Medicare premiums can be assessed in advance depending on your work history and financial situation. While most people who have paid into the Medicare system for 10 years or 40 quarters will get Medicare Part A with a no-cost premium, Part B is generally not free. For more detailed information on that, you can read my post about Medicare Premiums and income.
First things first: if you are eligible for both Medicare Part A and Part B, it is crucial to continue paying your premiums once you go on Medicare. Sometimes people mistakenly believe that if they sign up for a Medicare Advantage plan with premiums then they no longer need to pay their Part B premiums. That is false and if you lapse on your Part B premium payments it could result in the loss of your eligibility for a Medicare Advantage plan. If you sign up for a Medicare supplement, also known as a Medigap Plan, then you also need to keep paying your Part B premiums because that supplement pays AFTER Original Medicare. For example, if Medicare doesn’t pay the claim, a supplement will not pay it either. In addition, there are currently very specific enrollment periods throughout the year for Medicare Part B, so if your coverage lapses mid-year you could be without coverage for six months or up to a year depending on when it happens.
As for the timing of your Medicare Premium payments, it is variable. If you are assessed a Part A premium because either your or your spouse did not earn enough work credits, then you will be assessed the Part A premium monthly. The premium for Part A can range from $274 to $499 per month in 2022, depending on how many work credits you have on file. In most cases, if you choose to buy Part A you must also buy Part B.
If you are already receiving your Social Security retirement benefits, then your Medicare premiums will be automatically deducted and the remaining balance will become your monthly benefit. However, if you have chosen to delay receiving your Social Security retirement benefits you will receive a paper bill in the mail. For Medicare Part A, this will happen monthly. However, with Medicare Part B I have clients who receive a bill each quarter or even up to 4 months in advance.
Here’s an example of what that might look like: if you are eligible for Medicare Part A and B to start September 1, then your bill may be for September 1 through December 1 to finish out the year. However, if you are eligible for Medicare Parts A and B on January 1, they may bill you for only three months. Keep in mind this bill would include your monthly premium payment of $170.10 for three or four months, so it could be upwards of $680 if you pay it all at once. Fortunately, most people who delay drawing their Social Security retirement benefits have other savings or investments they will be using until they take their benefits.
If you cannot pay three or four months of your premiums in advance Medicare offers a program called EasyPay and it’s a free service through which Medicare will deduct your Medicare premiums straight from your checking account on or around the 20th of each month. You can visit the Medicare website to learn more and sign up for EasyPay.
Alternatively, if you choose to make your payments by mailing in a check to Medicare directly or by paying online through your Medicare account, payments are due on the 25th of each month. It is strongly recommended that you submit the payment by the 20th of each month for it to post to your account on time. If your payment is late, you will get a past due notice, and you may be at risk of losing your Medicare coverage. Premiums are generally due the same month that you receive the bill. For example, if you receive your bill for Medicare Part B the first week of September your payment is due September 25th to be considered on time.
So that you can manage your funds efficiently and budget for them, it pays to know what your costs could be. A licensed insurance broker can help you to determine your out-of-pocket expenses in advance, as well as help you choose the best plans for your healthcare needs and budget. At Translating Insurance, we are licensed in multiple states and offer free consultations. Call us at 503 324 4511 to schedule an appointment.