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Medicare costs

Medicare for senior

What are Medicare costs?

It's not just about premiums. Many Americans find that qualifying for Medicare eases some financial stress as it’s possible to pay less and get more. However, even though Medicare is less costly than many other health plans, there are expenses you should be aware of.

Take a moment to familiarize yourself with the out-of-pocket costs associated with Medicare Parts A, B, C, and D, so that you can select a plan that is best suited for the type of retirement you’re planning on. All costs listed here apply for 2020.

Medicare Part A: Out-of-pocket costs

Original Medicare Part A is your hospital insurance and part of Original Medicare. If you are admitted to the hospital, you should expect to pay the following:

COST OF CARE UNTIL YOUR DEDUCTIBLE IS MET

A deductible is the money you will pay before your benefits kick in.

For Part A (hospital insurance), the deductible is $1,408 per benefit period.1

COINSURANCE

  • Coinsurance is the percentage of your medical bill that you pay.
  • For Part A, coinsurance is a set dollar amount that you pay for covered days spent in the hospital. Here are the Part A coinsurance amounts:

If your time in the hospital exceeds your number of reserve days, you will pay your remaining hospital expenses. To learn more about Medicare Part A, check out our free seminars near you!

1 Original Medicare measures your use of hospital and skilled nursing facility (SNF) services by “benefit periods.” A benefit period begins the day you’re admitted as an inpatient in a hospital or SNF. The benefit period ends when you haven’t gotten any inpatient hospital care (or skilled care in an SNF) for 60 days in a row. If you go into a hospital or an SNF after one benefit period has ended, a new benefit period begins. You must pay the inpatient hospital deductible for each benefit period. There’s no limit to the number of benefit periods.

2 Based on a 12-month hospital stay at the 91+ day coinsurance rate. Actual per-day hospital rates will vary.

3 12 months of skilled nursing facility care at the 2019 coinsurance rate of $170.50 per day

Medicare Part B: Out-of-pocket costs

Part B is your doctor's office insurance under Original Medicare. It covers necessary medical treatments and preventive healthcare services. You pay a monthly premium for this coverage, which can be automatically taken out of your benefits.

MEDICARE PART B PREMIUM

For Medicare Part B, most people pay a standard monthly premium, which is set each year. In 2020, the standard premium amount is $144.60 ($1,735.20 per year).

If you earn over $85,000 a year, you will pay a higher premium.

If the premium is deducted from your Social Security benefits, you will pay a lower premium.

MEDICARE PART B DEDUCTIBLE

With Medicare Part B, you have a set deductible. For 2020, the Medicare Part B deductible is $198, which you pay only once a year. After your deductible is met, you typically pay about 20% of:

MOST DOCTOR SERVICES

DURABLE MEDICAL EQUIPMENT

OUTPATIENT THERAPY

Total annual costs for Medicare Part B can be up to $5,526.

Medicare Advantage plan (Medicare Part C): Out-of-pocket costs

Out-of-pocket costs vary for Medicare Part C, our Medicare Advantage plans. Medicare Advantage plans typically function like an HMO or PPO plan where your common out-of-pocket expenses for Medicare Advantage plans include:

  • Monthly premiums
  • Your annual deductible
  • Copayments

Medicare Part D: out-of-pocket costs

Our Medicare Part D prescription drug coverage will save you money in the long run. This coverage helps you lower the cost of your prescription medications. The out-of-pocket costs you should expect with Medicare Part D, include:

  • A monthly premium
  • An annual deductible
  • A set amount (copay) or set percentage (coinsurance) for each prescription
  • Catastrophic coverage in Part D for 2019: $6,350.

Once you have paid $6,350 in medications, your costs for medications will be $3.60 per generic drug, and $8.95 or 5% (whichever is greater) per brand-name drug.

Avoid additional out-of-pocket costs with Medicare Supplement and Medicare Advantage plans

Choosing to enroll solely in Original Medicare may result in short-term savings, but it could end up being a costly decision.
If you choose to enroll in Original Medicare coverage only, there are a number of common healthcare costs your plan won’t cover, including:

PRESCRIPTION EYEWEAR AND CONTACT LENSES

DENTAL CARE AND PROCEDURES

HEARING AIDS

NURSING HOME CARE AFTER 100 DAYS

Shop our Medicare Supplement and Medicare Advantage plans to avoid these expenses and get the coverage that’s right for your needs.

Budgeting for Medicare

Now that you have learned the types of out-of-pocket costs you can expect with your Medicare coverage, it’s time to plan them into your budget and ensure you avoid penalties and fees.

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