Medicare premiums are monthly fees beneficiaries pay for their Medicare coverage. In 2021, the Medicare Part B standard premium is $148.50 a month. Most people pay no premiums for Medicare Part A, while premiums for Medicare Part D drug coverage and Medicare Advantage plans vary.
2021 Premiums for Original Medicare
Original Medicare includes Medicare Part A hospital insurance and Part B medical insurance. The U.S. Centers for Medicare & Medicaid Services adjust the premiums for the following year in the fall.
Medicare Part A Premium
There is no Medicare Part A premium for most people. The hospital coverage is premium-free if you have worked and paid Medicare payroll taxes for at least 10 years — measured as 40 quarters by the Centers for Medicare & Medicaid Services (CMS).
If you haven’t met that 10-year mark, you can buy Medicare Part A, but the premiums will cost you $471 per month in 2021. Only about one percent of Medicare beneficiaries have to pay for Part A coverage.
Medicare Part B Premium
The Medicare Part B standard premium went up in 2021 to $148.50 from $144.60 a month in 2020. The CMS cited rising prices for doctor administered medications as the driving force behind the hike. People with higher incomes may have to pay higher prices.
Medicare Part B uses a complex formula to determine the amount of your monthly premium. The cost is based on your modified adjusted gross income. That’s adjusted gross income plus any tax-exempt interest reported on your most recent tax return.
The formula also takes into account whether you filed an individual tax return, a joint return or you were married but filed separately.
|Filed an Individual Tax Return||Filed a Joint Tax Return||Married Filing Separately Tax Return||Medicare Part B Premium for 2021|
|$88,000 or less||$176,000 or less||$88,000 or less||$148.50|
|More than $88,000 up to $111,000||More than $174,000 up to $222,000||N/A||$207.90|
|More than $111,000 up to $138,000||More than $222,000 up to $276,000||N/A||$297.00|
|More than $138,000 up to $165,000||More than $276,000 up to $330,000||N/A||$386.00|
|More than $165,000 but less than $500,000||More than $330,000 but less than $750,000||More than $88,000 but less than $412,000||$475.20|
|$500,000 or above||$750,000 or above||$412,000 and above||$504.90|
If you had a major life changing event in the two years since your last tax return, such as a change in your marital status, losing a job or loss of pension or income-producing property, you can request the Social Security Administration to adjust your premium.
Medicare Advantage Premiums
The CMS estimates that the average Medicare Advantage premium of $21 for 2021 is the lowest in 14 years. The agency figured monthly premiums dropped an average of nearly 8.7 percent from $23 in 2020.
CMS projected the number of people enrolled in the plans to increase to 24.4 million in 2020. At the same time, plan choices, benefits and Medicare Advantage enrollment have all increased.
There were 3,550 Medicare Advantage plans available in 2021 and because these vary based on location, the average Medicare beneficiary had access to 33 Medicare Advantage plans, the most ever according to the Kaiser Family Foundation.
For the most part, plans with cheaper premiums may offer far fewer benefits than those with more expensive premiums. Be sure to compare plans to get the coverage you want or need at a price you can afford.
Medicare Part D Premiums
Medicare Part D prescription drug coverage is optional. Some Medicare Advantage plans also incorporate prescription drug coverage. Monthly premiums vary from plan to plan.
Most people only pay their monthly premium for Medicare Part D coverage. But people with higher incomes also have to pay an additional fee based on their income reported to the Internal Revenue Service. For 2021, that would most likely be based on 2019 income.
|Filed an Individual Tax Return||Filed a Joint Tax Return||Married Filing Separately Tax Return||Your Monthly Premium in 2021|
|$88,000 or less||$176,000 or less||$88,000 or less||Your plan premium|
|More than $88,000 up to $111,000||More than $176,000 up to $222,000||N/A||$12.30 + your plan premium|
|More than $111,000 up to $138,000||More than $222,000 up to $276,000||N/A||$31.80 + your plan premium|
|More than $138,000 up to $165,000||More than $276,000 up to $330,000||N/A||$51.20 + your plan premium|
|More than $165,000 but less than $500,000||More than $330,000 but less than $750,000||More than $88,000 but less than $412,000||$70.70 + your plan premium|
|$500,000 or above||$750,000 or above||$412,000 and above||$77.10 + your plan premium|
The extra amount you pay is not part of your plan premium and you do not pay it to your Medicare Part D insurer.
In most cases, the extra amount will be held out of your Social Security check. If it isn’t withheld, you’ll get a bill from either the Social Security Administration or the Railroad Retirement Board.
You also have to pay the extra fee if you are in a Medicare Advantage plan that includes prescription drug coverage.
If you don’t pay the extra fee, you can lose your Medicare Part D coverage.
13 Cited Research Articles
- Biniek, J.F., et al. (2020, October 29). Medicare Advantage 2021 Spotlight: First Look. Retrieved from https://www.kff.org/medicare/issue-brief/medicare-advantage-2021-spotlight-first-look/
- AARP. (2020, March 25). Does My Income Affect My Monthly Premiums for Medicare? Retrieved from https://www.aarp.org/retirement/social-security/questions-answers/income-affect-medicare-premium/
- Laurence, B.K. (2020, January 1). Medicare Premiums, Deductibles, and Copays Change for 2020. NOLO. Retrieved from https://www.nolo.com/legal-updates/medicare-premiums-deductibles-and-copays-change-for-2020.html
- U.S. Centers for Medicare & Medicaid Services. (2020, January). 2020 Medicare Costs. Retrieved from https://www.medicare.gov/Pubs/pdf/11579-Medicare-Costs.pdf
- O’Brien, S. (2019, November 11). Here’s How Much More You’ll Pay for Medicare Part B in 2020. CNBC. Retrieved from https://www.cnbc.com/2019/11/11/heres-how-much-more-youll-pay-for-medicare-part-b-in-2020.html
- Livingston, S. (2019, November 8). Drug Spending Drives Higher 2020 Medicare Part B Premiums, Deductibles. Retrieved from https://www.modernhealthcare.com/medicare/drug-spending-drives-higher-2020-medicare-part-b-premiums-deductibles
- U.S. Centers for Medicare & Medicaid Services. (2019, November 8). 2020 Medicare Parts A & B Premiums and Deductibles. Retrieved from https://www.cms.gov/newsroom/fact-sheets/2020-medicare-parts-b-premiums-and-deductibles
- U.S. Centers for Medicare & Medicaid Services. (2019, September 24). Trump Administration Drives Down Medicare Advantage and Part D Premiums for Seniors. Retrieved from https://www.cms.gov/newsroom/press-releases/trump-administration-drives-down-medicare-advantage-and-part-d-premiums-seniors
- U.S. Centers for Medicare & Medicaid Services. (n.d.). Pay Part A & Part B Premiums. Retrieved from https://www.medicare.gov/your-medicare-costs/pay-part-a-part-b-premiums
- U.S. Centers for Medicare & Medicaid Services. (n.d.). Your Medicare Costs. Retrieved from https://www.medicare.gov/your-medicare-costs
- U.S. Centers for Medicare & Medicaid Services. (n.d.). Part B Costs. Retrieved from https://www.medicare.gov/your-medicare-costs/part-b-costs
- U.S. Centers for Medicare & Medicaid Services. (n.d.). Medicare Costs at a Glance. Retrieved from https://www.medicare.gov/your-medicare-costs/medicare-costs-at-a-glance
- U.S. Centers for Medicare & Medicaid Services. (n.d.). Monthly Premium for Drug Plans. Retrieved from https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/monthly-premium-for-drug-plans