Any individual who has paid the Medicare hospital insurance tax (HIT, equal to 1.45 percent of an employee’s wages) for at least ten years during his or her working lifetime is considered “fully Insured” with respect to Medicare. As such, the individual is eligible to enroll in Medicare when the individual becomes age 65. In particular, this means that the individual is eligible to enroll in Medicare Part A (hospital insurance), Medicare Part B (medical insurance), Medicare Part C (Medicare Advantage) and Medicare Part D (Medicare prescription drug plan).
Upon enrolling in Medicare Part A, an individual who is considered Medicare “fully insured” does not pay a monthly premium. Nearly all federal employees and retirees enroll in Medicare Part A when they become age 65 because the Medicare Part A premiums were prepaid through the Medicare HIT payroll tax they have paid for at least 10 years.
SEE ALSO: Should Federal Retirees Enroll in Medicare Part B?
On the other hand, most Medicare Part B beneficiaries pay a monthly premium, which is determined by their adjusted gross income (AGI). Higher-income individuals may pay a higher monthly premium, known as a monthly Income-Related Monthly Adjustment Amount (IRMAA).
Each year, usually in November or early December, the Center for Medicare and Medicaid Services (CMS) sends notices to Medicare Part B beneficiaries notifying them of their following year Medicare Part B monthly premiums. This column discusses the various options available to Medicare Part B beneficiaries to pay their monthly Medicare Part B premium.
Most Medicare Part B beneficiaries do not formally pay their monthly premium bill to CMS because they get their Medicare Part B monthly premium deducted automatically from their monthly Social Security benefit payment each month. Those federal retirees who are receiving CSRS annuities may not have accumulated enough credits of Social Security to qualify for a monthly Social Security benefit. These retirees can request from the Office of Personnel Management (OPM) that their monthly Medicare Part B premiums be deducted from their monthly CSRS annuity check.
Those individuals enrolled in Medicare Part B and who are eligible for a monthly Social Security retirement benefit or a Railroad Retirement benefit but who are delaying receipt of this benefit will get a Medicare Part B premium bill sent to them from the CMS.
The following shows an illustration of a Medicare premium bill:
Here are two useful things to know about a Medicare premium bill:
• Expect the bill around the 10th day of the month. Medicare premium bills usually arrive on or around the 10th day of each month. Some Medicare beneficiaries only receive a bill once every 3 months; others receive their bills monthly.
• A Medicare beneficiary is paying for next month’s coverage. Medicare bills a beneficiary for the upcoming month, rather than the month that the beneficiary is currently in. For example, if a beneficiary is billed every month and the beneficiary gets a bill in January, the beneficiary is paying for Medicare Part B coverage in February. If a beneficiary is billed every 3 months and the beneficiary gets a bill in June, the beneficiary’s payment is for Medicare Part B coverage in July, August, and September.
Besides having the monthly Medicare Part B monthly premium deducted from a beneficiary’s monthly Social Security check, there are other ways a beneficiary can pay the monthly Medicare Part B premium. They are:
• Pay online through the beneficiary’s secure Medicare account. This is the fastest way to pay. To do this, the beneficiary will need to log onto or create his or her secure Medicare account in order to use this free service. Payment is made via credit card, debit card, or from a checking or a savings account. To create and set up a secure Medicare account, a beneficiary should go to: https://www.medicare.gov/account/create-account. It can take up to 6-8 weeks for automatic deductions to start. Until a beneficiary’s automatic deductions start, the individual will need to pay his or her premiums another way.
• Sign up for Medicare Easy Pay. With this free service, Medicare will automatically deduct monthly premium payments from a beneficiary’s checking or savings account each month. The following is the link to get information about Medicare Easy Pay and to enroll: https://www.medicare.gov/basics/costs/pay-premiums/medicare-easy-pay.
With Easy Pay, Part B premiums deductions are automatically done on the 20th of the month, or the next business day. There are two ways to enroll in Medicare Easy Pay, namely: (1) Log onto (or create) one’s secure Medicare Account. Select “My Premiums” and then “Sign Up” to complete a short online form; or (2) Fill out, print and mail a paper form.
Once Medicare Easy Pay starts, two things will happen each month:
(1) The Medicare Part B beneficiary will get a monthly statement letting the beneficiary know that Medicare will deduct from the beneficiary’s bank account that month: and
(2) Medicare will deduct the beneficiary’s monthly premium from a bank account on or around the 20th of the month. The beneficiary’s bank statement will show a payment to “CMS Medicare Premiums.”
If the beneficiary’s bank rejects or returns the automatic payment, then Medicare will send the beneficiary a letter explaining why and tell the beneficiary how to send payment to Medicare.
• Pay directly from a Medicare Part B beneficiary’s saving or checking account through a bank’s online bill payment service. Some banks charge a service fee.
• Mail payment to Medicare. Payment can be made by check, money order, credit card or debit card. The payment coupon at the bottom of the beneficiary’s Medicare Premium bill needs to be filled out and included with payment. The payment together with the Medicare payment coupon should be mailed to:
Medicare Premium Collection Center
P.O. Box 790355
St Louis, MO 63179-0355
In summary, besides being deducted from a Social Security retirement or disability monthly check, there are four ways a Medicare Part B beneficiary can pay his or her Medicare premium, as presented here:
All Medicare Part B premium bills are due on the 25th of the month. In most cases, a Medicare Part B monthly premium is due the same month that the beneficiary receives the bill. For the payment to be on time, Medicare must receive the payment by the due date of the bill. Medicare recommends submitting the payment at least five business days before the due date so that the bill can be received on time.