Everything changes as you age—even your health insurance and how you pay for it.
One of the most vital measures in how much you will pay for health insurance is modified adjusted gross income.
Millions of people are on Medicare plans: By one estimate, there are 44 million people, or about 15 percent of the population, on Medicare. Medicare is the federal government’s health plan for seniors and certain people with specific disease states.
But where do you fit into this? We’re going to breakdown Medicare and how your income impacts the cost of Medicare.
The Parts of Medicare
Medicare Part A effectively covers direct health care services such as hospital stays, skilled nursing facility stays and home health care.
Part B is considered by some as the genuine health insurance part of Medicare. Part B covers physician and outpatient services and other medical necessities like durable medical equipment and some preventative services.
Part C is the Medicare Advantage program. This is a privately administered version of Medicare. Private insurers such as Humana, Aetna or United Health (to name a few major players) provide health plans that cover everything that standard of “traditional” Medicare covers. But as a way to incentivize people to get insurance through them, they will expand coverage into areas that traditional Medicare doesn’t cover. This includes eye care, hearing care and dental care — to name a few.
Part D covers prescription drug costs. They are also often called prescription drug plans or PDP. They can be held with other parts of Medicare or held separately to add additional coverage to cover drug costs for seniors.
Most seniors will fill between 9 and 13 prescriptions in a year and those costs really add up.
Who Does Modified Adjusted Gross Income Factor In?
Part A is provided to most seniors free of premiums. This is dependent on whether or not the enrollee worked for a certain amount of time and paid Medicare tax.
Part A monthly premiums are set by the amount of Medicare taxes you paid. If you paid these taxes for less than 30 quarters, or 7.5 years, you must pay $437 per month. If you paid 30 to 39 months, your monthly premium is $240, according to Medicare.
For Medicare Part B, premiums increase or decrease based on modified adjusted gross income.
If your income is below $85,000 individually or $170,000 as a couple that files taxes jointly, your premium for Part be is $135.50. Monthly premiums max out at $460.50 for people with incomes of $500,000 or more and couples whose income is $750,000 or more.
Things get even more technical with Part D, or PDP plans, click here to learn about Medicare and how Part D differs from the other parts of Medicare.
Now Fixed Cost for Medicare
Only you and your financial advisor can know your specific circumstances and how they apply to Medicare. Consult with an expert before enrolling.
But now that you know where your modified adjusted gross income fits in, you can have some idea on where to start.
Keep it here for all your sundry questions about lifestyle, business, and even technology and education.