While there are $0 Medicare Advantage plans, Medicare is not “free” for anyone, and how your premium is computed is not a mystery.
The ABC(D)s of Medicare
Medicare consists of 3 different parts that cover different types of care:
- Part A — provides hospital insurance
- Part B — covers costs for doctors’ services, outpatient care and medical equipment
- Part D — covers prescription drug costs
Medicare Advantage plans, on the other hand, are an all-in-one alternative to Original Medicare — they include Part A, Part B and, usually, Part D. Some Medicare Advantage plans also provide extra benefits, such as vision, hearing or dental care, that aren’t covered by Original Medicare.
Medicare Advantage is also known as Part C. Some Medicare Advantage plans charge no additional premium — you only have to pay your Part B premium.
Calculating your Part B premium
Medicare offers 4 different income-based programs that can help pay the Part B (outpatient care), copays and coinsurance. To arrive at the Part B premiums:
- Medicare uses the modified adjusted gross income as reported on your IRS tax return 2 years prior to determine your premium.
- This premium is calculated annually and Medicare sends a letter every year letting you know what your premium will be the following year.
Want to know more about Medicare? Sharp offers free, virtual classes. Register for “Understanding How Medicare Works” by calling 1-800-82-SHARP or signing up online.