- May 27, 2020
When you go on Medicare, there are several decisions you have to make. First, you have to make sure you’re enrolling in the right plans. Once you've selected the right plans, you have to pay for those plans. Many people get confused at this point because there’s a lot of misconception surrounding how to pay for Medicare plans. We want to help clear up this confusion. That’s why today, we’re answering the question, “How do you pay for Medicare?” Let’s get started.
How Do You Pay For Medicare?
The answer to this question depends on what kind of Medicare plan you have. We’re going to cover five of the most common types of Medicare plans and teach you how to pay for them.
Medicare Part A
For most people, Medicare Part A won’t cost them a penny. Why? If you or your spouse have paid at least 40 quarters (or 10 years’ worth of work) into the Medicare system through your FICA taxes, then Medicare Part A will automatically be free. That’s right, absolutely free. This means most people won’t ever have to worry about paying for Medicare Part A.
Medicare Part B
Medicare Part B, on the other hand, is not free. Right now, almost everyone on Medicare pays $170.10 each month for their Part B premium. Some high-income people pay more than that, but 95 percent of the population pays $170.10 each month.
If you’re on Social Security, the Medicare Part B premium will always come out of your Social Security check. There is no other payment option available.
If you're not on Social Security, you have a few different payment options. First, if you’re not on Social Security, Medicare will automatically send you a quarterly bill for your Part B premiums. This bill is always due on the 25th day of the month before your coverage starts and is due every three months after that. For example, if your coverage starts July 1st, your Part B bill will be due on June 25th and every three months after that.
If you don’t want the hassle of writing a quarterly check or simply don’t want to pay the Part B premium in three-month increments, they also offer an “easy-pay system.” The easy-pay system automatically pays Medicare out of your checking or savings account every month. You just have to send Medicare a form and a voided check, and they’ll set up the easy-pay system so you never have to worry about sending in quarterly checks.
When a person buys a Supplemental plan, they're staying on original Medicare A and B, but transferring the risk of coverage gaps to a private insurance company. Since the private company is taking on the risks of the gaps, they charge monthly premiums.
Supplemental plan premiums are never deducted out of Social Security checks. This leaves you with only two payment options--bank draft and direct bill. The bank draft route is the most common way to pay your Supplemental plan premiums. Why? Simply because it’s so convenient. All you have to do is give the insurance company a routing or account number and pick the day of the month you want to pay the bill. They’ll take care of the rest.
If you're not comfortable paying with a bank draft (some people aren't), then Supplemental companies also let you pay via a direct bill. However, almost all carriers charge you an additional fee to send the bill, and they will only send it quarterly, not on a monthly basis. But if you don’t mind an extra fee and prefer to pay quarterly rather than monthly, the direct bill might be a good option for you.
Prescription Drug Plans
There are a few different options when it comes to paying for a drug plan. First, if you're on Social Security, you can opt to pay for your drug plan out of your SS check. However, if you don’t want to pay out of your SS, you don’t have to.
Some drug plans let you pay via a bank draft, while others will give you the option to pay with a quarterly bill. You may also be able to pay the entire year off in one payment, or you can just pay on a monthly basis.
Many Advantage plans have zero premiums. If you enroll in a zero-premium plan, you obviously won’t have to worry about paying any premiums. However, if there is a premium attached to your Medicare Advantage plan, then you can pay that premium through either your Social Security check, a bank draft, or direct bill.
Each Medicare plan has different premiums and different ways to pay for those premiums. Some draw the payment directly from your Social Security check while others bill you every quarter. Some plans also allow you to set up an easy bank draft system that bills you every month so you don’t have to worry about remembering to send in a check.
We understand how difficult making the right Medicare decisions can be. To take the next step, watch our full course here or schedule a free one-on-one call with a certified Medicare School Guide who can answer your questions, compare plans options, and even help you enroll. Click here to get started.
MedicareSchool.com started in 2009 to provide an unbiased and education-focused service to individuals approaching Medicare enrollment. Since then, MedicareSchool.com has helped over 100,000 people find and enroll in the best Medicare plans that fit their budget.