Payroll Deductions and Other Costs
A lot of people are unsure about what Medicare costs—not only for those currently enrolled in Medicare, but for people not yet receiving Medicare benefits who are paying into the system. Following are answers to a couple of important questions we hear from time to time about Medicare-related costs the average person can expect to pay.
How much do they take out for my Medicare?
As you may know, Medicare is funded largely by:
- Payroll taxes paid by most employers and employees
- Income taxes paid on Social Security benefits
- Premiums paid by Medicare beneficiaries
- Interest earned on Medicare trust fund investment
As far as payroll deductions are concerned, the Medicare tax rate is currently set at 1.45% of income. (Social Security deductions, meanwhile, are set at 6.2%.) Under provisions of the Affordable Health Care Act of 2010, the Medicare tax rate for people earning $200,000 or more (or joint filers earning $250,000 or more) is scheduled to increase to 2.35% in 2013.
Currently employers match the employee contribution of 1.45%. In 2013 employers will continue to contribute 1.45% of employees’ income to the Medicare fund even in situations where employees’ incomes require employees to contribute the higher 2.35% rate.
What Other Medicare-Related Costs Can I Expect?
What you pay depends on your insurance choices and your income.
As far as Original Medicare (Medicare Parts A and B) is concerned, chances are you’ll pay about $100 a month. Most Medicare recipients get Part A at no cost, but the majority of people enrolling in Medicare in 2012 pay a monthly Part B premium of $99.90, and people with high incomes usually pay more.
If Original Medicare is all the coverage you have, you’ll also have to pay a sizable share of the costs of medical services you receive. Your deductible for hospital stays will be $1,156, while you’ll have a $140 deductible plus a 20% coinsurance for your doctor bills and outpatient coverage. These figures are current as of 2012, but you should be aware that your Part A and Part B deductibles are subject to change annually.
Because Original Medicare leaves you with numerous coverage gaps, you are well advised to look into Medicare supplement (or Medigap) and Medicare Advantage plans.
While Medigap plans and most Medicare Advantage plans require you to pay monthly premiums, they can pay off big-time in the long run by giving you a degree of coverage that Original Medicare can’t approach. How much does a good Medicare supplement or Medicare Advantage plan cost? Not as much as you might think—because MedicareMall will leave no stone unturned in shopping the market on your behalf.
Contact MedicareMall now and we’ll make it our priority to find the coverage you need at a price you can afford.
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