Why Is My First Medicare Bill So High?
Key Takeaways
- How much you pay for Medicare overall will depend on how much you earned when you signed up.
- There are many types of Medicare plans, and some types of plans have higher premiumsA premium is a fee you pay to your insurance company for health plan coverage. This is usually a monthly cost. to reduce other costs.
- If you signed up for Medicare late, you may have penalties added to your premium.
- There are several ways to pay your Medicare premiums, and how you pay can affect your bill.
High Medicare Bills
While Medicare is largely funded by the federal government using taxes you pay into the system during your working years, you will still have to pay a sizable portion of your healthcare costs once you enroll in the program.
Some people are surprised by the amount of their first Medicare bill – especially those who are paying their premiums quarterly.
Keep reading to learn about how Medicare bills you for services, and how much you should expect to pay.
Why Is My Medicare Bill for Three Months?
Generally speaking, you pay ahead for three months of Original Medicare coverage when you first sign up, and you pay for each quarter in advance after that.
There are several ways to pay for your Medicare premiums, and what kind of plan you pay and when you sign up has a big impact on your bills.
Most people don’t have to pay a premium for Part A, which covers inpatient hospital expenses. If you didn’t pay employment taxes for a certain period of time (fewer than 40 quarters during your lifetime), you will have to pay a premium for this portion of Medicare.
While most people don’t pay a Part A premium, most do have to pay at least part of the standard premium for Part B, which covers outpatient costs. The monthly premium for Part B is $174.70 in 2024, but may be even higher if your income level is high. Additional costs are added when you make more than $103,000 per year as an individual or $206,000 as a married couple jointly filing taxes.
These costs and thresholds–set by the federal Medicare program – may change each year.
Your bill may also include charges for Medicare Part D, the portion of Medicare that covers prescription drug costs. This part of Medicare is optional, but if you don’t sign up when you are first eligible, you could be charged a penalty on your premium every month for the rest of your life when you do sign up.
You may choose to sign up for a Medicare Advantage plan instead of using Original Medicare, and these plans include all the services under Part A and B, plus optional services like prescription, dental, hearing and vision coverage.
Are Medicare Premiums Paid in Advance?
Whether your bill is for one or three months of premiums, you should expect to receive it around the 10th of every month, with your payment covering that month (or any subsequent months listed). The bill is due on the 25th of the month.
You can choose to have your premiums and other costs deducted from a bank account each month or from your Social Security payment, but quarterly bills are standard in most cases. If you have to pay a premium for Part A or you have a high income and end up faced with an Income Related Monthly Adjustment Amount payment (IRMAA), you must pay your premiums each month.
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Potential Reasons for a High First Bill
Whether you choose to pay for one or three months at a time, there are a number of other factors that can increase the total of your Medicare bills.
You’re Not Drawing From Social Security Yet
In many cases, the cost of your Medicare premium is deducted from your Social Security payment, so you never receive a bill that you have to pay. You may still receive a statement from Medicare reflecting premiums that have been paid by another method, but it will be marked, “This is Not a Bill.”
If you enrolled in Medicare but haven’t started receiving Social Security payments yet, then there is nothing to draw your premiums from, and you will have to pay this monthly or quarterly amount yourself.
You Are a High Earner
Medicare is a benefit for people who typically are retired and live on set incomes. While it’s in your best interest to plan financially for your retirement, having income levels above a certain threshold can cost you when it comes to Medicare.
The Income Related Monthly Adjustment Amount (IRMAA) is an additional fee you may have to pay on Medicare Part B and Part D if you earn above a certain income level. When this fee applies to you for Part D, this fee will be charged to you monthly, and you must pay it directly to Medicare.
As of 2024, IRMAA Part D fees are charged to people who make more than $103,000 per year as an individual or $206,000 as a married couple jointly filing taxes. Social Security will let you know if you have to pay this fee, and you will have to pay it whether you have Original Medicare or Medicare Advantage. Failure to pay this fee could cause you to lose your prescription drug coverage.
IRMAA-D ranged from $12.90 to $81.00 per month in 2024.
You’re Paying Penalties
It’s important to consider signing up for Medicare when you are first eligible regardless of your current needs. While you may be able to handle your medical costs on your own when you are first eligible for Medicare, you never know what your future health may hold.
If you put off signing up for Medicare, most parts of the program will charge you late enrollment penalties that will be added to your monthly premium costs every month – often for the remainder of your enrollment. These penalties are added to both Original Medicare and Medicare Advantage plans, and are even applied to your optional Medicare Part D coverage.
The following late enrollment penalties may be added to your bill:
- Part A: A 10% penalty will be added to your monthly premium for twice the number of months you failed to sign up after you were first eligible.
- Part B: A fee that equals 10% of your premium cost for each 12-month period you were eligible for coverage but didn’t sign up. This means you would pay 10% more for your premium if you waited one year to sign up, but 30% more if you wait three years. This penalty applies for the remainder of your Medicare enrollment and never goes away.
- Part D: A formula is used to calculate the penalty for signing up for Part D late. In 2024, this was 1% of the national base beneficiary premium of $34.70 for every month you were eligible for coverage but didn’t sign up. This penalty is added to your bill every month and never goes away.
Medicare Part B first-time expenses
Paying for your first three months of Medicare Part B premiums all at once can cause some sticker shock, but depending on where you fall in the billing cycle, your “surprise” could be even worse. Medicare bills are sent every three months unless you are on a monthly payment schedule, and could include premiums for months that you were enrolled before the first billing was done. Your bill or statement will outline exactly what dates and periods you are paying for.
Medicare Savings Programs
Healthcare isn’t cheap, but if you truly cannot afford to pay for your share of your healthcare costs after Medicare pays its share, there’s help.
Medicare Savings Programs offer several ways to get help paying for your Medicare premiums, deductibles, copayments and coinsurance.
The program is divided into four groups:
- Qualified Medicare Beneficiary (QMB) Program: This program helps pay for Part A premiums and Part B premiums, deductibles, coinsurance and copayments for people who meet certain eligibility and income criteria.
- Specified Low-Income Medicare Beneficiary (SLMB) Program: This program helps pay for Part B premiums only for people who meet certain eligibility and income criteria.
- Qualified Individual (QI) Program: This program also helps pay for Part B premiums only for people who meet certain eligibility and income criteria.
- Qualified and Disabled Working Individuals (QDWI) Program: This program helps pay for Part A premiums only for people who meet certain eligibility and income criteria.
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Sources
- Medicare Costs at a Glance. Medicare.gov.
- Medicare Premium Bill. Medicare.gov.
- Pay Part A & Part B Premiums. Medicare.gov.
- Medicare Savings Programs. Medicare.gov.
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