Most people qualify for premium-free Medicare Part A, although a person may sometimes have to buy Part A, and pay the premium.
There may also be options to pay zero-premium amounts for other parts of Medicare, include Part B, Part C, Part D, and Medigap.
This article looks at how a person may get Part A at no cost, or why they might have to pay a premium. It also discusses options to help pay premiums for other parts of Medicare coverage.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Original Medicare includes Part A, hospital insurance, and Part B, medical insurance. Most people do not pay the premium for Medicare Part A. However, there are exceptions when a person may have to pay the Part A premium.
Premium-free Part A
For a person to qualify for premium-free Medicare Part A, they must meet certain conditions.
One condition is that the person has worked a certain amount of calendar quarters, and also be aged 65 or older. The income of a person’s parent, spouse, or child can also count towards eligibility.
Worked calendar quarters are ‘earned’ through payroll taxes. Employers deduct payroll taxes from each paycheck, under the Federal Insurance Contributions Act (FICA).
If a person or their spouse has worked for 10 years or more they will generally have paid the full FICA tax by payroll deduction, and meet the conditions to get premium-free Medicare Part A.
Other qualifying conditions
A person may also qualify for premium-free Part A if they are 65 or older and meet the following conditions:
- has government employment that is Medicare-covered
- get retirement benefits from the Railroad Retirement Board (RRB) or benefits through Social Security
- is eligible for RRB or Social Security benefits, but has not yet claimed the benefits
If a person is under 65, they may still qualify for premium-free Part A if they meet the following conditions:
- has end stage renal disease (ESRD)
- has received RRB or Social Security benefits for 24 months
Paying a premium for Part A
If a person is not eligible for premium-free Part A, they can buy it. In 2021, the premiums range from $259–$471. The cost depends on how much taxes a person paid during a certain amount of calendar quarters:
- between 30–39 calendar quarters, a person will pay a standard Part A premium of $259
- less than 30 quarters, a person will pay a Part A premium is $471
Medicare includes Part A, Part B, Part C, and Part D. There are several programs that may help a person to get reduced or premium-free Medicare parts B, C, and D.
For example, a person with certain income and assets conditions may get some parts of Medicare premium-free through the Medicare savings programs (MSPs), which are run by state governments.
Other programs include Extra Help and Medigap.
Medicare Part B
Medicare Part B covers doctor services, outpatient hospital services, durable medical equipment, some home health services, and some other medical services not covered by Medicare Part A.
Medicare savings programs
- Medicare Beneficiary (QMB)
- Low-Income Medicare Beneficiary (SLMB)
- Individual (QI)
- Disabled and Working Individuals (QDWI)
The monthly premium a person pays is based on their income level. The Part B premium may be deducted from a monthly benefit check if they receive any of the following:
- Social Security benefits
- railroad retirement board benefits
- office of personnel management payments
A Medicare Access and CHIP Reauthorization Act of 2015 made it unlawful for supplement plans to pay Part B deductibles. So, new Medicare enrollees no longer have access to some supplement insurance plans, also known as Medigap, that may pay Part B deductibles.
Medicare Part C
Medicare Part C, also known as Medicare Advantage, are private insurance plans offered by companies approved by Medicare. They offer the same coverage as original Medicare, and may have additional benefits.
A person must be enrolled in Medicare parts A and B to enroll in a Medicare Advantage plan.
Zero-premium Medicare Advantage plans have no monthly premium, although a person may still need to pay for the Part B premium. However, zero-premium plans may have higher deductibles, copays, or additional out-of-pocket costs compared to an Advantage plan with a monthly premium.
Medicare Part D
Medicare Part D is prescription drug coverage. A person can enroll in the plan, or it may be included as part of an Advantage plan.
The premiums for Part D vary, generally according to a person’s income. If a person qualifies for certain MSPs, they may get help with their Medicare prescription drug costs.
The Extra Help program may also help a person with premium and other costs such as deductibles, and coinsurance.
Medigap is health insurance sold by private insurance companies. It is designed to supplement original Medicare coverage by paying costs that original Medicare does not cover.
A Medigap policy may pay a person’s healthcare costs, such as coinsurance, deductibles, and copays. However, Medigap is not free, and a person may have to pay a monthly premium. A person can get more details online.
Most people receive Medicare Part A at no cost, but some people may need to pay a monthly premium. A person who is not eligible for premium-free Part A can buy coverage.
Medicare offers several programs to help a person with costs.