Medicare Part B Premiums
Beneficiaries enrolled in Medicare Part B must pay premiums .35 By law, individuals receiving Social Security benefits have their Medicare Part B premiums automatically deducted from their benefit checks.36 In 2017, approximately 75% of Medicare Part B enrollees had their Medicare Part B premiums deducted from their monthly Social Security benefit checks.37 Those not receiving Social Security are billed by Medicare,usually on a quarterly basis.38Individuals who are enrolled in Medicare Part B but do not receive Social Security may include individuals who are waiting to reach full retirement age and individuals who spent their careers in employment that was not covered by Social Security, including certain federal, state, and local government workers.
The standard monthly Medicare Part B premium in 2018 is $134.00. This premium applies to individuals with a modified adjusted gross income of $85,000 or less and to couples with a MAGI of $170,000 or less.42 Enrollees earning more than those respective amounts pay higher premiums based on their income, as shown in Table 1.
Table 1. Medicare Part B Premiums, 2018
Modified Adjusted Gross Income a
Notes: Each member of a couple pays the applicable premium. Lower thresholds are rounded up to the nearest dollar and upper thresholds are rounded down to the nearest dollar.
Premiums For Medicare Advantage Plans With Prescription Drug Coverage
In 2021, the average monthly premium for plans that include Medicare Part D prescription drug benefits is $21 according to the Kaiser Family Foundation.3 The average monthly premium is weighted by enrollment. That means most people are selecting the lower-priced plans on an overall basis.
Below are the average 2021 monthly premiums for some of the different types of plans .3
Projected Impact Of Medicare Premium Growth On Social Security Benefits
Medicare per capita cost growth is expected to continue to increase at a faster rate than inflation measured by the CPI-W, thus increasing Medicare premiums at a faster rate than Social Security COLAs. The Medicare Trustees project that Medicare beneficiaries will use a larger portion of their Social Security benefits to pay Medicare Part B and Part D premiums in the future. For example, in 2018, the Medicare Part B and Part D premiums account for 12.4% of the average Social Security benefit 68 the Medicare Trustees project that this will increase to approximately 14.0% in 2028 and to 16.8% in 2092.69 Out-of-pocket costs are also expected to continue to absorb an increasing amount of the average Social Security benefit the Medicare Trustees project that out-of-pocket costs as a percentage of the average Social Security benefit will increase from approximately 23.6% in 2018 to approximately 26.9% in 2028 and to approximately 34.5% in 2092.70
The historical and estimated increases in average Social Security benefits, the average Medicare Part B and Part D benefits, average Medicare Part B and Part D premiums, and average out-of-pocket costs as indicated by the Medicare Trustees’ long-range projections are shown in Figure 2.
This report was originally authored by Kristanna H. Peris, National Academy of Social Insurance Intern.
How Else Can You Pay Medicare Premiums
Having your Medicare premiums deducted from your Social Security benefits is one easy way to make your payments, but its far from the only way of taking care of your Medicare costs.
You may also pay your premiums online using your MyMedicare account. When logged into your account, you may use a credit or debit card or a bank account number to facilitate a premium payment.
Another way to pay your Medicare premiums online is through your bank. If your bank offers an online payment portal for bills, you may be able to pay your Medicare premiums this way.
Medicare Easy Pay is a service that allows you to set up automatic withdrawals from your bank account or a credit or debit card to pay your Medicare premiums.
Lastly, you may pay your Medicare premiums by mail using the paper bill you receive in the mail along with a check, money order or credit or debit card number.
Spouses And Social Security Retirement Benefits
Your spouse can also claim up to 50 percent of your benefit amount if they dont have enough work credits, or if youre the higher earner. This doesnt take away from your benefit amount. For example, say you have a retirement benefit amount of $1,500 and your spouse has never worked. You can receive your monthly $1,500 and your spouse can receive up to $750. This means your household will get $2,250 each month.
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What If I Dont Want Part B Coverage
It is possible to defer your Part B coverage to a later date. This is quite rare to do, because you may end up paying more for late enrollment. If you dont want your Part B Medicare plan, youll have to get in contact with Medicare directly. It also makes sense to double-check with Social Security, so you can be sure that the Part B premium wont be deducted from your check.
Its also possible to be covered by your employer group plan at the same time as Part B if youre still working when you become eligible. However, this can end up not being worth it for some people, as your group health insurance will have to provide most of your coverage in most instances. This may be worth it for some to avoid the late enrollment penalty, but theres no way to tell without looking at your individual scenario.
Original Medicare Or Medicare Advantage
Medicare beneficiaries can decide between Original Medicare and Medicare Advantage for health insurance coverage.
Original Medicare consists of Part A hospital insurance and Part B medical insurance.
Typically, Medicare will deduct the premium for Part B from Social Security income. Other methods are also valid, but this leaves responsibility to the beneficiary to keep track of payments.
As the alternative, Part C Medicare Advantage plans must cover services equal to Original Medicare, or better.
A and B are both required to get Part C.
Medicare Advantage is a set of private plans from insurance companies. Medicare pays these companies an agreed fee for each beneficiary who joins. In turn, the private company takes over as the Medicare insurance carrier. This means the company sets health plans up with networks of Medicare-assigned doctors and facilities, as well as handling bills, claims, appeals.
In the same way as Original Medicare, Medicare Advantage can deduct the plan premium from Social Security income, or other billing methods can be chosen.
Medicare Advantage plans frequently offer benefits above and beyond what Original Medicare includes. Benefits can cover dental, vision, hearing, and even transportation for medical visits.
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Social Security Benefits And Medicare Part B Premiums From 2000 To 2018
Social Security benefits and Medicare Part B premium amounts are adjusted annually using different methods, which typically has resulted in a higher percentage increase in Medicare Part B premiums than in Social Security benefit increases. Specifically, Social Security benefits are adjusted for inflation annually by COLAs. The Social Security COLA is a measure of general inflation based on the CPI-W. By contrast, Medicare Part B premiums are adjusted annually to account for changes in Medicare program expenditures for covered medical services. Medicare Part B premiums represent a percentage of the actual costs of the program, and thus premiums rise as health care costs rise. The annual percentage increase in Social Security benefits and Medicare Part B premiums for years 2000 to 2018 is shown in Figure 1.
Since 2000, Social Security COLAs have ranged from 0.0% to 5.8% with an average Social Security COLA of 2.2%. There was no Social Security COLA increase in 2010, 2011, or 2016 and only a relatively small Social Security COLA in 2017.
Since 2000, the Social Security annual COLA has resulted in a cumulative benefit increase of approximately 50%, considerably less than the Medicare Part B premium growth of close to 195%.58
How Much Is Deducted From Social Security For Medicare Part A
For most people, Medicare Part A hospital insurance is premium-free. This doesnt mean it is actually free, because you still have to pay your deductible, co-insurance, and other out-of-pocket costs. However, you will have no monthly premium fees if you qualify.
You are eligible to receive premium-free Part A coverage at age 65 if:
- You or your spouse paid Medicare taxes for ten years or longer
- You already receive Social Security retirement benefits or Railroad Retirement Board benefits
- You are eligible for these benefits but havent yet received them
- You or your spouse had Medicare-covered employment through the government
You can also get premium-free Part A if you are under 65. This will happen if you have received Social Security or Railroad Retirement Board disability benefits for over 24 months, or if you have end-stage renal disease and meet certain other qualifications.
Part A is paid for through income taxes that you pay for while you work. This is why the amount of years that you paid this tax is used to determine how much you pay in premiums.
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Pay Your Premiums Directly From Your Social Security Benefits
Seniors who are enrolled in Medicare and Social Security simultaneously have their Part B premiums deducted directly from their Social Security benefits. Doing so isnt just a convenience, though in some cases, it can save you from rising premium costs thanks to Medicares hold-harmless provision.
This provision protects you from losing out on Social Security income when Part B premium increases surpass the cost-of-living adjustments that are applied to benefits each year. This means that if Part B increases by $30 a month in a given year, but your cost-of-living adjustment only raises your monthly benefits by $24, you save yourself the extra $6 by not having to pay it.
Why Do Some People Pay Less For Their Medicare Part B Premium
Some people who get Social Security benefits will still pay less than $170.10 in 2022. This affects around 2 million Medicare beneficiaries. Legislation prevents the cost of Medicare Part B from increasing more than the Social Security annual cost-of-living increase.
In recent years, we have had low COLA increases, so these individuals have only been paying less than the standard base Part B premium. Though the Social Security COLA increases for the last couple of years have been somewhat larger, there is still a small group of beneficiaries being protected by the hold harmless provision.
Though this all very confusing, remember that you do not have to calculate this yourself. Again, Social Security will determine your Part B premium for 2022 and notify you by mail if you exceed the Medicare income limits and must pay a higher adjusted amount.
Most Medicare beneficiaries qualify for premium-free Part A. However, the Medicare Part B premium is deducted from your Social Security check if you are receiving Social Security benefits. In 2022, the Part B premium is $170.10.
You can also request your Part D premium be deducted from your Social Security check.
Most People Pay the Standard Part B Premium
Youll pay the standard Medicare Part B premium amount if:
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Can Medicare Part B Premiums Be Deducted From Social Security
Yes. In fact, Medicare can automatically deduct your Part B premium directly from your Social Security check if you are both enrolled in Part B and collecting Social Security benefits.
Most Part B beneficiaries have their premiums deducted directly from their Social Security benefits. Part B premiums may also be deducted directly from Railroad Retirement Board benefits.
The benefit of having your Part B premium deducted from your Social Security check is more than just convenience. Those who do are protected by the hold harmless provision.
The hold harmless provision mandates that Social Security benefits may not be reduced because of increases to the Part B premium that are greater than the cost-of-living adjustment that is made to Social Security benefits each year.
Those who do not have their Part B premium deducted from Social Security are not protected by the provision and may have experience a Part B premium increase that is greater than the COLA amount, thereby reducing the amount of their Social Security benefit.
What Is Medicare Part B
Medicare Part B offers medical insurance to cover medically-necessary outpatient health care. This health coverage is used for most of your non-urgent care, such as ordinary doctors visits. Part B also covers other things, such as durable medical equipment and home health care in some instances. Notably, Part B doesnt cover prescription drug coverage, dental, or vision. Prescription drug coverage is offered by Part D plans, but vision and dental are only covered by some Part C plans, and are less common.
Part B is one of the core insurance plans that makes up Medicare. Together with Medicare Part A, which covers your hospital insurance, its known as Original Medicare. Medicare Parts A and B of Medicare are the only parts of Medicare that are directly covered by the federal government. Part C plans, also known as Medicare Advantage Plans, and Medicare Part D prescription drug plans are offered by private insurance companies instead.
Part A and B are also the only parts of Medicare that Medigap plans cover. Medigap plans, also known as Medicare supplement plans, provide extra help and coverage for your Part B out-of-pocket expenses, like deductibles and coinsurance. Most Part B expenses will be the same for everybody since theyre mandated at the federal level.
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How To Make Premium Payments
Your Part B Medicare premiums are billed directly through Medicare, while your Part C premiums are billed through the private insurance company associated with your Medicare Advantage plan. Heres how you pay Medicare and your private insurance company.
- Premium Payments to Medicare: If you receive Social Security, Office of Personnel Management, or Railroad Retirement Board benefits, Medicare will automatically deduct your Part B premiums from your benefits check. If you dont receive these benefits, you will receive a bill called Notice of Medicare Premium Payment Due. You can then pay by mailing a check, using online banking services, or signing up for Medicares bill pay, which will automatically draft the premium from your bank account each month.
- Part C Premium Payments to Private Insurance Companies: If your insurance company charges a premium for your Medicare Part C plan, you can set your payments to come from your Social Security benefits. But this is not an automatic action. You must submit a request to Social Security, and they have to approve your request before your Part C premium payments will be deducted. If you dont get Social Security, you can mail in a check or have your premium automatically drafted from your bank account.
What You Need To Do Next
If you have your Medicare Part B premium automatically deducted from your benefits check, you dont have to do anything else. Just make sure to check youre paying the correct amount.
If thats not your situation, then youll get a bill or you can set up how you want to pay for your Medicare. If you need help with this then give us a call at 783-5901. Well be happy to help you.
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How To Apply For Medicare Part B
If you are already receiving Social Security benefits when you turn 65, you will automatically be signed up for Medicare Part A and Medicare Part B by the Social Security program. Your Part B premium will be deducted from your retirement benefit each month.
If you are not yet collecting Social Security at age 65, you can apply for Medicare coverage online at the Social Security website. You will be billed for your Medicare Part B premium quarterly. You can pay for this with a credit card, debit card or a bank transfer.
To avoid any potential missed payments, you might want to consider enrolling in Medicare Easy Pay, which will automatically deduct your premiums from a bank checking or savings accounts.
If you are still working at age 65 and continue to have coverage through your workplace plan, you may want to delay starting your Medicare Part B coverage. Joanne Giardini-Russell, whose insurance firm specializes in helping people navigate Medicare choices, notes that even if you automatically signed up at 65 because you were already receiving Social Security benefits, you could then opt out, if that made sense.
I often see people who just accept enrollment and start paying the premium, even though they dont need to just yet, says Giardini-Russell.
Before making that choice, be sure to consult a Medicare insurance pro to make sure you are in fact eligible to delay, or you could be slapped with a permanent penalty premium when you do eventually sign up for Part B.
How Much Is Deducted From Social Security For Medicare Part B
There is no premium-free version of Medicare Part B. If you are enrolled in Part B and receive Social Security benefits, then your Medicare Part B premiums are deducted automatically. If you are enrolled in Part B but do not receive Social Security benefits, you have to pay your monthly premium online or by check.
The standard monthly premium for Part B is $170.10 in 2022. However, there may be an additional amount you pay each month depending on your income.
This additional fee is called the Income-Related Monthly Adjustment Amount . The amount varies depending on the income that you reported to the IRS on your most recent tax return. In 2022, the highest your monthly premium will be is $578.30. Fewer than 5% of Medicare beneficiaries owe IRMAA.
The table below shows the additional amount you’d owe for IRMAA at each income level.
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