The Ultimate Guide to Medicare Plans
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Medicare is a health insurance program administered by the United States federal government since 1966, as part of the Social Security program. In 2015, Medicare provided health insurance to over 55 million individuals—more than 49 million people aged 65 and older and nearly 6 million younger people with disabilities. Medicare is financed by a combination of payroll taxes and premiums, plus income taxes on Social Security benefits and certain other sources. It guarantees health insurance coverage for Americans aged 65 and older, younger people with disabilities, and end-stage renal disease patients. It also provides no-charge coverage for many Americans with end-stage renal disease and their spouses
If you’re a senior and hoping to learn more about Medicare, you’re in the right place. In this guide, we’ll cover the basics of Medicare and tell you everything you need to know about how it works. Let’s get started!
How Medicare Works
The original program, known as Part A, provides hospital insurance. Part B provides supplementary medical insurance that covers physician’s services, outpatient care, medical equipment, and other hospital expenses. Part C of Medicare covers medically necessary services, including doctor’s visits, prescription drugs, and medical equipment. Part C also helps cover some services provided by home health care providers. Part D covers mostly self-administered prescription drugs.
What Are the Costs?
Medicare costs are calculated by three different factors: the plan you choose, where you live, and your income. To determine your costs, Medicare looks at your modified adjusted gross income, or MAGI, which is the sum of your adjusted gross income, tax-exempt interest, and the amount of any tax-exempt Social Security benefits you received.
As of 2021, the Part A premium is $259 per month for those who are otherwise not eligible for premium-free hospital insurance and have between 30–39 quarters of Medicare-covered employment. For people with less than 30 quarters of Medicare withholdings, it is $471 per month.
If you are enrolling in 2021, you will have to pay the standard Medicare Part B premium of $148.50 per month. That is unless your modified adjusted gross income amounts to more than $88,000 for single filers or $176,000 for joint filers. Remember that Medicare Part B and D premiums are means-tested. This means that if your income exceeds this, you will have to gradually pay more corresponding to your income level.
Medicare Part C
The premiums for Medicare Advantage Plans differ. Use Medicare’s online plan finder tool, search your location and view the estimated premiums and benefits offered.
Medicare Supplement Policies
If you opt for Original Medicare, it is likely that you will want a Medicare Supplement policy or a “Medigap” policy. The premiums for these will vary depending on your chosen plan.