The cost of Medicare often becomes a hot topic when you’re already enrolled, but learning about Medicare costs and benefits before you enroll can be helpful, as well. Original Medicare is designed as affordable health insurance for seniors 65 and older, and individuals under 65 due to certain disabilities. It can cover things like doctor visits, hospital care, preventive care, and more.
Understanding the potential costs related to Medicare can help you explore your options and compare plans when you’re ready to enroll. You deserve to find the coverage that’s right for you at a price you can feel comfortable with.
How does Medicare work?
Before discussing the costs associated with Medicare, it’s important to discuss how the program works. Coverage is split into four different parts in Medicare. These are:
- Medicare Part A
- Medicare Part B
- Medicare Part C
- Medicare Part D
Each part provides Medicare recipients with coverage for a specific type of medical care and coverage. Some parts are optional, but you’ll have options to make when you are enrolling in Medicare and during annual enrollment periods.
Medicare Part A
Medicare coverage under Part A pays for inpatient care in a Medicare-participating hospital or skilled nursing facility (SNF). This coverage is available for limited time-limited usage each benefit period. The first 60 days of inpatient care are covered fully, the next 30 days are covered at a discounted rate and then lifetime reserve days can be used if any are available to receive further discounted care. Some home health care services and hospice care are also covered by Medicare Part A.
Medicare Part B
Medicare recipients can opt into Part B coverage. This is outpatient coverage that helps to pay for doctor visits, outpatient surgery, lab work and durable medical equipment (DME). It also covers some home health services, rehabilitative care services like physical therapy, and some preventive care.
Medicare Part C
Medicare Part C is an alternative to Original Medicare. Medicare Advantage plans are offered by private insurance plans. They are required to include the same Part A and Part B benefits as Original Medicare, but many MA plans include additional benefits, such as vision care, routine dental exams, and prescription drug coverage.
Medicare Part D
Medicare Part D provides coverage for prescription medications. If you have Original Medicare, you can enroll in a stand-alone Prescription Drug Plan (PDP) or a Medicare Advantage plan that includes prescription drug coverage. Each Part D plan has a formulary that lists all of the covered medications in the plan. Drugs listed in the formulary must be available for purchase at a retail pharmacy and must be used by Medicare recipients. Drugs administered by a medical professional, such as intravenous medications, are usually included in Part B benefits. Part D is optional coverage.
How much does Medicare cost?
Since some parts of Medicare are optional, your overall costs will vary based on the benefits you select, what plan you choose, how often you need care, and where you live. If your coverage has an annual deductible, the amount must be met before benefits begin applying toward your healthcare costs. For Part B and/or Part D, you will likely face a monthly premium payment that must be kept current in order to utilize benefits. You will be responsible for coinsurance and/or copayments for services, as well.
Medicare Part A premiums and deductibles
Medicare Part A is usually available premium-free. This is because the premium is covered by paycheck deductions that Medicare recipients pay out over the course of their working lives. If you have not contributed enough to receive premium-free Medicare Part A, this coverage can be purchased. For 2022, the premium for Medicare Part A is based on how long you paid into Medicare taxes, up to a maximum of $499 per month. The deductible for Medicare Part A is $1,556 in 2022.
Medicare Part B premiums and deductibles
Medicare coverage under Part B usually has a monthly premium and deductible that are also susceptible to changes from year to year. For 2022, the standard premium for Medicare Part B is $170.10. The premium you pay is based on your modified adjustable gross income (MAGI) which factors in your income among other things related to your tax filing status.
The standard deductible for Medicare Part B for 2022 is $233. This is the amount in healthcare spending you will need to pay prior to your Medicare Part B benefits kicking in. This amount may also change from year to year.
Medicare Part D premiums and deductibles
Medicare Part D plans are offered by private insurance plans, so costs and coverage can vary. Plans include a monthly premium that is determined by your plan provider. Because each plan has its own formulary, or list of covered drugs, and includes different tiers of pricing for drugs, costs can vary.
The deductible for Medicare Part D has a limit of $480 in 2022, but your overall costs can depend on the plan you choose.
Your costs may change based on whether or not you choose Medicare Advantage (Part C) insurance or choose to have Original Medicare. Some people with Original Medicare purchase Medigap coverage, also known as Medicare Supplement insurance. Medigap policies help cover some costs that Original Medicare does not. You can’t have Medigap if you’re enrolled in a Medicare Advantage plan.
Work with an licensed Medicare sales expert
While the basics of determining your cost for Medicare coverage are fairly simple, there are a number of factors that can change the amount you pay. Your unique healthcare needs should always be factored into your consideration. You’re encouraged to also consider your needs going forward as Medicare coverage can only be changed without penalty during a Special Enrollment Period or during the Open Enrollment Period each year.
As such, it’s recommended to work with a Medicare health plan advisor or independent broker to discuss plan options. An independent Medicare advisor can shop plans from different providers, providing you with impartial advice and guidance to help you make the choices that are best for your specific healthcare needs.