As you enter retirement age and start thinking about your future, your health insurance is an essential part of that. What kind of insurance will you have if you are no longer working? Well, if you’re 65 or older, the answer is Medicare. Medicare insurance is for those 65 and older or with specific disabilities. There are certain requirements you must meet to become eligible for Medicare.

Medicare Eligibility

Many people incorrectly think Medicare starts at age 62. Although you can receive Social Security benefits at 62, you won’t be eligible for Medicare until 65. You must be a United States citizen or a permanent resident for five consecutive years to qualify for Medicare at 65. However, it is possible to receive Medicare benefits earlier than 65.

You can qualify for Medicare early if you fall into one of these three circumstances:

• Receive Social Security Disability Income for at least 24 months
• Have end-stage renal disease and need a kidney transplant or dialysis
• Have Amyotrophic Lateral Sclerosis (ALS)

Additionally, you can pair your Medicare with a Medicare Supplement plan once you qualify for Medicare. Learn more about Supplement plans at https://boomerbenefits.com/best-medicare-supplement-plans.

Medicare vs. Medicaid

Medicaid is another kind of program that provides health care services and often gets confused with Medicare. However, Medicaid is available to those with low income. If your income is under a specific threshold, you can qualify for Medicaid. The state governments provide this assistance program, whereas the federal government provides Medicare.

Since each state provides Medicaid to low-income individuals, the income levels vary. However, Original Medicare costs are the same for all beneficiaries, no matter which state you live in.

Original Medicare Premiums

All Medicare beneficiaries must pay Medicare premiums. Some people may qualify for premium-free Part A if they worked at least 40 quarters in the U.S. and paid FICA taxes. Those taxes funded your Part A premium.

However, Medicare Part B is not free. There is a standard base premium of $170.10 in 2022. You pay this regardless of your income. Therefore, if you qualify for Medicare and enroll in Part B, you will pay this premium. Your income does not entitle you to Medicare. However, you could pay more than the standard premium if you have a high income.  

Part B Income-Related Monthly Adjustment Amount

Your Medicare Part B premium is affected by your income. Every Part B enrollee will pay $170.10 in 2022, but you could potentially pay much more. Social Security looks at your modified adjusted gross income (MAGI) displayed on your tax return from two years prior. For example, in 2022, they look at your 2020 tax return. That number will determine what you will pay in the current year.

There are six total income brackets that you could fall into. The lowest amount you could pay is the standard premium, but the highest amount you could pay is $578.30 in 2022. The additional amount above the standard premium is the Income-Related Monthly Adjustment Amount (IRMAA). Filing individually or jointly does make a difference as well.

Additionally, these income brackets change each year. So, it is possible to be subject to IRMAA one year but not the next or vice versa.

Appealing IRMAA

Since IRMAA is based on your income from two years prior, you can appeal it if your income has changed since then. For example, if you start Medicare in 2022 and retired in 2021, your current income is likely to be less than what it was in 2020. Therefore, you can submit an appeal to ask them to reduce the IRMAA surcharge. There are several circumstances that you may qualify for to appeal IRMAA.

Summary

Your income has nothing to do with your Medicare eligibility. Instead, your Medicare eligibility is based on your U.S. citizenship or permanent residency status and age. However, your income can affect how much you will pay for Medicare.