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How much does Medicare really cost?

Bonnie-Vengrow Bonnie Vengrow

Medicare may pay for a portion of health care costs, but it doesn’t cover everything. How much you can expect to spend on care and services depends on several factors. These include the type of Medicare plan you have, when you sign up for it and your annual income.

The good news is you have some control over your Medicare costs. Read on to learn about how much coverage can cost. There are also some tips for keeping your expenses in check.

 

How the different parts of Medicare affect what you pay

Medicare has different parts. You can combine them to deliver more complete health care coverage. Depending on your choice, you may need to pay premiums, copays, coinsurance, deductibles or other costs.

 

How much does Original Medicare cost?

Medicare Parts A and B provide coverage for essential medical care. Together, Parts A and B are called Original Medicare.

Part A covers inpatient hospital stays and some care outside of the hospital. (For instance, skilled nursing care after you leave the hospital.)

With Part A, you generally won’t have to pay a monthly premium. But you will need to pay a deductible before Medicare begins to cover any of your hospital costs. In 2022, the Part A deductible is $1,556. If you spend more than 60 days in the hospital, you will have coinsurance to pay.

Let’s take a closer look.

 

Part A premium 

If you or your spouse worked and paid Medicare taxes for at least 10 years, you qualify for premium-free Part A. (Most people do.)

If you don’t meet that requirement, you can pay a monthly premium for coverage. The amount depends on how long you’ve worked and paid Social Security taxes. Three months of work count as one “work credit.”

In 2022, the standard Part A premium is $499 if you have fewer than 30 credits. If you have 30 to 39 credits, it’s $274.

Part A hospital inpatient deductible and coinsurance

In 2022, you pay:

  • $1,556 deductible for each benefit period (A benefit period begins the day you go into the hospital. It ends when you haven’t received any care for 60 days in a row.)
  • Days 1-60: $0 coinsurance for each benefit period
  • Days 61-90: $389 coinsurance per day after day 60 of each benefit period
  • Days 91 and beyond: $778 coinsurance per each "lifetime reserve day" after day 90 for each benefit period (up to 60 days over the course of your lifetime)
  • Beyond lifetime reserve days: all costs

 

 

 

Part B covers:

  • Doctor visits
  • Outpatient procedures, even if they occur at a hospital
  • Lab services and other testing
  • Durable medical equipment (think wheelchairs, hospital beds and oxygen tanks)

Most people pay a monthly premium for Part B. They must meet a deductible before it begins paying for services. The standard monthly payment is $170.10 in 2022. The annual deductible for Medicare Part B is $233 in 2022.

If your income is more than a certain amount, you pay the standard premium plus an extra charge. This is called an Income-Related Monthly Adjustment Amount (IRMAA).

The Part B premium may also cost more if you enroll later than three months after your 65th birthday and you don’t have other creditable health insurance, such as through an employer.


How much does Part D cost?

Medicare Part D provides coverage for prescription drugs. It can offer a degree of cost protection.

Premium amounts vary by plan and by where you live. In 2022, the average Part D monthly premium is $33.37. The annual deductible is no more than $480. As with Part B, you may need to pay an extra monthly charge if you make more than a certain amount. It’s called the Part D IRMAA. You may also have to pay a copayment or coinsurance when you pick up your prescribed medicines. The more costly the prescription, the more you’ll pay.

Ensuring you have consistent drug coverage is key. If you go 63 or more days in a row with no Medicare drug coverage or other creditable prescription coverage, you may have to pay a penalty if you sign up for Part D later.


How much does Part C (Medicare Advantage) cost?

Also known as Medicare Advantage, Medicare Part C plans provide at least the same coverage as Original Medicare. But if often come with more benefits. These may include coverage for:

  • Prescription drugs
  • Dental, vision and hearing services
  • Gym memberships
  • An allowance for over-the-counter (OTC) items

Before you can sign up for Medicare Advantage, you must enroll in Original Medicare. This means you’ll pay your Part B premium plus your Medicare Advantage plan premium. These plans also have a copay for each service. The amount varies by plan.

 

A closer look at the price of Medicare Advantage

When choosing a Medicare Advantage plan, you have plenty of options. Premiums, deductibles, copayments can vary. So will your out-of-pocket costs. But these costs are often highly competitive and may be less than what you’d pay for Original Medicare.

Another thing to consider: Medicare Advantage plans limit how much you’ll spend on out of your own pocket each year. Original Medicare has no such limit. This maximum out-of-pocket (MOOP) limit means you will never pay more than a certain amount every year for your health care, if you use services and providers in your plan. In 2022, the maximum Medicare Advantage out-of-pocket limit is $7,550 for in-network services and $11,300 for in-network and out-of-network services combined. But Medicare Advantage plan members often pay less than that, depending on the plan.

Your MOOP includes deductibles, copayments and coinsurance costs. But it does not include premiums and Part D cost sharing.

 

Comparing costs for Original Medicare and Medicare Advantage plans

The costs for each type of coverage depend on your health needs and the services you use. When looking at plans, crunch the numbers for some different scenarios, such as doctor visits, a hospital stay and yearly medicine costs. The results can help you decide.

Medicare Advantage plans, for example, require a copay for every doctor visit or medical service. Original Medicare charges a 20 percent coinsurance for most doctor visits and services. That means the plan only covers 80 percent of approved expenses. You must pay the other 20 percent.

To learn more about comparing costs of plans, go to “Which Medicare plan will save you the most money? It’s not always what you think."

No matter which type you choose, Medicare can help you care for your overall health. It may not be completely free, but your Medicare coverage will be an essential way to pay for your health care as you age. In fact, it may be the best present you get for your 65th birthday.

Need help?

Call us at 1-833-329-0413 (TTY: 711) to chat about any Medicare questions you have.