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Carla Fried: What you need to know about Medicare by age 63. Yes, 63

Carla Fried, Rate.com on

Published in Home and Consumer News

Medicare Part B premiums are pegged to income reported prior to eligibility

Rate.com financial news editor

When their 65th birthday is approaching, most Americans begin seriously studying their Medicare options.

But few realize that financial moves made at age 63 can mean you will pay a higher monthly premium for Medicare Part B. It pays to plan way ahead.

Part B: Everyone needs it. Nearly everyone pays for it

Medicare Part B is insurance that pays 80% of the costs for outpatient care. Doctor appointments, tests, and outpatient treatment such as chemotherapy and dialysis. (Medicare Part A covers hospitalizations and on a limited basis will cover skilled nursing home care.)

 

The vast majority of Medicare enrollees pay a monthly premium for Part B coverage. (Low income households may qualify for state-run programs that help pay the Part B premium.)

The standard monthly premium for 2021 is $148.50 per person. And higher income households pay more.

A new retirement acronym to master: IRMAA

Medicare Part B premiums became means-tested beginning in 2007. The official Medicare term for the means-testing is Income Related Monthly Adjustment Amount (IRMAA). Nutty acronym aside, it’s a tax based on income.

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