What is Medicare?

Medicare Part A

Medicare Part A covers inpatient hospital care. Inpatient hospital care generally means that you are registered as inpatient and have been at the hospital for more than 23 hours. If you are under observation, that isn’t considered inpatient care and can affect your payments.

Medicare Part A also covers skilled nursing facility care (up to 100 days). Medicare Part A will pay for skilled nursing care if you are coming from a three-day hospital stay as an inpatient and are released into a skilled nursing facility.

Medicare Part A does not pay for custodial or long-term care. Medicare Part A will cover hospice care and some home healthcare. Medicare Part A has a $1,408 per benefit period deductible in 2020. A benefit period begins when you enter the hospital and ends when you have been out of the hospital for 60 days.

Medicare Part A is free for 99% of Medicare benefciaries. It is free if you or your spouse paid Medicare taxes for 40 quarters or 10 years. If you haven’t met that qualification, you can still buy Medicare Part A. In 2019, Medicare Part A premiums were as high as $458 per month.

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Medicare Part B

Medicare Part B covers outpatient medical care and services. This includes services from doctors and other health care providers, durable medical equipment (like wheelchairs, walkers, hospital beds, and other equipment and supplies), physical therapy, and many preventative services. Medicare Part B generally covers 80% of outpatient charges.

Medicare Part B is not free. In 2019, the Medicare Part B monthly base premium is $144.60. Seven percent of Medicare Beneficiaries will pay more than $144.60 per month. Those beneficiaries will pay an income adjustment – as much as $347 more per month per person.

Medicare Part B has an annual deductible of $198 for 2020.

If you pay a Medicare Part B income adjustment, you will also have to pay a Medicare Part D income adjustment. You can appeal your Part B & D income adjustments if you have had a life changing event that has decreased your Modified Adjusted Gross Income. Social Security asks the IRS how you filed your taxes (individually or jointly) from two years ago. Then Social Security uses the Modified Adjusted Gross Income from that year to determine your Medicare Part B income adjustment. If you retired and your income decreased within the last two years, you may be able to appeal and lower or eliminate your Income Adjustment.

Your Medicare Part B premium will come out of your Social Security check unless you are not drawing Social Security. In that case, you will be direct billed and will have the option to pay by paper bill, credit card, or automatic bank deduction.

Based on Modified Adjusted Gross Income as reported on your IRS tax return from two years ago (2018).

Income Levels Premiums
Individual Tax Return Joint Tax Return Standard
Total Monthly
Up to $87,000 Up to $174,000 $144.60 $0.00 $144.60
Above $87,000 and
up to $109,000
Above $174,000 and
up to $218,000
$144.60 $57.80 $202.40
Above $109,000 and
up to $136,000
Above $218,000 and
up to $272,000
$144.60 $144.60 $289.20
Above $136,000 and
up to $163,000
Above $272,000 and
up to $326,000
$144.60 $231.40 $376.00
Above $163,000 and
up to $500,000
Above $326,000 and
up to $750,000
$144.60 $318.10 $462.70
$500,000 or above $750,000 or above $144.60 $347.00 $491.60