How Much Does Medicare Cost?
Medicare costs can be different person to person, depending on which type of plan you choose. After you have a basic understanding of Medicare and it’s basic components, you will want to know how much does Medicare cost? The answer is, it depends on how you structure it. Let’s break down what you could be paying.
Medicare Costs Broken Down & Made Simple
When you set up your Medicare, you will decide if:
- You just want Original Medicare (Parts A & B) and a Prescription Drug Plan (Part D).
- You want Original Medicare plus a Medigap Plan (Aka a Medicare Supplement) and a Prescription Drug Plan.
- Or you want a Medicare Advantage Plan (Part C) that may or may not include a Prescription Drug Plan.
Your costs will also be different if you get help in any way from any state or federal programs.
How Much Original Medicare Costs
- Medicare Part A – For most people, there is not a cost or premium you pay for Part A. Your Part A is premium free if you worked in the US and paid Medicare taxes for at least 30 quarters. (You will pay up to $471 a month depending on your work history for Part A if you do not meet the premium free requirements in 2021).
- There is also a $1,484 yearly deductible for Part A services and coinsurance tiers on hospital stays.
- Medicare Part B – You will pay a premium for Part B. In 2021, the standard premium is $148.50 per month. If you make more than $85,000 a year in retirement, you will pay more on an income dependent scale.
- There is also a $1203 Part B deductible and a 20% coinsurance (co-pay) for most approved services.
- Late penalties may also apply to Part B (and less commonly, Part A) if you do not sign-up when you are first eligible.
How Much Prescription Drug Costs
Medicare Part D – Prescription Drug Coverage needs to be obtained from a private insurance company. Each company will price their service differently and you can shop for the best plan and price for you. In addition, you will pay more for your Part D coverage, on a sliding scale, if you make more than $85,000 a year while on Medicare.
- Other costs to consider with your Part D coverage are co-pays and coinsurance, in addition to deductibles.
- Click here to learn about “What is the Medicare Donut Hole?“
- There are also late enrollment penalties associated with not signing up for Part D coverage when you are first eligible if you do not have “credible coverage.”
How Much Medicare Supplements or Medicare Advantage Plans Cost
On top of your Original Medicare, you will need to make a decision to either participate in a Medicare Advantage (Part C) plan or to consider having a Medigap (Medicare Supplement) Plan. If you need help deciding on which one is best for your needs, please read our article on Medicare Advantage Vs. Medicare Supplements.
- Medicare Supplement Plan Costs – Medicare Supplements will each have a different cost depending on the Letter Plan you choose and the company you go with. The government decides what benefits are offered by each letter plan. Then, each private insurance company decides what price they can offer for each plan in each market. It is a good idea to compare multiple plans by multiple carriers (insurance companies) in your area before choosing a plan. An independent insurance agent will be able to help you do this.
- Here are a Few Medigap Articles to tell you more:
- Medicare Advantage (MA/MAPD) Costs – Part C, or Medicare Advantage Plans are also offered by private insurance companies and stand in place of Original Medicare. In addition, they often include Part D Prescription Drug Coverage. Some of these plans have low or zero premium plan options. A few even cover Part B premiums. All of them are required to have max out of pocket expenditures and deductibles. It is a good idea to talk to an independent insurance agent on MAPD plans in your area to help you choose your best option.
If you are considering a specific procedure, you many have questions about what Medicare covers, and what costs are associated with each service or procedure. Here are a few health care costs to consider in regards to how Medicare will cover them:
Medicare Costs Summary
In summary, Medicare will cost you something, unless you are on full benefits from Medicaid. Moreover, you have already been paying into the Medicare system during your working career with Medicare taxes. Common set-up for Medicare beneficiaries include:
- Having Original Medicare, Part A Premium Free, Part B Premium at $135.50 /month and a stand alone Part D Premium to pay. Then, adding on a Supplement Plan to cover the expenses Original Medicare does not pay.
- Or having a Part C Medicare Advantage Plan that includes a drug plan with a premium to pay (sometimes a $0 premium). Most commonly, you will still pay your Part B premium with Medicare Advantage.
Get More Help Understanding How Much Medicare will Cost You
One good resource for learning more about the costs of Medicare is the Medicare and You Book published by the government every year. It is a large book, so please star with our Medicare and You User’s Guide to learn what it offers and to get a copy if you need one.
In addition, finding the best Medicare options for your budget can be a lot to take on, but hopefully this breakdown is helpful. I strongly suggest talking to a professional to help you in setting up your Medicare plan. As an independent agent myself, I suggest using an independent agent. They are not tied to one company, so they work for you, not one carrier and can help you in considering many different carriers and plans.
As always, if you live in Nebraska or Iowa, please give me a call, and I can help you out either in person or over the phone.Carly Cummings, NE/IA Licensed Independent Insurance Agent for Life and Health.