Medicare

From Bob Jennings at TaxSpeaker. Check out more at taxspeaker.com

Medicare is our country's national health insurance program primarily for people aged sixty-five or older who have obtained forty quarters of coverage through their own or their spouse’s (or ex-spouse’s) work. Certain people younger than age sixty-five can qualify for Medicare, too, including those who qualify for Social Security disability (after a two-year waiting period), and those who have permanent kidney failure or amyotrophic lateral sclerosis (Lou Gehrig's disease). The program helps with the cost of health care, but it does not cover all medical expenses or the cost of most long-term care. See the Web site: www.Medicare.gov About 70 million people are on Medicare (15% of population) of which about ½ are covered under the Medicare Advantage system according to the Kaiser Family Foundation (www.kff.org).

There are 4 parts to Medicare.

Part A is Hospitalization insurance (Generally no premium).

Part B is conventional Medical insurance (Base premium determined by Medicare plus up to 2 adjustments: the high income IRMAA adjustment and the late signup penalty).

Part C, now called Medicare Advantage, is a comprehensive Part A, B and some additional coverages paid and administered through private companies (Base premium determined by provider). Supplement policy normally not allowed when on Advantage except for special policy if chronically ill. 

Part D is Prescription Drug coverage (Base premium determined by Medicare plus up to 2 adjustments).

Medicare Supplement or Medigap Coverage is a policy purchased directly from 3rd party providers. Coverage is the same by provider but varies according to policy type (below).

IRMAA Adjustment to B/D Premiums This is an increase in B and D premiums because of high income reported two years previously. For example, Social Security would use tax returns from 2024 to determine your IRMAA in 2026. It is determined independently each year and is applied separately to the base Medicare Part B and Part D premiums. It can be appealed as discussed later. Yes, the adjustment may go down (or up) the next year.

Late Enrollment Penalty Adjustment to B/D Premiums If you didn't get Part B when you're first eligible, your monthly premium may go up 10% for each 12-month period you could've had Part B but didn't sign up (Exceptions exist as discussed later). In most cases, you'll have to pay this penalty each time you pay your premiums, for as long as you have Part B. And the penalty increases the longer you go without Part B coverage.