicare Part A, you’ll either pay $278 or $506 as a monthly premium as of 2023. The cost of your premium is heavily dependent on how long you or your spouse worked and paid Medicare taxes.

You’ll also have to consider deductibles and copayments for Medicare Part A when factoring costs. You’ll pay a $1,600 deductible for each time you’re admitted to the hospital per benefit period. Once you’ve hit that deductible, Original Medicare begins to cover the cost.

Your copays for Medicare Part A depend on how many days you’ll need to stay in the hospital. For up to 60 days, you’ll pay $0 in copays after you reach your Part A deductible. The costs go up $400 for each period thereafter up to 150 days*.

*This means that if you stay in the hospital for 61 to 90 days, you’ll pay $400 as a copay for each day. If you’re in the hospital for 91 to 150 days, you’ll pay $800 as a copay. If you’re in the hospital for more than 150 days, all costs then become your responsibility.

How much are Medicare premiums?

The Cost of Medicare Part B

Unlike Medicare Part A, everyone has to pay a premium for Medicare Part B. The premium for Medicare Part B isn’t a set number, and it depends on your yearly household income. Medicare Part B premium rates start at $164.90 in 2023 for the lowest bracket ($97,000 or less) and end at $560.50 for the highest bracket ($500,000 or above for singles, $403,000 or above for married couples filing separately).

Your deductible for Medicare Part B is lower than your deductible for Medicare Part A. Before Original Medicare will start paying for your medical costs, you’ll pay $226 as a deductible, and you’ll pay it once per year.

You’ll also pay coinsurance for Medicare Part B, 20% of the cost for Medicare-covered services or treatments after meeting your deductible. Some providers may require you to pay a copay for services as well.

Medicare Advantage, Prescription Drug Coverage (Medicare Part D), and Medigap

The premiums you’ll pay for Medicare Advantage, Prescription Drug, and Medigap coverage depend heavily on the carrier through which you purchase your coverage. Sometimes, you can find Medicare Advantage plans near you that are “premium-free”, much like Medicare Part A.

There are other factors that play a role in how much you pay, outside of your carrier. Some of these factors include:

  • The level of coverage offered through your plan
  • The benefits your plan may provide
  • Your location

In some cases, your plans will require you to pay copays or coinsurance, much like Original Medicare. Whether you’re enrolled in Medicare Advantage, Original Medicare, or Medicare Part D, Medigap plans are designed to help cover the costs of these items. In other words, they help you fill in the gaps!

How much do Medicare premiums cost?

So, How Can I Keep My Medicare Costs Low?

Medicare premiums in 2023 can be expensive, especially given the current economic situation. Like many other seniors, you may live on a low fixed income, and you find it tough to cover your healthcare costs. Fortunately, we can help you find ways to reduce what you’ll pay Out-of-Pocket for your care.

At MedicareInsurance.com, we can help you find plans that:

  • Offer $0 premiums
  • Offer Part B “buybacks”
  • Offer rebates on your Part B premiums
  • Offer assistance with purchasing prescription medications and supplies

Just give us a call today. Our licensed insurance agents are here to help you find a Medicare Advantage plan that helps you get the care you need while saving the most money possible.

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