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June 2, 2021
Is Medicare Coverage Free at Age 65?

Is Medicare Coverage Free at Age 65?

Alright, folks, we have some good news and some bad news. We all love a good freebie, but unfortunately, Medicare is not one.

The good news is that Medicare coverage is significantly cheaper than any other insurance coverage you may be used to! Say goodbye to sky-high premiums and outrageous deductibles!

The costs (or lack thereof) of different Medicare plans are one of the most common inquiries that we get at Medicare Allies. To save you the trouble of hardcore research, we are here to give you the long-story-short on all things Medicare!

Are Medicare Parts A and B free?  

Since you have likely been paying taxes into a Medicare fund throughout your time in the workforce, you might assume that you're in the clear regarding Medicare costs.

However, that money was going toward Medicare Part A, which is insurance for hospital visits and stays. This part of Medicare is generally covered since the funds are taken out of payroll tax during your working years.  

If you haven’t worked and contributed to the Medicare Part A fund through your taxes, you can also purchase Part A, with a premium of either $259 or $471 each month in 2021, depending on whether or not your spouse worked and paid Medicare taxes.  

Alternatively, most people have to pay a monthly premium for Medicare Part B, which is insurance for medical services. Part B has a monthly premium that is automatically drawn from your benefits if you receive at least one of the following:  

  • Social Security  
  • Railroad Retirement Board  
  • Office of Personnel Management  

If you aren’t receiving any of these benefits, you will receive a bill every month — the cost of which will be determined on a sliding scale according to your income. The standard amount for 2021 is $148.50, but it will change depending on your and your spouse’s income.  

Which part of Medicare is free to qualified seniors?

Long story short, Part A is typically included at no additional cost while every other part of Medicare will normally have a monthly cost associated with it.  While it's not free, Part A generally has $0 premium.

If medical costs are really giving you a hard time, a Medicare Supplement Plan is a great investment. A Medicare Supplement Plan (you guessed it!) supplements your traditional Medicare coverage.  

Medicare Supplements, also referred to as Medigap, cover the costs that traditional Medicare doesn’t. This includes:  

  • Copayments
  • Coinsurance
  • Deductibles  

However, it’s important to remember that Medigap will only fill in the gaps for services that Medicare already covers — care like dental, vision or nursing homes will not be affected by a Medicare Supplement Plan.

If Medigap doesn’t sound as appealing, but you would like to get the coverage from traditional Medicare AND certain vision, dental and hearing programs, a Medicare Advantage Plan may be for you.  

Medicare Advantage, also known as Medicare Part C, is a bundled plan that includes Part A, Part B and usually Part D. The difference between this and traditional Medicare is the extra benefits and perks, but there are low or $0 premiums. It’s similar to a “pay-as-you-go” plan, where you pay when you need care, and you don’t otherwise.  

This is a great option if you are healthy and don’t need a lot of care, but it can be risky if you end up needing surprise medical services. Furthermore, Medicare Advantage has networks of coverage, since it is provided by private companies, so your physical location is key to determining whether or not Medicare Advantage is right for you.  

You can only have Medigap OR Medicare Advantage on top of traditional Medicare, so be sure to speak to an agent to see which one is right for you!

Read More: When Can I Enroll in a Medicare Supplement Plan?  

Do seniors on Social Security have to pay for Medicare?  

Social Security and Medicare are both federal programs, so it’s easy to see why they would intersect somehow. Because individuals have to pay their dues for Medicare, most plans are income dependent.

While Medicare Part A is normally $0 premium, Medicare Parts B and D require monthly payments that are based on an individual’s household income.

To determine the amount that an individual owes for Medicare, Social Security analyzes their income and benefits from the past two years, on an individual basis.

How much does Medicare cost at age 65?

The bottom line is — it depends.  

As much as we wish we had a hard and fast answer to this question, the cost of Medicare will likely vary from person to person, based on their income, needs, and plan choices.

Medicare Part A usually does not have a premium, but you do still have to pay an inpatient deductible at the hospital and coinsurance. The deductible for each benefit period is $1,484 with each period of coinsurance correlating with a rise in cost. For example:  

  • Days 1–60: $0 coinsurance
  • Days 61–90: $371 coinsurance per day
  • Days 91 and beyond: $742 coinsurance per each “lifetime reserve day,” which everyone has 60 of over their lifetime. After your lifetime reserve days run out, you will be responsible for all costs.  

Medicare Part B has a premium that is income-dependent. The deductible is $203 in 2021. Once you reach your deductible, you will pay 20% of the Medicare-approved amount for most services.

If you have a Medicare Supplement plan, you likely won't pay any of the costs associated with having Part A, and you will most likely only be responsible for the $203 Part B deductible (not the 20% coinsurance). The exact benefits will depend on which Medicare Supplement plan you choose.

Who qualifies for Medicare Part B?  

Everyone who is a US citizen or who has been a permanent resident of the United States for over five years becomes eligible for Medicare Part B when they turn 65.  

Is Medicare Part B coverage and pricing based on income?  

Medicare Part B PRICING is based on income!

The average paid monthly premium in 2021 is $148.50, which is about 25% of the cost of the actual premium — the government foots the rest of that bill. However, because Part B premiums are based on income, your income on your tax return will determine whether or not your premium is higher based on a higher-than-average income.  

Medicare Part B COVERAGE is not based on income!

Because Medicare Part B is federally regulated, Part B is Part B — no matter who you are or how much money you make.

Conclusion

Though Medicare is not quite free, it is significantly more affordable than pre-65 insurance options, so don’t be afraid to switch over!

Additionally, if you feel that the costs are still daunting, talk to a trusted, licensed agent today to check out a Medicare Supplement or Medicare Advantage plan option.  

Get a free quote today.

Luke Hockaday
By
Luke Hockaday
Luke Hockaday is a Customer Success Rep here at Medicare Allies. Luke has been helping Medicare-eligible clients with their insurance and retirement-planning needs since 2011. Luke is passionate about 3 things, and 3 things only: senior insurance, football, and food!

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