Q:

How is the monthly cost of Medicare calculated?

A:

Quick Answer

Medicare Part A is free for those who qualify for Social Security benefits, but others pay a premium based on total quarters of employment. Medicare Part B premiums vary based on income. Medicare Parts C and D premiums vary depending on the private companies administering the plans.

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Full Answer

Anyone who is eligible for Social Security or Railroad Retirement Board benefits by working for at least 40 quarters of employment receives Medicare Part A hospital insurance without cost. Those who have at least 30 quarters of employment can buy Medicare Part A for $243 per month as of 2015, and those with less than 30 quarters of employment must pay $441 per month. Most people pay the minimum premium of $104.90 per month for Medicare Part B, but the premium gradually rises according to the enrollee's income. For instance, those earning $85,000 or less annually pay the minimum, while those who earn $214,000 or more pay the maximum premium of $335.70 per month.

The cost of Medicare Part C plans, also known as Medicare Advantage, depends on what coverage they offer, whether the plan pays the Medicare Part B premium and whether the plan charges an extra premium. Sometimes Medicare Part D prescription drug coverage is covered by a Medicare Part C premium, but otherwise those who have traditional Medicare must pay an extra premium for Medicare Part D. The amount of the premium depends on the company administering the plan and what drugs it has in its formulary.

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