Who Does Not Pay Medicare Premiums?

Medicare has different parts and options for coverage. Premium costs can vary based on the specific Medicare coverage you have. However, some people qualify to enroll in certain parts of Medicare without paying premiums.

Understanding Medicare premium costs and eligibility for premium-free coverage can help you evaluate your options and budget for healthcare expenses in retirement.

Medicare Part A – Hospital Insurance

Medicare Part A covers inpatient hospital, skilled nursing facility, hospice, and home health care services.

In 2023, the standard Part A premium is $506 per month for those who must pay. However, most people do not pay a premium for Part A coverage.

You can get premium-free Part A if:

• You or your spouse paid Medicare payroll taxes for at least 10 years – Medicare taxes are deducted from paychecks during your working years. People with at least 10 years of Medicare tax contributions are eligible for premium-free Part A when they turn 65.

• You receive Social Security or Railroad Retirement benefits – If you get monthly Social Security checks, you will automatically qualify for premium-free Part A starting the first day of the month you turn 65. The same applies if you have Railroad Retirement benefits.

• You qualify for Medicare early – Certain people under 65 can qualify for Medicare if they have a disability or end-stage renal disease (ESRD). They will not pay premiums for Part A coverage.

Medicare Part B – Medical Insurance

Medicare Part B covers doctor visits, preventive services, lab tests, durable medical equipment, and other outpatient care.

The standard Part B premium in 2023 is $164.90 per month. However, some people may pay more or less than this amount.

You may pay less than the standard premium if:

• You enrolled in Part B for the first time in 2023 – New enrollees get a premium reduction in their first year of Part B. The 2023 premium is $122.90 for new enrollees.

• You have a higher income – People with incomes above $97,000 for an individual or $194,000 for a couple file joint tax returns may pay higher income-adjusted premiums up to $504.90 per month.

You will pay the full standard premium if:

• You’ve had Part B for more than one year – After the first year, the regular standard premium applies.

• You have a lower or moderate income – With income below $97,000 as an individual or $194,000 as a couple, you pay the standard $164.90 monthly premium.

Some people may pay nothing for their Part B premiums:

• You qualify for Medicaid – In states that have expanded Medicaid, people with incomes up to 138% of the Federal Poverty Level can qualify for Medicaid. Medicaid pays the Part B premium for dual eligible enrollees.

• You qualify for Medicare Savings Programs – These state Medicaid programs help pay Medicare premiums and other costs for low-income Medicare beneficiaries. Based on your income and state rules, the program may cover all or part of your Part B premium.

So while most people pay something for Part B coverage, there are scenarios where Medicaid or Medicare Savings Programs cover some or all of the premium cost if you meet eligibility criteria.

Medicare Advantage Plans – Part C

Medicare Advantage, also known as Medicare Part C, offers an alternative to Original Medicare. These private managed care plans include benefits covered by Parts A and B, plus often Part D drug coverage.

Medicare Advantage monthly premiums vary by plan. Many plans charge $0 premiums, but enrollees must continue paying their Part B premium. Those with higher incomes may pay more for Part C coverage just as they do with Part B.

You will pay no additional premium beyond your Part B premium for Medicare Advantage if you select a plan with a $0 premium. Keep in mind that most Medicare Advantage plans charge copays or coinsurance for covered services.

Medicare Part D – Prescription Drug Coverage

Medicare Part D offers prescription drug coverage through private insurance plans. Monthly premiums vary widely based on the specific plan you select.

In 2023, the national average Part D premium is around $32 per month. However, plans can charge premiums ranging from about $5 up to $100 or more per month.

You may pay a higher income-adjusted premium for Part D just as with Parts B and C. But some people pay no Part D premium:

• You have Medicaid – For full dual eligible enrollees, Medicaid pays the Part D premium.

• You qualify for Extra Help – This federal program helps pay prescription costs for low-income Medicare enrollees based on income and assets. If you qualify for the full Extra Help benefit, you will pay no Part D premium.

• You enroll in an $0 premium plan – Some Part D plans don’t charge a monthly premium. You still need to pay your Part B premium to enroll in these $0 premium Part D plans.

So while most enrollees pay something for their Medicare drug coverage, there are scenarios where you can obtain Part D with no monthly premium.

What If I Miss My Chance for Premium-Free Part A?

Remember, you must sign up for Medicare Part A and Part B during your initial enrollment period when you turn 65 to avoid penalties.

If you miss getting premium-free Part A when first eligible, you may have another chance:

• General enrollment period – Sign up between January 1 to March 31 each year and coverage starts July 1. You’ll pay premiums for Part A and possibly a Part B penalty.

• Special enrollment period – Triggers like losing other coverage can qualify you for a special enrollment period outside the general period. You may request premium-free Part A if eligible.

So if you missed premium-free Part A at 65, you can potentially obtain it later through general or special enrollment periods. But it’s best to enroll when first eligible to avoid penalties.

Ways to Save on Medicare Premiums

There are several strategies to reduce your premium costs in Medicare:

• Pick Advantage or Part D plans with $0 premiums – Shop carefully when comparing plans to find options with no monthly premiums.

• Qualify for Medicaid or Extra Help – These programs help lower-income enrollees save on all Medicare premiums.

• Compare Medigap policies – Consider higher deductible Medigap plans to pay lower monthly premiums.

• Evaluate Part B enrollment timing – Delaying Part B sign up past 65 can help avoid premium increases.

• Appeal income-adjusted premiums – If your income has gone down, you may qualify for lower income-based premiums.

Understanding when you can qualify for premium-free Medicare coverage, as well as utilizing cost-saving strategies, can help you access affordable healthcare coverage in retirement.

Who Qualifies for Premium-Free Medicare?

Here is a quick summary of who generally does not pay premiums for Medicare coverage:

• Part A – Those who paid Medicare taxes for 10+ years, receive Social Security/Railroad Retirement benefits, or qualify for Medicare before age 65.

• Part B – People with Medicaid, enrolled in a Medicare Savings Program, or qualify for Part B for the first time.

• Part C (Medicare Advantage) – Enrollees in $0 premium Medicare Advantage plans.

• Part D (Drug Coverage) – Beneficiaries with Medicaid, enrolled in Extra Help, or join a $0 premium prescription drug plan.

Though rules and specific plan options can vary, these groups commonly qualify for at least one type of Medicare without paying monthly premiums.

The Takeaway

While many enrollees pay premiums for Medicare coverage, some people do qualify for premium-free Part A hospital insurance. Others can enroll in Parts B, C, or D with no monthly premium or reduced costs through Medicaid and assistance programs.

Understanding eligibility for premium-free coverage can help you make the most of your Medicare benefits. Comparing plans and seeking financial assistance if qualified can further reduce your out-of-pocket costs in retirement.