Being able to qualify for Original Medicare when you turn 65 or finally retire after 65 is an achievement. Original Medicare is good health insurance that is accepted by the majority of healthcare providers. You may find this coverage less expensive than what you have paid for when you had individual or group coverage.

However, one common misperception is that Medicare is entirely free. That is only partially true: Part A has no premium — but only if you, your spouse, or your ex-spouse (under certain conditions) have qualified, as explained in this article. This article will focus on the costs and premiums, assuming that you are eligible and have successfully enrolled, but you can learn more about Medicare eligibility and enrollment here.

Part A premiums are based on the Social Security Administration’s quarters of coverage (QC) calculation. The Social Security Administration is the sole party that determines your Medicare eligibility and what you will or will not be charged. Your Part A premium is $0/month if any of the following have worked 40 quarters of coverage:

• You
• Your existing spouse
• Your ex-spouse, if you were married for at least 10 years

If you do not qualify for premium-free Medicare Part A, it can be purchased, but it will be expensive. For people with less than 30 QCs, Medicare Part A is $506 a month. For those with between 30 and 40 QCs, Part A costs $278 a month. The premiums are established by the Centers for Medicare and Medicaid Services (CMS) and are reset annually.

Part B is Medicare health insurance. Part B has a monthly premium, and your monthly premium is determined by the Social Security Administration. Your Medicare Part B premium is determined by the income reconciled by the IRS from two years ago. For example, in 2023, your Part B premium will be determined by the modified adjusted gross income from your 2021 tax return. Medicare Part B premiums are adjusted yearly, and the changes are announced during the fourth quarter of every calendar year.

The reason your Medicare premiums can be higher than the “base case” is due to your income-related monthly adjustment amount (IRMAA). In fact, there are two separate IRMAAs. IRMAA will apply to both Part B and Part D.

For certain individuals, the different levels of premiums may reasonably affect the timing that someone chooses to enroll in Medicare if covered by employer-sponsored insurance. Because Part B and Part D premiums are affected by your taxable income, this also has important financial planning implications.

It’s important to note that the following paragraphs also apply if you are a Medicare Advantage policy owner and the Medicare Advantage plan includes prescription drug benefits.

The table below displays the Part D IRMAA. Note that if your Medicare Advantage plan includes prescription drug benefits, IRMAA still continues to apply, and will be added to your Medicare Advantage premium — even if that premium is $0.

Part D IRMAA can sometimes be confusing because each Part D (standalone prescription) plan has its own specific premium. And to that, the part D IRMAA is applied. For example, if the Part D plan has a stated plan premium (PP) of $10 a month, and your income is $125,000 as a single individual, then the Part D premium is $10.00 + $31.80 for a total of $41.80 a month.

When it comes to enrolling in the right Medicare plan, it's important to do your research and consider all of your options. With OpenMedicare, you can call us at 844-910-2061, and a licensed agent will help answer your questions and help you compare plans* and enroll, making it convenient to get the coverage you need.

*OpenMedicare is a non-government website operated by a licensed Medicare insurance agency. OpenMedicare is not affiliated with or connected with Medicare.gov or any other government program or agency.

Any information we provide is limited to those plans we do offer in your area, as we do not always offer every plan available in your area. Please contact Medicare.gov or 1–800–MEDICARE to get information on all of your options.