One of the biggest myths related to Medicare is that the program is free. But that couldn't be further from the truth.
Not only are there costs associated with the specific coverage you receive under Medicare, but aside from Part A, which covers hospital care, there's a cost to simply having coverage. With that in mind, here are a few things to know about Medicare if you're enrolled or enrolling in 2024.
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1. The standard Medicare Part B premium is rising
If you worked for an employer that provided you with health insurance, you may have had to pay a portion of your monthly premium for that coverage that came out of your paychecks. And if you bought your own coverage prior to Medicare, you may be more than used to paying a monthly premium for health insurance.
Medicare Part B, which covers outpatient care, costs $174.70 a month in 2024, up from $164.90 in 2023. But that's just the standard premium. If you're a higher earner, you can expect to pay more due to a surcharge known as an income-related monthly adjustment amount, or IRMAA.
This year, an IRMAA will apply to single tax filers with a modified adjusted gross income (MAGI) above $103,000 two years prior. The threshold at which IRMAAS apply to couples filing jointly is above $206,000, though once again, that's based on your MAGI from two years ago.
2. The Medicare Part B deductible is increasing
As is often the case with traditional health insurance, Medicare Part B requires enrollees to cover the cost of a deductible before full coverage kicks in. In 2023, the annual deductible for Part B was $226. This year, it's $240. You may, however, be eligible for an initial preventive exam for which your deductible does not apply.
3. Cost sharing for coverage under Medicare Part A is going up
Medicare Part A enrollees generally do not pay a premium for coverage. But if you end up needing to stay in a hospital or recuperate in a skilled nursing facility, you'll face a host of out-of-pocket costs.
If you're admitted to a hospital, you'll pay a $1,632 deductible this year that covers your first 60 days. That's up from $1,600 in 2023.
From there, you'll face a daily coinsurance charge of $408 for days 61 through 90, up from $400 a day in 2023. Beyond that, you'll be charged $816 per day for your lifetime reserve days.
Meanwhile, if you're moved to a skilled nursing facility, days 21 through 100 of your stay require you to pay in as well. Your daily coinsurance rate there will be $204 this year., up from $200 in 2023.
Know your costs
These and other Medicare fees could wreak serious havoc on your finances in 2024. So it's important to prepare for and make room in your budget for them.
Now if you're enrolled in Social Security, your Medicare Part B premiums will be deducted from your monthly benefits automatically. Otherwise, you'll have to arrange for payment. But even in the former scenario, you're still paying.
If you have funds available in a health savings account (HSA), you can use this to cover your out-of-pocket Medicare costs. Otherwise, make sure to budget carefully so you're able to manage your various expenses.
