When you turn 65, Medicare becomes your primary health insurance. The different parts of Medicare help cover specific medical costs, from hospital stays (Part A) to doctor visits (Part B) to prescription drugs (Part D). Most people pay premiums for Medicare coverage. But do these premiums count as health insurance premiums?
The answer is yes. The Medicare premiums you pay for Part B and Part D coverage give you access to vital health benefits and financial protection from medical costs. This meets the definition of a health insurance premium. However, Medicare has some unique rules and costs structures. Read on for an overview of how Medicare premiums function as health insurance.
Medicare Part B Premium Basics
First, it’s helpful to understand the basic Medicare Part B monthly premium:
- Medicare Part B covers doctor visits, outpatient care, preventive services, medical equipment, and more.
- Most people pay the standard Part B premium. In 2023, this standard monthly rate is $164.90 for most enrollees.
- Higher income earners pay more for Part B coverage based on their annual income. This is called the income-related monthly adjustment amount (IRMAA).
- The Part B premium is deducted from your Social Security benefit check if you receive them, or you can pay it directly.
So Medicare Part B has an annual premium just like other health insurance plans. This gives you access to essential medical benefits like doctor visits and lab testing.
Part D Also Has Premiums
Along with Part B, most Medicare enrollees also opt for a Part D prescription drug plan. These plans have monthly premiums as well:
- Medicare Part D helps cover the cost of prescription medications.
- You must enroll in a specific Part D Plan offered by private insurers. Premiums average around $32.74 per month in 2023 but vary by plan.
- Higher earners pay an extra IRMAA for Part D coverage just like with Part B.
So whether you get Part D standalone or bundled with a Medicare Advantage Plan, you’ll pay a monthly premium. This premium provides the prescription drug coverage.
Premiums Give You Health Coverage
By paying your Medicare Part B and Part D premiums each month, you maintain access to important medical benefits, including:
- Doctor office visits and outpatient services
- Preventive care screenings and yearly wellness visits
- Lab tests, X-rays, MRI scans
- Durable medical equipment
- Part D prescription drug coverage
These benefits – covered in exchange for paying the Medicare premiums – fall under the health insurance umbrella. Medicare premiums grant coverage the same way premiums for private health plans do.
Premium-Free Medicare Part A
One part of Medicare does not require a premium for most people – Medicare Part A.
Part A covers inpatient hospital stays, skilled nursing facility care, home health services, and hospice care.
You can get premium-free Part A coverage if:
- You or your spouse paid Medicare taxes while working for at least 10 years (40 quarters)
- You receive Social Security or Railroad Retirement Board benefits
Part A is earned coverage you gain from paying into Medicare through taxes when you were working. Since no premium is due, it functions a little differently than Part B and D coverage.
Premium Penalties Can Apply
If you don’t sign up for Medicare Part B and Part D when first eligible at 65, you may have to pay a late enrollment penalty added to your premium. Here’s how it works:
- If you wait more than 3 months after turning 65 to enroll, you’ll pay a 10% penalty for each full 12-month period you delayed signing up.
- This penalty is permanent – you’ll pay this extra surcharge as long as you have Part B.
- A similar late enrollment penalty also applies to Part D Plans if you don’t sign up when initially eligible.
So it’s essential to understand Medicare’s premium and enrollment rules to avoid paying these penalties. Medicare premium costs can go up if deadlines are missed.
Premium Subsidies May Be Available
If you have limited income and assets, assistance programs can help pay your Medicare premiums:
- State Medicare Savings Programs help lower income seniors cover premiums.
- The Extra Help program through Social Security provides subsidies for Part D drug plan premiums.
- Medicare also has programs for people under 65 based on disability or certain medical conditions.
Check if you qualify for financial assistance to make Medicare more affordable if you are worried about being able to pay the premium costs.
The Bottom Line
While Medicare is not a private health plan, the various premiums required for Part B and D coverage allow millions of Americans 65 and over to access quality healthcare. These premiums provide concrete medical benefits and financial protection. Paying Medicare premiums equates to purchasing health insurance.
Understanding the premium rules and penalties can help you avoid unnecessary costs. Compare your Medicare options each year during open enrollment to potentially lower your outlay for premiums.
We’re Here to Help
You do not have to spend hours reading articles on the internet to get answers to your Medicare questions. Give the licensed insurance agents at Think65 a Call at (719) 301-1220. You will get the answers you seek in a matter of minutes, with no pressure and no sales pitch. We are truly here to help.
Do Medicare premiums count as health insurance?
No, Medicare premiums do not count as health insurance. Medicare premiums are the amount you pay each month for your Medicare coverage.
What is hospital insurance?
Hospital insurance, also known as Medicare Part A, helps cover inpatient care in hospitals, skilled nursing facilities, and hospice care.
What is medical insurance?
Medical insurance, also known as Medicare Part B, helps cover services from doctors, outpatient care, and some preventive services.
What is a Medicare Advantage Plan?
A Medicare Advantage Plan is an all-in-one alternative to Original Medicare. These plans are offered by private companies approved by Medicare and provide hospital insurance and medical insurance, along with extra benefits like prescription drug coverage.
Can Medicare premiums help pay for health plan?
Medicare premiums can help pay for a health plan, such as a Medicare Advantage Plan or a Medicare Supplement insurance plan.
How do I enroll in Medicare?
You can enroll in Medicare by applying online at the Social Security Administration website, visiting your local Social Security office, or calling the Social Security Administration.
What is Part C?
Part C refers to Medicare Advantage Plans, which are offered by private companies and provide Medicare Part A and Part B benefits.
How do I sign up for Medicare?
You can sign up for Medicare online, by phone, or in person at your local Social Security office.
Does Medicare pay for prescription drugs?
Yes, Medicare Part D provides prescription drug coverage. You can either join a Medicare drug plan or have drug coverage included in a Medicare Advantage Plan.
What happens if I don’t enroll in Medicare?
If you don’t enroll in when first eligible for Medicare, you may have to pay a penalty. The penalty is added to your Medicare Part A premium and lasts as long as you have Medicare Part B.