How to Avoid Paying Too Much Out-of-Pocket with Medicare 

Ever since 1965, the national health insurance program in the United States known as Medicare has been providing health care coverage for people who are 65 and older, or for adults of any age with qualifying disabilities. 

While Medicare insurance covers a large list of medical services and supplies, there are out-of-pocket costs that Medicare beneficiaries still need to cover themselves. These can include: 

  • Plan premiums
  • Deductibles
  • Coinsurance 
  • Copayments
  • Supplemental insurance plan costs
  • Prescription drug coverage
  • Late enrollment fees
  • Costs for medical services that aren’t covered by Medicare

Many people who depend on Medicare for health insurance coverage are retired and living on a budget, so paying too much for out-of-pocket Medicare expenses can be difficult. Fortunately, there are several ways you can cut down on your annual costs for Medicare, here’s a look. 

Ways to avoid paying too much out-of-pocket with Medicare

Avoid late enrollment penalties 

If you haven’t enrolled in Medicare yet, but are going to be eligible soon, the most important thing you can do to lower your out-of-pocket costs is to enroll in a Medicare plan as soon as you become eligible. 

Your 7-month initial enrollment period begins three months before the month you turn 65 and ends three months after your birth month. If you’re collecting Social Security retirement benefits during this period, the Social Security Administration automatically enrolls you in Medicare Parts A (hospital insurance) and B (medical insurance). However, if you aren’t collecting retirement benefits, you’ll have to enroll yourself. 

If you don’t enroll in certain parts of Medicare during your initial enrollment period and don’t have comparable insurance through a group or employer, you may be subject to late enrollment penalties later. 

For instance, you will pay a higher monthly premium (ten percent for every 12-month period that you didn’t enroll) for Medicare Part B if you enroll later. If you choose to enroll in a Medicare prescription drug (Part D) plan outside of your permitted enrollment periods, you may pay a penalty that is calculated by multiplying one percent of the national base beneficiary premium ($34.70 in 2024) by the number of months you didn’t have Part D coverage.  

Make sure your Medicare plan fits your health care needs

Medicare allows enrolled beneficiaries to change plans annually during the Open Enrollment Period (October 15 to December 7). This gives you a great opportunity to compare your plan to other available plans in your service area and make sure you’re getting the right amount of health care coverage for your needs and your budget. 

Before enrolling in a Medicare Advantage (MA) plan, compare plans carefully. Make sure they offer the in-network providers and services that meet your preferences. If the plan has too many network restrictions and you choose to use health care providers outside the plan’s network, you may pay more out-of-pocket depending on the plan you choose.

Pay attention to the details

When you receive your Medicare bills, make sure to check them carefully for errors or charges for services that you didn’t get. If you find an inaccuracy, call your health care provider’s office to ask for assistance. 

If your physician orders a hospital stay, ask him whether it’s an inpatient or outpatient stay. As an admitted inpatient, Medicare Part A covers health care services, and you pay the deductible amount for the benefit period. However, if you’re admitted as an outpatient, Medicare Part B covers its share of each covered service you get in the hospital, and you’ll pay 20 percent of the cost. 

Depending on the type of care you receive in the hospital, you may pay more as an outpatient than as an inpatient. Also, if you need skilled nursing care related to your hospital visit, you must be admitted as a hospital inpatient for at least three days before your nursing care stay to be eligible for Medicare coverage. 

Research additional savings options 

If you choose to get your benefits through Original Medicare Parts A and B, you can also purchase a Medicare Supplement plan during your initial enrollment period. These plans, known as Medigap, cover some expenses that Parts A and B don’t, such as the Part A deductible and coinsurance charges. You have a 6 month Medigap Open Enrollment Period that begins once you are 65 and have Part B. During that period you will not be subject to medical overwriting. If you wait to purchase a Medigap policy, you may be charged more or even turned down for coverage based on pre-existing conditions.

You might be eligible for enrollment in a Medicare Savings Program if you can’t afford to pay the out-of-pocket costs for Medicare Parts A and B. And the Extra Help program can help you cover your prescription drug plan expenses. If you aren’t sure about qualification requirements, you can find this information on Medicare’s official website, or by calling a local CMS office for assistance. 

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