Despite the common misconception, Medicare is actually not free.
Additional fees may also apply, based on which plan you choose- original Medicare or Medicare Advantage. The Advantage plan means enrolling in Part C, which will offer a wide range of premiums, deductibles, and out-of-pocket payments. Those who choose original Medicare often enroll in a Part D prescription plan as well, and typically apply for a Medigap supplement to help cover copays, coinsurance, and deductibles which will not be covered otherwise. For a more in-depth comparison of original Medicare and the Medicare Advantage plan, please refer to my next post.
Medicare can be broken down into Part(s) A, B, C, and D respectively.
Part A- Hospital Insurance
Premium
Part A is funded by your payroll taxes.
Assuming you/your spouse have worked 40 quarters by the time you have joined Medicare, you will be charged no additional fees for Part A.
If you have worked only 30-39 quarters by this time, you will be charged a premium of roughly $259.
If you have worked 30 quarters or less, you’ll be charged a premium of around $471.
Hospital Inpatient Deductible and Coinsurance
Pay $1,484 deductible for each benefit period.
Payment by days spent under hospital care are as follows:
Days 1-60: $0 coinsurance per benefit
Days 60-90: $371 coinsurance per day of every benefit
Days 90+: $742 coinsurance per “lifetime reserve day” of every benefit.
Should you exceed 60 lifetime reserve days, you will pay full cost.
Part B- Doctors Insurance
Premium
Standard cost is $148.50, although this can vary depending on state and year. Everyone who is enrolled in Medicare is required to pay this nominal fee.
The rate will also vary individually, meaning those who claim Social Security benefits will likely pay less than the standard, while those with a higher income will likely pay more.
Deductible and Coinsurance
Deductible of roughly $203 on average.
After the value of this deductible has been reached, a beneficiary typically pays only 20% of Medicare approved amount (this 80/20 split cost rate is not universal, so make sure to determine what your plan offers).
Part C- Medicare Advantage
Premium
Varies by plan, but many are referred to as “zero premium”.
Beneficiaries of Advantage are still required to pay the premium for Part B, but typically there will be no additional premium on these plans as the cost is included.
Deductible and Coinsurance
There is not a standard cost for services because this cost varies greatly with each individual plan.
Because Advantage plans are not regulated by the government the same way traditional Medicare is, costs are determined by individual companies and plans.
"Healthcare Costs" by Images_of_Money is licensed under CC BY 2.0
Part D- Prescription Plan
Varies by plan
Throughout the year you will pay premium, yearly deductible, copayments/coinsusrance, and costs in the coverage gap.
Drug costs will vary based on several factors:
Coverage (which drugs are covered by your plan)
Drug “tier” (determined by individual company and plan)
Pharmacy
Drug benefit phase (whether deductible has been reached or if you’ve reached catastrophic coverage phase)
Income
Premium
The cost of a monthly premium will vary based on which plan you choose.
The part D premium cost is in addition to your premium for part B those who opt for original Medicare alongside a part D drug plan. This means it’s compulsary you remember to pay two seperate bills in order to retain insurance benefits.
However, for beneficiaries of a part C Advantage plan or Medicare cost plan with drug coverage, it is possible your monthly premium will include the cost of drug coverage.
Majority of people only pay their Part D premium, however you will be required to pay more if you enroll past the deadline.
Deductible & Coinsurance
The deductible for a prescription drug plan is completely separate from the deductibles for parts A and B.
As of this year, no Medicare drug plan can exceed a yearly deductible of $445. However, this does not necessarily mean your deductible will be this high- some plans don’t even have a deductible!
Once you and your plan have reached $4,130 spent on your drug plan (this is a combined cost and includes your deductible), you will not have to pay more than 25% of drug costs.
Catastrophic coverage comes into play once you’ve spent $6,550, and in result exit the coverage gap.
This means that you will only pay a small coinsurance or copayment fee for the rest of the year, so long as the prescriptions are covered by your plan.