How much does Medicare cost? Do you have to pay for Medicare? Is Medicare Part B free? What will be my Medicare premiums in 2022?

These are very common questions about the costs for Medicare. The costs for Medicare Part B and Part D, as well as supplemental coverage, are something that many don’t anticipate. It can surprise you when you turn 65 and learn that Medicare is not free.

So, do you have to pay for Medicare? Yes, most people do pay Medicare premiums. Fortunately, it’s fairly easy to put together a Medicare cost estimate so that you can plan ahead.

Part A

2022 Medicare Costs at a Glance

The cost for Medicare Part A for most people is usually zero. If you’ve worked 10+years (40 quarters) in the U.S., you have already paid for Part A via payroll taxes. (99% of beneficiaries qualify for free Part A.)

If you have to buy Part A, the cost for Medicare Part A will be around $499/month. People with less than 40 quarters work experience but more than 30 quarters can get a pro-rated premium of $274/month.

To be eligible to buy Part A, you must have been a legal resident or have had a green card for at least 5 years.

Should you have a hospital stay, your Part A Deductible will be $1,556 in 2022.

Part B

Cost for Medicare Part B is Based on Household Income

Medicare Part B premiums are based upon your modified adjusted household gross income (MAGI). The Social Security office will pull your IRS tax return from two years prior. They use that tax return to determine what you’ll pay for Parts B & D. (Part D premiums are also based on income.)

The items that contribute to your modified adjusted gross income include any money earned through wages, interest, dividends from investments, and capital gains. It also includes Social Security benefits and tax-deferred pensions. Distributions from Roth IRAs and Roth 401(k)s, life insurance, reverse mortgages and health savings accounts do not count in the MAGI calculation.

If you filed jointly with a spouse, Social Security will base your premiums for each of you based on that married income. However, you will EACH pay your own Part B premium. Your premiums for Part B are always individual, not combined. Social Security simply uses your household income to determine where you fall individually in the Part B premiums chart.

Social Security will usually notify you of your next year’s premium annually in December or early January by mail.

Part D

Just like Part B, your Medicare costs for Part D varies based on income. Your Medicare Part D Premiums for 2022 also vary by plan. Each state may have 20 or more plans to choose from.

You can find plans that start around $10 – $15/month in most states. Whatever the premium is for your plan, that is known as the base premium for Part D.

You will pay the plans published base premium unless you are in a higher income bracket. People with higher incomes pay more for Part D. It’s important to factor this in if you are comparing the potential costs for Medicare Part D against other insurance, such as employer insurance.

Read More About Medicare Cost FAQs

How Much Does Medicare Cost Per Month?

The amount that you will pay for Medicare each month will vary based upon your income and the kind of supplemental coverage you choose.

An example would be the base Part B premium of $170.10/month plus a Medigap Plan G monthly premium of $125/month plus a Part D premium of $27/month – your total would be $322.10/month in premiums.

With this example you can be sure your additional out-of-pocket spending would be minimal as Plan G would pick up the majority of your out-of-pocket costs.

There are many different Medicare plan options to choose from so that you can have a monthly premium within your budget.

How Much Does Part B Cost for Most Enrollees?

Most people new to Medicare will pay $170.10 a month for Part B premiums in 2022. This is the standard premium that most people pay based on income. Social Security will deduct your Part B premium from your Social Security check monthly. If you have not enrolled in Social Security income benefits yet, they’ll bill you quarterly.

Since some people pay more based on income, use the tables below to determine your personal Medicare cost for Part B. It shows the amount that you will pay in 2022 for Part B, per the preview notice released by the Department of Health and Human Services in November.

Why Do Some People Pay Less for Part B?

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.

Is Medicare Deducted from Your Social Security Check?

Yes, once you sign up for Social Security income benefits, your Medicare premiums will be deducted from Social Security payments monthly. This is usually just Part B premiums that are deducted automatically, since most people pay nothing for Part A.

For those who are age 65 but have not started to receive Social Security until later, you will have to pay through mailed in payments or Electronic Funds Transfer (EFT) in Auto-deduction. When you start to draw Social Security you can opt into having it deducted directly from there instead.

Are Medicare Premiums Tax Deductible?

Medicare premiums are tax deductible as part of your medical expenses. If your total medical expenses for the year exceed 10% of your Adjusted Gross Income, then you can deduct them. This essentially then excludes a portion of your income from being taxed.

Always consult a tax professional for guidance before deducting Medicare premiums or any other medical expenses.

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