Medicare is a socialized health insurance benefit granted by the state to individuals who meet certain criteria. In general, Medicare benefits are given to those who are above 65 years of age or below it but are incapable of maintaining proper medical treatment due to personal circumstances i.e. partial or total incapacity. Normally Medicare contributions are partly subsidized by the state, the employer and/ or the employee. This article will discuss the different Medicare costs as well as the advantages of having one.

Taxes Pay for Medicare

In general Medicare is made possible by payroll taxes that are imposed and regulated by different entities and governed by different laws such as the Federal Insurance Contributions act (FICA). Payroll tax means taxes imposed on the total salary and or wages earned by an individual. As mentioned earlier Medicare fees are shouldered by three entities (employee, employer and the government) if employed but two entities if not employed (employee and government).

Medicare sharing

Medicare costs usually involve 2% to 3% of an individual\’s total salary, wages, commissions, and/or bonuses. In the United States the exact amount is 2.9% with 1.45% shouldered by the employee and 1.45% shouldered by the employer. The government comes in because the total Medicare benefits receivable is way above the accumulated 2.9% poll tax collected monthly. Take note that beginning 2013 any annual income in excess of $200,000 (single) or $250,000(married) will be taxed at 3.8%

Four Part Medicare

1. Part A (Hospital Insurance): hospital insurance that covers inpatient procedures that require hospital admittance, skilled nursing and facilities or admittance to other health care facilities

2. Part B (Medical Insurance): covers medical services and procedures that do not require in patient care. This also includes preventive treatment and medicine to some extent.

3. Part C (Medicare Advantage Plan): in the nature of HMO or PPO plan which can be offered or availed of by the employee

4. Part D (Prescription Drug Coverage): This is prescription drug coverage which can be availed of by an employee. Note, if the individual failed to avail of such but subsequently needs to purchase prescription drugs and does not have any creditable prescription drug coverage then the same individual can still avail of such by paying a late enrollment penalty.

Depending on how many parts are chosen Medicare payments can increase or decrease. However take into consideration that each part represents services that are normally way above the accumulated payroll taxes actually paid. For example, Mr. A chose to avail of all four parts. Let us assume that his annual salary is $150,000. Mr. A and his employer pay the sum of $4,350annually (1.45% employee share and 1.45% employers share). If Mr. A is hospitalized due to a car accident and require in patient care, then needs outpatient care plus medicine Mr. a will be paying more than the $4,350. Just think about it, that amount alone would probably only cover a day or two of hospitalization and basic tests and procedures. Therefore the Medicare costs should not be computed by the amount of money that is paid by way of taxes but by the amount of money that can be potentially saved.

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Author Bio: If you are looking for the best medicare costs and medicare coverage, visit our site for more tips and information. Contact us for free medicare advice.

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