Many of 62.7 million seniors enrolled in Medicare utilize one or more part, each with a specific prices and premiums. Medicare offers a lot of advantages to healthcare, and can be especially useful to have. Most seniors say they know the price of their policy, but hidden fees and loopholes take us all by surprise. CNBC’s Sarah O’Brien reports on three surprising Medicare charges that cost seniors exponentially more for healthcare.
Surprising Medicare Charge #1
The first of three surprising Medicare charges is late fees. Seniors pay a penalty for just signing up late. Like with Social Security benefits, there is a brief window of time that you can apply for Medicare without receiving a penalty. Seniors apply for Medicare within a seven-month window, the year they turn sixty-five. The window starts three months before their 65th birthday month and ends three months after. The only exception to this is if your employer offers a group, company insurance plan.
Medicare Parts A and C don’t incur any extra costs, but seniors with Parts B and D are stomped with a fine. Part B’s fine is steep, potentially tacking on 10 percent of the monthly standard premium to your individual monthly premium, for as long as you continue to have Medicare. Part D, which covers drug costs, only adds one percent of the standard premium to your monthly bill. Unsuspecting seniors pay exponentially higher than someone with the same type of coverage.
Seniors’ Second Expensive Shocker
The second surprising Medicare charge has to deal with spousal income. Medicare works off IRMMAs (income-related monthly adjustment amounts), meaning that premiums adjust for how much money you make. Unfortunately, IRMMAs also factor in any income made by your spouse as well. If one person works while the other is retired, the working spouse’s income increases your tax return, an IRMMA will raise your premium.
Currently, any gross adjusted income equal to $176,000 or more will result in an IRMMA. Married seniors with different retirement statuses might be caught off guard with their higher monthly premium. By being aware, they can work together to better plan their individual retirements.
More Money, More Premiums
Speaking of IRMMAs, the third surprising Medicare charge deals with higher premiums for higher earners. An estimated seven percent of people on Medicare pay higher Part B and D premiums due to higher earnings. The monthly premium you pay depends on your tax return.
Part B premiums start at $148.50 for any individual making $88,000 or less, or any couple making $176,000 or less. Individual tax returns range from $88,000 to $500,000; joint tax returns range from $176,000 to $750,000. The highest premium is $504.90. Part D uses the same tax range, where the smallest monthly premium depends on your specific plan, and the highest premium adds $77.10 to your plan.
These IRMMAs rise sharply from tax bracket to tax bracket. If you’re unaware of how your tax bracket affects your monthly premium, you’ll be unprepared for a higher monthly cost.
Healthcare is one of the largest expenses for today’s seniors. Prices rise and income stalls, making it even more important to know exactly what you have to pay. The Council for Retirement Security wants every senior to have a financially protected retirement. Knowing what retirement will cost is half the battle, paying for it the other.