Why Is My First Medicare Bill So High?

If you're new to Medicare and were surprised by the hefty price on your first Medicare bill, you may be wondering what the deal is.

It's important to remember that while a lot of Medicare is paid for by the federal government, there are still some costs you'll need to cover out-of-pocket.  

Let's take a look at what costs you should expect to pay, and why your first Medicare bill may be higher than you expected.

‍How Much Does Medicare Cost?

Medicare Part A, which covers hospital stays and some home health services, comes at a $0 premium for most people, as long as either you or your spouse have paid Medicare taxes for 10 years or more.

If you or your spouse did not pay Medicare taxes for that long, you would need to pay for Part A, and the amount varies depending on how many years you worked.  

Medicare Part B, which covers doctor visits and outpatient care, has a standard monthly premium that is determined by the federal government and it changes each year. In 2023, the standard premium for Part B is $164.90 per month.

However, depending on your income, you may be subject to the Income Related Monthly Adjustment Amount (IRMAA), in which case you would have to pay a higher premium.

There are also Medicare Advantage plans (Part C), Medicare Supplement plans, and Medicare Prescription drug plans (Part D) that may come at an extra cost.

And don't forget that Medicare also has certain out-of-pocket costs that you are responsible for in addition to the monthly premium including coinsurance and copayments for specific medical services and medications, although these won't show up on your bill.

Reasons Your Medicare Bill Could Be Higher

There could be a few reasons you're looking at a Medicare bill that is more than you expected. Let's look at the details.  

You are billed quarterly

If you are paying for Part B only, you will be billed every three months, which may come as a surprise for people who are not prepared for it (Medicare.gov). That means your first bill will be three months' worth of premiums.

If you are paying for Part A, you will be billed for that premium every month, and if you are paying for an income-related monthly adjustment amount, you will have to pay that additional amount every month.

Otherwise, your Medicare bill will include 3 months of premiums.  

If you're not sure which applies to you, check your billing statement for dates. It will clearly state the specific periods you're getting charged for.  

You have a higher income

If your income is higher than a certain threshold, you may have to pay an Income-Related Monthly Adjustment Amount (IRMAA). That means you'll have to pay an additional amount on top of the standard Part B and Part D premiums.

Related: How Income Affects Your Medicare Costs

The IRMAA is based on your income reported on your tax return from two years ago.

For example, in 2023, if you file an individual tax return or are married and file separately, you will pay the higher premium if your modified adjusted gross income (MAGI) is more than $97,000. If you are married and file a joint tax return, the threshold is $194,000.

Social Security will notify you if you have to pay a higher premium due to your income, so be on the lookout.

Also, if you are paying the IRMAA, and your income significantly decreases, you can report that to the Social Security Administration and ask them to reevaluate the amount you have to pay.

Related: How To Lower Your Medicare Premiums: 3 Easy Steps

You enrolled too late

You first become eligible for Medicare when you are 65, and you will have what is called an Initial Enrollment Period (IEP). Your IEP lasts for 7 months – the three months before your birthday, the month of your birthday, and the three months after.  

If you didn't sign up for Medicare during your IEP and didn't have a qualifying reason as an exception (like having other creditable health coverage), you may have to pay a late enrollment penalty.

This penalty is added to your Medicare Part B premium and stays with you for as long as you have Medicare.

Here's a breakdown of the penalties you could face:

• For Part A, if you are one of the few who have to pay a premium for Part A and you didn't sign up during your IEP, a 10% penalty will be added to your monthly premium. You'll have to pay the penalty for twice the number of years you delayed enrollment. So, if you waited a year, you would pay 10% more for 2 years.  
• For Part B, if you were eligible for coverage but didn't sign up during your IEP, you'll have to pay an extra 10% of your premium cost, and this penalty stays with you for as long as you're on Medicare.
• For Part D, you'll have to pay 1% for each month you were eligible but didn't sign up or if you go 63 days or more without creditable drug coverage. This penalty is added to your bill every month and will stay with you forever.  

To avoid these penalties, make sure you sign up for Medicare during your Initial Enrollment Period and save yourself from the additional costs.

How Do I Pay My Medicare Premium?

If you're already receiving benefits from Social Security (or the Railroad Retirement Board), your Medicare premium will be automatically deducted from your benefits each month.  

However, if you aren't yet collecting benefits, you'll get a bill from Medicare for the cost of your premium.

If you get a bill, there are several ways you can pay it:

• Online: Use your Medicare.gov account.
• Medicare Easy Pay: If you sign up for this, your premiums will be automatically deducted from your checking or savings account each month.  
• Bill Pay: You can use your bank's bill pay service to pay your premium directly from your savings or checking account however some banks may charge a service fee for this.
• By mail: You can fill out and sign the payment coupon at the bottom of your Medicare bill and mail it in the return envelope that it came with along with your check, money order, credit card, or debit card info to: ‍

Medicare Premium Collection Center
PO Box 790355
St. Louis, MO 63179-0355

All Medicare bills are due on the 25th of the month so be sure to pay on time to avoid any late charges.  

Medicare Savings Programs

If you find yourself grappling with healthcare expenses, even after Medicare chips in, there are several state-funded Medicare Savings Programs that may be able to help with the costs.

These programs offer payment assistance for Medicare premiums, deductibles, copayments, and even coinsurance for those who financially qualify.  

You can contact your State Medical Assistance (Medicaid) office to get details and see if you qualify.

The Takeaway

Your Medicare bill may be higher than expected for a couple of different reasons, but it usually comes down to not having a thorough understanding of what you are responsible for paying and how often you are being billed.

If you have any questions about your bill, or about Medicare in general, our experts at Sams/Hockaday would love to walk you through all the details.

We're here to help you figure out the complexities of Medicare and make sure you are set up with the best plan for your healthcare needs and budget.