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In this video, we are talking about the Medicare Parts A, B and D Coverage Premiums and Penalty Costs.

Part A is your hospital inpatient coverage. You usually don’t have to pay a monthly premium for the Part A Coverage. This happens if you or your spouse paid Medicare taxes while either of you was working. This is called the Premium-Free Part A.

If you didn’t pay the Medicare taxes and you are not eligible for the premium-free part you can buy the Part A. There are two ways to qualify to buy the Part A:

First, you are qualified to buy it if you are age 65 or older and meet the citizenship and residency requirements.

Second, if you are under the age of 65, and are disabled, and you lost your premium-free Part A coverage because you returned to work you are qualified. Point of fact, if you are disabled and under age 65 you can continue to get the premium free part A for up to 8 ½ years after you return to work.
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In 2017, if you paid Medicare taxes for less than 30 quarters, the Part A premium is $413 a month. If you paid Medicare taxes for 30-39 quarters, the standard Part A premium is $227 per month. Now if you choose to buy Part A, you must also enroll in Part B and pay the premium for both.

Now, if you are not eligible for the premium free part A and you don’t buy it when you first become eligible, there will be a 10% penalty when you decide to enroll. You must pay the higher premium for twice the number of years you should have had Part A, but did not sign up.
For example: If you were eligible for part A two years ago, and didn’t sign up you must pay the higher premium for a total of four years
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OK, let’s next discuss the cost of Part B coverage. Part B is your coverage outside of the hospital for such things as doctors, x-rays, lab work, etc. The part B coverage has a premium each month. As of this video, the standard Part B premium amount is $134 per month – or higher depending on your income.

However, most people who get Social Security benefits will pay less than this amount, which is $109 on average.

Now, what’s the Part B late enrollment penalty? If you do not sign up for Part B coverage when you are first eligible, you must pay a late enrollment penalty for as long as you have a Part B. Your monthly premium will go up 10% for each full 12-month period you should have had Part B but didn’t sign up for it. For example:

Let’s say you were supposed to sign up for Part B after your Initial Enrollment Period ended on January 30, 2014. You waited to sign up for Part B until July, 2016 to sign up. Your part B penalty is 20%. You waited for 30 months before you signed up. This only included 2 – 12 month periods thus the 20% penalty. You’ll have to pay this penalty for if you have Part B.

There is also a penalty for now signing up for the Part D Prescription Drug plan. It is very much like the Part B penalty except the penalty is 1% per month you didn’t sign up for the drug plan. Just like the Part B penalty you must pay the penalty for as long as you have the Part D coverage.

Is this confusing? The short answer is yes! Making mistakes with Medicare can be expensive. Give us a call and we can help guide you through the Medicare process and avoid the penalties.