“Medicare Premiums Deductions from Social Security Checks” – What to Expect?

Many people are aware that Medicare premiums will be deducted from their social security checks, but they may not know exactly how much. So what does this deduction look like?

When you reach retirement age and start collecting Social Security benefits, a portion of your monthly check will be deducted to pay for Medicare premiums. If you have other health insurance coverage like through your employer’s plan you can defer Part B and save some money. The amount deducted depends on the person’s income and whether they are single or married. In this blog post, we’ll discuss what to expect and how to calculate your Medicare deductions.

Medicare premiums are deducted from social security checks. This is a fact of life for many older adults who receive social security benefits and Medicare benefits. While you may not like getting a little less in your monthly check, most people are glad to have one less bill to pay each month. This is especially important if you were ever hospitalized for a long period of time. You wouldn’t want to lose your coverage just because you didn’t pay your premium.

What are the monthly costs?

A premium in the context of Medicare is what you have to pay each month to receive coverage. You may also have deductibles, co-pays, and co-insurance, but you will pay those costs directly to your medical providers and only when you actually seek medical treatment.

Generally, your Medicare Parts A and B premiums are automatically deducted from your social security checks. Additionally, you can choose to have your Part C (Medicare Advantage plan) or Part D (prescription drug plan) premiums deducted from your Social Security check. On the other hand, Medicare Supplements, dental, and other ancillary premiums cannot be paid directly from your Social Security check. Make sure to check out my article explaining the difference between Medicare Advantage and Medicare Supplements.

How Much Does Medicare Cost

Most people who have worked and paid taxes for more than 10 years receive Medicare Part A at no cost. In 2021 the standard Part B premium is $148.50 per month. Part B premiums may be higher for people with incomes above a certain threshold and lower for those with incomes below a certain level. The Medicare Savings Program can help low-income beneficiaries pay their monthly Medicare Parts A and/or B costs.

Medicare looks at your modified adjusted gross income (MAGI) as reported on your tax return from 2 years ago to determine your monthly premium. If your MAGI is above a certain amount, you’ll pay the standard premium amount plus an Income Related Monthly Adjustment Amount (IRMAA). IRMAA is an extra charge added to your premium.

In 2021, if you file an individual return and earned less than $88,000 per year, or married filing jointly and made less than $176,000 per year you will pay only the standard Part B premium of $148.50 per month (per person). If you earned more than those amounts you may have to pay an additional amount. You can see the full chart of IRMAA charges here: https://www.medicare.gov/your-medicare-costs/part-b-costs.

Individuals in Indiana making less than $2006 per month, and couples making less than $2706 may qualify to have the state pay their Medicare Parts A&B premiums for them. Additionally, anyone who qualifies for these benefits will automatically qualify for the federal Extra Help program which can pay some or all of an individual’s Part D premiums. Extra Help will also pay some or all of the Part D portion of a Medicare Advantage plan premium.

Medicare Advantage and Prescription Drug Plan costs

Medicare Advantage and Prescription Drug Plans are two options you have to receive your Medicare benefits. These plans are provided by private insurance companies that have a contract with the federal government.

According to the Kaiser Family Foundation, the average Medicare Advantage plan has a monthly premium of $21 in addition to the Part B premium. 60% of all Medicare Advantage members choose plans with no additional premium required. The national average premium for a stand-alone Prescription Drug plan is $38 per month. Keep in mind, most Medicare Advantage plans include prescription drug coverage, so you wouldn’t need to enroll in both types of plans.

if the plan you choose has a monthly premium, you will have the option to have those premiums deducted from your Social Security check when you sign up for that plan. Generally, you can also choose to get a monthly bill or have the amount drafted from your bank account.

When Can’t Medicare premiums be deducted from your Social Security Check?

There are some times when your Medicare premiums cannot be deducted from your Social Security check. Obviously, if you haven’t filed for Social Security benefits they cannot deduct your premiums. Sometimes, if your Social Security benefits are too low there may not be enough money to cover the premiums.

I recently had a client who was having their Medicare Advantage premiums deducted from their Social Security check. They ended up making too much money outside of Social Security which caused them to owe money back. Because of that, there wasn’t enough money in their check to cover their premiums. When this happens the beneficiary will receive a notice and will have to choose another method to make their payments.

How do I pay my Medicare premium if I’m not receiving Social Security?

If you haven’t filed for Social Security retirement benefits yet, you will need to make arrangements to make sure your Medicare payments are made each month.

You have four options on how to pay your monthly premiums.

  1. Sign up for Medicare Easy Pay. Once you sign up for Medicare Easy Pay, Medicare will deduct your premium payment directly from your bank account, usually about the 20th of each month.
  2. Through your secure Medicare account. You can make one-time payments by credit or debit card by logging into your Medicare.gov account.
  3. Through your bank. Many banks offer online bill payments services that will pay electronically from your bank account.
  4. Mail a Check. If you choose this method, be sure to sign your coupon and mail your payment to the address on your Medicare bill.

If you’re 65 or older and receiving Social Security benefits, your Medicare Part B premiums will be automatically deducted from your Social Security payments. Most people do not have to pay a premium for Part A (hospital insurance). Members can choose to have their Part C and D premiums deducted from their benefits as well. Click below now to schedule an appointment with one of our experts who will walk you through all the details so that you can know you’re getting the most out of your Medicare coverage.