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Medicare is the Federal government’s health insurance program for citizens who have reached age 65, and for certain younger people with disabilities. Medicare benefits are funded by the Medicare tax of 1.45% that is withheld from your salary or wages, plus an identical Medicare tax of 1.45% that is levied on your employer’s payroll. If you are self-employed, Medicare taxes are included in the Self-Employment Taxes on your net self-employment income that you pay via Estimated Tax Payments.

If you work for a Federal, State or Municipal government agency, the Medicare tax of 1.45% is withheld from your salary or wages (unlike with Social Security).

Medicare s comprised of several parts to help cover specific services: 

Part A (Hospital insurance). Covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. You usually don't pay a monthly premium for Part A coverage if you or your spouse paid Medicare taxes for a certain amount of time while working.

Part B (Medical insurance). Covers certain doctors' services, outpatient care, medical supplies, and preventive services. The minimum Part B monthly premium will be $144.60 (2020, $135.50 in 2019) (or higher, depending on your AGI).

Part C (Medicare Advantage Plans). A type of Medicare health plan offered by a private company which contracts with Medicare. Medicare Advantage Plans are more like an HMO or PPO, provide all of your Part A and Part B (and optionally, Part D) benefits.

Part D (Prescription Drug Coverage). Coverage for prescription drugs. The minimum Part D monthly premium will be $12.20 (2020, $12.40 in 2019) (or higher, depending on your AGI).

Medicare does impose limitations with respect to the types of services that it will cover under Parts A and B. Medicare also assesses an annual deductible that you must pay for your prescriptions before it will begin to pay for them under Part D coverage. For specific details, please refer to www.medicare.gov.

Most people decide to enroll for coverage under Medicare Part A and Part B plans. If you require prescription medications, then enrolling under Part D will make sense.

The costs for your Medicare premiums are determined by your AGI, as reported on your Federal Form 1040 income tax return from two years prior. I.e., the cost of your 2020 (or 2019) Medicare premiums is determined by your AGI, as reported on your 2018 (or 2017) Form 1040 income tax return.

If you are eligible for and receiving Social Security benefits, your Medicare premiums will be deducted directly from your monthly Social Security benefits. If you are not eligible for Social Security benefits, or you have opted to defer receiving your Social Security benefits to a later age, Medicare will bill you for your premiums quarterly.

When to Apply For Medicare 

You should apply for Medicare health insurance coverage exactly 3 months before you turn age 65. If you delay your enrollment, you may incur a late enrollment penalty, higher monthly premiums, and a gap in coverage. 

To apply for Medicare insurance coverage, click here:


Once you have been approved for Medicare insurance coverage, you should contact your current employer or private health insurance provider to convert your current health insurance plan over to a “supplemental” health insurance plan, which would be accessed only after Medicare coverage benefits have been exhausted. Such a conversion should provide you with a significant reduction in the cost of the monthly premiums that you have been paying for such health insurance coverage.


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