Yes, you generally pay for Medicare after retirement, primarily through premiums for Part B (medical insurance) and Part D (drugs), though most get Part A (hospital) premium-free; these costs are often deducted from Social Security checks, but you can delay enrollment in some parts if you have other coverage, though it may lead to penalties later.
Exemptions from Medicare tax apply mainly to specific employment situations, like certain religious objectors (Amish/Mennonite) and some foreign workers (students, temporary scholars). U.S. citizens working for foreign governments or specific state/local employees hired before 1986 (with public pension plans) can also be exempt, as can students working for their universities under certain conditions. Generally, if you have earned income and aren't in one of these categories, you'll pay the Medicare tax.
If you are receiving monthly benefits from Social Security, Medicare premiums are usually deducted automatically. If you are not receiving Social Security benefits, the Centers for Medicare & Medicaid Services will mail you a quarterly bill with instructions on how to pay your premium.
Your CalPERS health coverage will automatically be canceled the first day of the month after you turn 65. Review Cancellation of CalPERS Health Coverage for information on reinstating your health coverage.
Here are some of the biggest Medicare mistakes to avoid:
Exemptions from Medicare tax apply mainly to specific employment situations, like certain religious objectors (Amish/Mennonite) and some foreign workers (students, temporary scholars). U.S. citizens working for foreign governments or specific state/local employees hired before 1986 (with public pension plans) can also be exempt, as can students working for their universities under certain conditions. Generally, if you have earned income and aren't in one of these categories, you'll pay the Medicare tax.
Medicare levy surcharge is an extra amount that you can avoid by having private health cover. Without hospital cover though it won't count. If you're covered for part of the year then yes the amount is adjusted.
For 2025, the standard Medicare Part B premium is $185 per month, with higher earners paying Income-Related Monthly Adjustment Amounts (IRMAA) on top of that, while most people get a lower premium due to the "hold harmless" rule protecting Social Security recipients from premium increases larger than their COLA. Part A is often free, but Part B costs vary, so check your Social Security statement for your exact amount.
People retire at 62, the earliest age for Social Security, to gain freedom, pursue passions, simplify life, or because of health issues or job loss, but it means accepting permanently reduced Social Security benefits and needing a solid financial plan to cover a potentially long retirement and the gap before Medicare eligibility at 65. It's a strategic choice balancing immediate lifestyle benefits (more time for hobbies, family, travel) with financial trade-offs, often involving lower monthly Social Security checks.
While it's not possible to entirely avoid paying Social Security and Medicare taxes, certain approaches can help you reduce your taxable income and, by extension, your tax liability.
If you earn more than the MLS income thresholds and only hold suitable private hospital cover for part of the financial year, you'll just have to pay the MLS for the days you weren't covered.
On a $100,000 capital gain, you'll likely pay 15% for long-term gains, resulting in about $15,000 in federal tax (plus potential state tax), but it could be 0% or 20% depending on your total taxable income and filing status, while short-term gains are taxed as ordinary income (potentially 22-24%).
Part A is free if you worked and paid Medicare taxes for at least 10 years. You may also be eligible because of your current or former spouse's work.
If you can't afford your Medicare premium, you likely qualify for financial help through Medicare Savings Programs (MSPs) or Extra Help, which cover premiums, deductibles, and drug costs for those with limited income and assets; start by visiting BenefitsCheckup.org or calling your State Health Insurance Assistance Program (SHIP) for personalized assistance. You can also get help from Medicaid or contact your State Medical Assistance office.
Starting in 2025, there is an annual limit on what you pay out-of-pocket for prescription medications through Medicare and Medicare Advantage prescription drug plans. All prescription medications, including specialty medications, covered by Part D plans are included under this cap.
The top ten financial mistakes most people make after retirement are:
Vermont, Utah and Minnesota topped the Commonwealth Fund's Medicare performance scorecard in 2025, whereas Kentucky, Mississippi and Louisiana struggled the most.