When you transition from Covered California or an employer group health insurance plan, it is good to create a budget of the Medicare insurance premiums. Some of the Medicare insurance premiums are higher than you may have expected. Once you understand the insurance premiums for the various parts, plans, and options, you can make a budget for when you eventually segue to Medicare when you turn 65 or later.
What Does Medicare Cost?
This post focuses on just the Medicare insurance premiums. The insurance premiums are fixed costs that you will have to pay every month. Your health care expenses will be in addition to the insurance premiums. Original Medicare is composed of Parts A (hospital insurance) and Part B (outpatient insurance.)
For most people who have worked for 10 years and paid Medicare taxes, Part A is zero cost. The spouse of an individual who has the necessary work credits will receive Part A at zero cost. If the individual has partial work credits, Part A will be $285 for 2025. If there is no work history that paid into Medicare, the cost of Part A is $518 for 2025.
Extra Cost for Part B and Part D Premiums
The Social Security Administration (SSA) has a history of the work credits and determines if you will pay $0 or a higher amount for Part A. The SSA also knows your income tax history. The monthly insurance premium for Part B of Medicare is $185 for individuals who had earned less than $106,000 or $212,000 for a married couple filing a joint federal income tax return. As the household income increases, the insurance premium for Part B increases. For individuals who earned over $500,000, the Part B premium is $628.90 per month for 2025. Remember that the monthly premiums are per person. If a married coupled earned over $750,000 and are eligible for Medicare, each person will pay $628.90 for Part B.
The higher premium for Part B, over the base rate, is known as the Income Related Monthly Adjustment Amount (IRMAA.) The IRMAA also applies to Part D drug plans that are issued by insurance companies. The IRMAA for the Part D plans are a set amount in addition to the insurance premium of the Part D drug plan. For individuals who earned under $106,000, there is no additional cost. For individuals and married couples who earn more than $106,000 or $212,000 respectively, there will be an additional cost over the Part D premium. The highest extra cost (IRMAA) for individuals who earned over $500,000 is $85.80 per month.
Low-Cost Medicare Advantage Plans
Medicare Advantage plans are a great way to reduce monthly insurance premiums and contain the health care expenses of Medicare. You must have both Parts A and B in order to enroll. This means that you must pay any Part A and Part B premiums associated with Original Medicare. Most Medicare Advantage plans include the Part D drug coverage. Even if the Medicare Advantage plan has a zero monthly premium, if you are subject to any IRMAA on your Part D enrollment, you will have to pay that extra amount.
Throughout California there are numerous Medicare Advantage plans with a zero monthly premium. In Los Angeles County, of the 73 plans listed on Medicare.gov, only eight plans had a monthly premium.
Medicare Supplement Plans add to Monthly Premium Costs
Another option to contain Original Medicare health care expenses are the Medicare Supplement plans. Monthly premiums for Medicare Supplement plans can range from $110 (Plan A) upwards to $175 (Plan G) for an individual turning 65 in 2025. Medicare Supplements are primarily age based, which means you are guaranteed a rate increase every year.
Monthly rates can vary by the region you live in. For example, a Plan G can have a higher premium in Northern California versus Southern California. Of course, there can be significant rate differences between the carriers, so it is best to shop around. Finally, the carriers may offer various discounts for auto-pay, two-person enrollment, and new to Medicare discounts that can all lower the final premium below the average premium range.
For individual who receives no extra help from Medi-Cal, the least cost path of Medicare insurance premiums has Part A at $0, Part B at $185, and Medicare Advantage plan at $0 (that includes Part D) for a total monthly insurance premium cost of $185. Another path has the Medicare beneficiary enrolling in a Medicare Supplement plan with Part A at $0, Part B at $185, Part D at $50, and the Medicare Supplement Plan G at $175 for a total monthly insurance premium cost of $410.
The estimated monthly premiums may be higher if Income Related Monthly Adjustment Amounts are triggered along with any late enrollment penalties. To reduce monthly Medicare premiums beneficiaries can apply for the Social Security Low Income Subsidy to help reduce Part D costs. In addition, individuals can apply for the Medicare Savings Program through Medi-Cal and potentially their Part B insurance premiums covered.
YouTube Video Outline of Medicare Insurance Premiums
