Demystifying Medicare

Demystifying Medicare

Medicare is the national health insurance initiative that provides coverage for individuals aged 65 and older, individuals under 65 with specific disabilities, or individuals of any age with a documented medical condition like end-stage renal disease or amyotrophic lateral sclerosis. While Medicare assists with healthcare expenses, it does not encompass all medical costs or the majority of long-term care expenses. The funding for Medicare is derived from a fraction of the payroll taxes contributed by employees and their employers. Additionally, it is supported in part by monthly premiums subtracted from Social Security disbursements. 

4 Parts of Medicare

Medicare consists of four parts: A, B, C, and D, which each cover specific services. 

  • Part A – Hospital Insurance: Hospital stays, skilled nursing facility care, home health care services, and hospice care 
  • Part B – Medical Insurance: Medical and other services, clinical laboratory services, home health care services, outpatient hospital services, and preventive services 
  • Part C – Medicare Advantage Plans: Medicare Advantage Plans, such as HMOs or PPOs, offer an alternative route to receive your Medicare benefits from private companies sanctioned by and in agreement with Medicare. These plans encompass both Part A and B coverage, and sometimes other coverage such as prescription drugs, or Part D. 
  • Part D – Medicare Prescription Drug Coverage: Medicare provides prescription drug coverage to all individuals enrolled in Medicare. This coverage is extended through private companies that are authorized by and under contract with Medicare. 

Medicare Part B Premiums

If you qualify for Medicare Part A, you have the option to sign up for Medicare Part B by making a monthly premium payment. If your earnings surpass specific thresholds, your Part B premiums will likewise go up. Retirees may experience a significant rise in income due to capital gains generated from asset sales or the sale of their primary residence. The income used to calculate the 2023 Medicare Part B premium is based on your 2021 tax return. If your income has decreased since 2021, you have the option to reach out to Social Security and request a reevaluation. 

2023 Medicare Part B Monthly Premiums

Modified AGI for Single, HOH, QSS Modified AGI for MFJ Modified AGI for MFS Monthly Premium for Each Person 
Up to $97,000 Up to $194,000 Up to $97,000 $164.90 
$97,001 to $123,000 $194,001 to $246,000  $230.80 
$123,001 to $153,000 $246,001 to $306,000  $329.70 
$153,001 to $183,000 $306,001 to $366,000  $428.60 
$183,001 to $499,999 $366,001 to $749,999 $97,001 to $402,999 $527.50 
Over $499,999 Over $749,999 Over $402,999 $560.50 

Note: Modified AGI is AGI plus tax-exempt interest 

There is also an income-related increase in Part D premiums, similar to Part B premiums. 

If you require any assistance or clarification regarding your Medicare benefits, don’t hesitate to reach out to our knowledgeable accountants for expert guidance. 

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2023-10-25T13:39:22+00:00September 21st, 2023|Individual|

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