What are Medicare Part B Premiums?

What are Medicare Part B Premiums?

Medicare Part B premiums are based on your income, but unless you’re a high earner after retirement, your premiums will likely fall on the lowest tier.

Stephanie Faris

Published October 14th, 2020

Updated December 18th, 2020

Table of Contents

Key Takeaways

  • For most retirees, Medicare Part A will be free, but Part B will come with premiums.
  • Monthly premiums are based on income for the tax year two years prior.
  • Parts C and D are offered by third-party providers, which means your premiums and coverage will vary by insurer.

Medicare Part A is offered premium-free to qualifying retirees. This free plan will cover your hospitalizations and nursing home care, as well as home healthcare and hospice costs.

But for your doctor visits and preventive care, you’ll need Part B. Unlike Part A, you’ll pay premiums on this plan. Medicare Part B premiums are based on your income, but unless you’re a high earner after retirement, your premiums will likely fall on the lowest tier.

What Are Medicare Part B Premiums?

As long as you’ve paid into the Medicare system long enough during your working years, you’ll be eligible for premium-free Part A upon reaching age 65. But you have the option of adding Part B. You aren’t required to sign up for Medicare Part B--or Medicare at all--but you may find that alternatives like private health insurance are costlier than Part B premiums. Still, it can’t hurt to price both options.

Part B premiums pay for many of your basic healthcare costs. Any in-patient hospital treatments will be covered by Part A, but you’ll still need insurance to cover preventive care and treatment by doctors and specialists, which is where Part B comes in.

Medicare Part B Costs for 2021

Medicare premiums can change from one year to the next. But the 2021 Medicare Part B premium for most people is $148.50. This is based on your income from two years ago, so 2021’s premiums are priced using your income in 2019. As long as you earned $88,000 or less, or $176,000 if you’re married and filed jointly, you’ll fit into this premium tier.

The premiums increase exponentially after that. Here’s how it breaks down:

  • Up to $111,000 ($222,000 for couples): $207.00
  • Up to $138,000 ($276,000 for couples): $297.00
  • Up to $165,000 ($330,000 for couples): $386.10
  • Up to $500,000 ($750,000 for couples): $475.20
  • $500,000 or above ( $750,000 and above for couples): $504.90

Eligibility for Medicare Part B

Now that you know what is the Medicare Part B premium for 2021, it can help to learn when you’ll be eligible. As long as you’re approved for premium-free Part A, you’re automatically eligible for Part B. For Part A, you’ll need to be 65 or older or suffer from an approved disability or end-stage renal disease.

Medicare Part C

As great as Medicare Parts A and B are, they still don’t cover everything. That means as you’re calculating what are Medicare premiums, you’ll also need to factor in the cost of Medicare Part C. Also known as a Medicare Advantage plan, this covers your care costs for things like vision, hearing, dental, and health and wellness programs

Often you can find Medicare Advantage plans with no premiums. However, it’s important to pay attention to your out-of-pocket costs with these plans. You may be better off adding Part C to your Medicare monthly premiums to get a lower copay.

Medicare Part D

When looking at what does Medicare Part B cover 2021, you may also notice that your prescription costs aren’t included. That’s where Part D comes in. Both Parts C and D are offered through third-party insurers, so the prescriptions your specific plan covers will vary by plan. The premiums you pay will also vary and will often be based on your annual income.

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The CARES Act of 2020

Medicare B premiums are already set for the year, but other things have changed due to the pandemic. Medicare, specifically, has been affected due to legislation called the CARES Act of 2020. If you have Medicare and need to be tested or treated for COVID-19, Medicare is limited in how much you can be responsible for paying if you go to an out-of-network provider. You can’t pay more out of pocket than you would have paid if you’d stayed in network.

Final Thoughts

When researching what is Medicare Part B premium, it’s important to note that premium amounts and coverage are subject to change from one year to the next. 2021’s premiums will be based on your 2019 earnings, so you may be in for a reduction if you retired that year and your income declined. We recommend working with a Certified Financial Planner® to determine if Medicare Parts B, C, and D are best for you or if you’d be better off choosing a private insurance policy.

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Stephanie Faris

Stephanie Faris has written about finance for entrepreneurs and marketing firms since 2013. She spent nearly a year as a writer for a credit card processing service and has written about finance for numerous marketing firms and entrepreneurs. Her work has appeared on Money Under 30, The Motley Fool, MoneyGeek, E-commerce Insiders, and GoBankingRates.

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