Paying for Medicare coverage works a little differently then how we paid our health insurance premiums during our working years. While most of us have paid one large premium for all of our healthcare coverage (Doctor, hospitalization, and drug coverage) during our working years, Medicare coverage is paid in several smaller amounts for individual parts of coverage.
Medicare Cost for Part A
There is usually no cost associated with Medicare Part A . As long as you have worked and paid taxes for at least 10 years (40 quarters) you will be entitled to Part A at no cost. You may also be eligible for Part A for free though your spouse who has met the previously mentioned requirements.
If you have to buy Part A, you will pay up to $413/month for it in 2017. People with less than 40 quarters work experience but more than 30 quarters can get a pro-rated premium.
Cost for Medicare Part B & D is Based on Income
Premiums for Medicare Part B and Part D are based upon your modified adjusted gross income. Medicare will actually use your tax return to determine what you will pay for Part B and D. Items that contribute to your modified adjusted gross income (MAGI) include wages, interest, required minimum dividends from investments, capital gains, Social Security benefits, and tax-deferred pensions. *Note: Medicare will use your tax return from two years prior to the current year, as an example they will use your 2015 tax return to set your 2017 Premiums.
Social Security will send you a letter once a year around December or early January to tell you what your costs are for the upcoming year. Most Americans will pay the base premium of $134 for Part B. If you have a higher income than most people then you may pay more for your Part B Coverage (see Chart Below) . If you are receiving your social security benefits then your Part B premium will be deducted from your social security check otherwise you will be billed quarterly for Part B. For those not receiving social security an alternate payment method of Monthly Bank draft is available and can be set up once your receive your first bill from Medicare.