Medicare is a federal health insurance program devised to cater to the medical needs of the senior citizens; people aged 65 years old or older. Medicare also includes younger people with disabilities and people with end-stage renal disease (kidney failure resulting in dialysis/transplantation).
The program is supervised by the Centers for Medicare and Medicaid Services (CMS). It is funded in part by Social Security Taxes, Medicare Taxes, and Medicare Premiums and in part through the federal budget.
The program is to cover 60 million persons in 2018, out of which 51 million will be aged beneficiaries.
Medicare consists of several parts, such as original Medicare, advanced Medicare, etc. However, the most prominent are:
Medicare Part A covers inpatient hospitalization of a beneficiary. It provides skilled nursing facility and other related health services. It is financed predominantly through payroll taxes.
However, as per the Research Data Assistance Center, only 1% people pay a monthly premium for this type of Medicare.
Medicare Part B medical insurance is to cater to those not admitted, by general medically necessary needs like doctor’s office visits, lab work, and x-rays, to name a few.
Part B is financed by premiums and federal reserves.
This part is specifically for prescription drug coverage. People reliant on drug usage for health reasons can obtain this.
As of 2020, the number of people automatically enrolled in Medicare will rise to 64.1 million. The gradual increase has led to many Americans questioning medical premiums.
A Medicare Premium is the standardized monthly payment you have to pay for the health benefit that you are receiving. Premium is also termed as ‘out of pocket’ costs and is subject to annual changes.
Aged beneficiaries might be completely exempt from paying Part A premium if they or their spouse paid Medicare taxes for at least ten years (40 quarters) while being part of the workforce.
Most Medicare beneficiaries enjoy a premium free part, courtesy of their Medicare tax history. However, if your Medicare tax history doesn’t qualify, the monthly premium for 2019 is expected to be $422.
Although Medicare Part A helps cover your medical bills, you have to pay for the deductibles and co-insurances.
For 2018, the deductible amount for Medicare Part A was $1,340.
The coinsurance amount to be paid by the beneficiary differs according to the length of your hospital stay:
Skilled-nursing facility co-insurance is also partially Medicare covered and is subject to payment from the beneficiary, depending upon the stay period:
People enrolled in Medicare Part B are required to pay the CMS approved premium rate.
The amount paid may differ from person to person, depending upon the situation. Here are some general guidelines to determine Part B premium:
One of the factors that also increases part B premium is a “late enrollment penalty.” If you enroll in Part B program after you have passed the Initial Enrollment Period, for every 12 month period missed is multiplied by 10% and added to the Part B monthly premium.
There are exceptions to this rule that prevent the late enrollment penalty from applying. For example, delaying Medicare because of other health coverage options such as employer-sponsored insurance.
This is one of the most frequently asked questions.
The majority of Part A hospital insurance members do not pay for their Medicare.
However, Part B members are required to pay a monthly premium. Such premium does not vary with a beneficiary’s age, status, health or residence. However, the premium does change according to the income. Part B premium taxes increase progressively across the members’ base.
Since 2007, higher income employees pay higher premiums that cover a more significant portion of the Medicare costs. It’s worth noting that this affects less than five percent of the beneficiaries.
Certain low-income beneficiaries are also allowed Medicare cost-sharing or premium assistance programs.
Premium paid on Part A, and Part B are tax deductible. Premium payment of Part A is rare, but Part B payments will be allowed to be deducted from tax if those premiums are deducted from your Social Security check.
Medical services not covered by Medicare are also allowed tax deduction. Such services may include vision care, nursing home care, prescription eyeglasses and dental treatment.
Moreover, added insurance supplements and out-of-pocket costs are also allowed deductions. Expenses such as transport to hospital cost (even via your own vehicle) and the cost of medically necessary equipment installation in the house are also allowed to be deducted from tax.
There is one catch to all this.
A taxpayer is allowed to deduct medical expenses (premium included) incurred only if the expenses exceed 10% of adjusted gross income (AGI).
Any expense incurred within 10% of AGI will not be eligible for tax deduction. Also, deductions can’t directly offset tax liability. Deductions work by excluding a portion of your income from taxes. Such exclusions, which are your savings, are also subject to the effective tax rate.
In recent years, Medicare has gone through significant alterations. Previously non-covered people have enrolled in the Medicare program.
There are multiple choices regarding which health insurance and which program to choose. Every year, the government proposes changes to the program, which makes it hard for the public to grasp.
If you are considering applying for Medicare, find someone to talk. Consulting a professional will allow you to ease into the process and understand the program better.
Aged people who may be deaf, dumb or face speech loss, can make use of TTY users 711 to communicate with a Medicare expert.
A licensed insurance agent is crucial to develop an understanding of the process. An expert recommendation can open new pathways for your retirement. Even if you have some time before retirement, prior consultation will make you aware of your current financial standing and help you reach your retirement goal better.
For example, by comparing plans, you may figure out that working an additional year may provide you more income for your retirement plan or allow you to make investments in productive ventures for guaranteed income in the future.
The calculation and determination of premiums and insurance is a daunting task. Medicare 2019 Premiums are a systematically designed program which proves difficult to understand for the public. This is one of the core reasons we advise you to seek professional help with regards to your retirement plans.
Keep checking this space for the latest updates on Medicare 2019 Premiums.
Speak to a licensed agent today