5 Key Details to Know About the Cost of Medicare

Medicare is one of the most valuable programs available to Americans over age 65. However, despite what many people think, Medicare is not free, and it does not cover 100% of medical costs. Participants are required to pay a variety of charges including co-payments, deductibles, and monthly premiums. Furthermore, there is an annual no out-of-pocket limit on Medicare expenses.

The costs associated with Medicare tend to increase over time, and 2019 is no exception. The different parts of Medicare and its corresponding expenses are outlined below.

Medicare Part A

Medicare Part A, or hospital insurance coverage, usually comes with no monthly premium for participants (often called “premium-free Part A”). Participants (or their spouse) who have at least 40 quarters (10 years) of qualifying employment are exempt from Part A premiums.

Despite not requiring a monthly premium, Medicare Part A coverage still comes with deductibles and coinsurance payments for various services.  Part A does not have an annual deductible but instead has a deductible for each hospital benefit period.

The hospital deductible for each period if $1,364. The coinsurance is based on the length of the stay.  The 2019 coinsurance prices are as follows:

• Days 1-60: $0 (all hospital costs are covered after deductible is met)
• Days 61-90: $341 per day
• Days 91+: $682 per day, until “lifetime reserve days” are used

Medicare participants have 60 lifetime reserve days for hospital stays. Once these days are used, the participant is responsible for 100% of hospital expenses.

If a Medicare participant ends up in a skilled nursing facility, the first 20 days do not have a copayment. However, days 21-100 come with a $170.50 per day coinsurance cost.

Medicare Part B

Medicare Part B covers doctor visits, outpatient services, and durable medical equipment (DME). In contrast to Part A, all participants pay a monthly premium for Part B coverage. For 2019, the standard premium is set at $135.50 each month. However, higher premiums apply to participants who are considered high-income. 

Part B participants also have to pay a $185 deductible. After the deductible is met, patients will typically pay 20 percent of covered services. In order to keep costs down, participants should be sure their healthcare providers “accept assignment” for Medicare. Providers who do not accept assignment can bill more than the Medicare-approved amount. Providers also have the option to opt-out of Part B billing, leaving patients with the full cost of their services.

Medicare Part D

Medicare Parts A and B do not cover prescriptions; that’s where Part D comes in. Prescription drug plans are available under Medicare Part D, and there is a wide range of policies to choose from.

Costs vary greatly depending on the insurance company and the level of coverage. The average Part D premium in 2019 is $33.19. Similar to Part B, high-income consumers can expect to pay more for their monthly premiums. Additionally, the standard deductible for Part D is $415 in 2019, but some plans are able to offer a $0 deductible.

When selecting a Part D plan, it is important to look at monthly premiums and out-of-pocket expenses for the prescription drugs you plan to take. Each plan categorizes drugs into different levels called tiers. Each tier has its own copayment amount. It would be beneficial to use the lowest-cost drug to treat medical conditions: less expensive drugs are usually on a lower tier and are accompanied by a lower co-pay.

Medicare Part C (Medicare Advantage Plan)

Medicare Part C, or a Medicare Advantage Plan (MA), rolls together Medicare parts A, B, and D. The coverage of these plans varies greatly, as do their associated costs. The premiums can range from $0 to over $200, with the average being $28 per month for 2019. MA Plans are helpful because there is an out-of-pocket annual maximum. As a result, these plans can help avoid financial struggles caused by unexpected illness or injury.

Medigap

Many people opt to pair Original Medicare (Parts A and B) with a supplemental policy, called Medigap. Medigap can help mitigate many copays and deductibles that Medicare participants would otherwise pay for out-of-pocket.

Medigap plans are sold by private insurance companies, and there are varying levels of coverage between the plans, which results in a variety of prices. Keep in mind, however, that a Medigap policy cannot be paired with an Advantage Plan. Learn more about and compare Medigap plans, also known as Medicare Supplement plans, on Health com’s review of the best Medicare Supplement companies.

Being Prepared for Medicare Costs

Medicare beneficiaries with limited incomes and who meet certain guidelines may qualify for assistance with healthcare costs. In order to further lessen costs, be sure to sign up for Medicare when you first become eligible. Failing to sign up when you’re supposed to can result in late penalties that are tacked on to monthly premiums.

Overall, the key to avoiding financial hardships from healthcare costs is preparation. Because many Medicare beneficiaries are not aware that the coverage comes with additional expenses, they find that they may not have saved enough for retirement. While a low Medicare premium may attract you to a certain plan, you may end up paying more in out-of-pocket costs. As a result, it may be beneficial to contact an unbiased, licensed insurance agent to help navigate options to best meet your health and financial needs.

*All numbers are taken from 2019 Medicare Costs published on medicare.gov.

Caitlin Morse is a communications professional with more than fifteen years of marketing, writing and public relations experience, with the majority of her career spent within the insurance industry. She has worked at Allstate Insurance Company and Combined Insurance, a Chubb company, and has developed and executed various sports, entertainment and multicultural sponsorship programs on behalf of clients. A graduate of Lehigh University with a bachelor’s degree in Journalism, Morse is a busy wife and mother of three who loves to cook, read, travel and spend time with family and friends.