Medicare Part A (Hospital Insurance)
Most people do not pay a monthly premium for Medicare Part A coverage, referred to as premium-free Part A. You are eligible for premium-free Part A at age 65 if (a) you receive retirement benefits from Social Security or the Railroad Retirement Board; (b) you are eligible to receive Social Security or Railroad retirement benefits but you have not filed for them yet; or (c) you or your spouse had Medicare covered government employment.
If you do not qualify for premium-free Part A, you can buy coverage. The monthly premium will vary depending on how long you or your spouse worked and paid Medicare taxes. The premium will be either $259.00 (if you paid Medicare taxes for 30-39 quarters) or $471.00 (if you paid Medicare taxes for less than 30 quarters). If you choose not to buy Part A coverage, you can still buy Part B.
Part A coverage has specific inpatient hospital deductible and coinsurance out of pocket requirements that should be planned for. A “benefit period” begins the day you are admitted as an inpatient in a hospital or skilled nursing facility and ends after you have not received any such care for 60 days in a row. Inpatient hospitalization is subject to a deductible of $1,484 per benefit period. The inpatient coinsurance is $0.00 per day for the first sixty 60 inpatient hospital days per benefit period. The coinsurance for days 61 through 90 is $371.00 per day. Each inpatient day after 90 days is referred to as a “lifetime reserve day”. You are entitled to up to 60 lifetime reserve days over your lifetime. The coinsurance for each lifetime reserve day is $742.00 per day. You are responsible for all costs after exhausting the 60 lifetime reserve days.
Skilled nursing services under Part A has a different coinsurance structure. The coinsurance for the first 20 days per benefit period is $0.00. Thereafter, the coinsurance is $185.50 per day for days 21 through 100 in each benefit period. You are responsible for all costs after the first 100 days per benefit period.
Medicare Part B (Medical Insurance)
While most people who receive Social Security benefits will pay the standard monthly Part B premium of $148.50 in 2021, those with higher incomes may pay more. If your modified adjusted gross income (MAGI) as reported on your federal income tax return from two years ago (2019) is above a certain amount, you will pay the standard premium amount and an Income Related Monthly Adjustment Amount (IRMAA), which is an extra charge added to your premium, as shown in the following table.
| Individual | Married Filing Joint | Married Filing Separately | 2021 Monthly Premium (including any IRMAA) |
| $88,000 or less | $176,000 or less | $88,000 or less | $148.50 |
| $88,000 up to $111,000 | Above $176,000 up to $222,000 | N/A | $207.90 |
| $111,000 to $138,000 | $222,000 to $276,000 | N/A | $297.00 |
| $138,000 to $165,000 | $276,000 to $330,000 | N/A | $386.10 |
| $165,000 and less than $500,000 | Above $330,000 and less than $750,000 | Above $88,000 and less than $412,000 | $475.20 |
| $500,000 and above | $750,000 and above | $412,000 and above | $504.90 |
Medicare Part B is subject to an annual deductible of $203.00 in 2021. After you meet your deductible for the year, you typically pay 20% of the Medicare approved amount for most services performed by a doctor (including while an inpatient), outpatient therapy, and certain medical equipment ordered by your doctor for use in your home.
EBS is not an accounting or law firm and the foregoing is a general summary of the rules and limitations that may apply to you. It is not intended to apply to all persons and situations and you should contact your tax or legal professional for advice. Please contact a member of the Wealth Management Group to discuss your specific situation.
Data provided has been obtained by third party sources. This data, while believed to be reliable, has not been independently verified by EBS.