Although cost isn’t the only consideration when choosing a health plan, there’s no denying that it’s typically the first thing we look at. And, when it comes to Original Medicare, understanding your costs can be the most confusing aspect. In this post, we walk you through your Original Medicare costs plus a Part D Prescription Drug Plan.
What Are Your Medicare Costs?
We touched on this in a previous post, How Much Is My Medicare Deductible? As a refresher, Medicare breaks down cost-sharing like this:
- Premiums are your monthly cost
- Deductibles are paid every benefit period
- Co-insurance is your share of covered services, typically a percentage
- Co-payment is your share of covered services, typically a set dollar amount
We use these terms repeatedly in this post, so it’s important to understand them.
How Much Does Medicare Part A Cost?
Medicare Part A is the hospital insurance portion of Original Medicare. For most people, Part A has no monthly premium, because they or their spouse worked and paid Medicare taxes for the required 40 quarters (10 years).
If you do not meet the premium-free requirement, your Part A premium varies according to the number of quarters you paid Medicare taxes.
- 0-29 quarters = $422 per month premium
- 30-39 quarters = $232 per month premium
In addition to the monthly premium, all Medicare Part A beneficiaries have deductibles and co-insurance costs for inpatient hospital care. The Medicare Part A deductible is $1,340 per benefit period.
The Medicare Part A benefit period is not calculated annually as with Part B. It begins on the day you’re admitted to the hospital and ends a full 60 days after you are released from the hospital. If you are readmitted during that 60-day span, you are still within the benefit period. If you are readmitted on day 61, a new benefit period begins.
Medicare Part A co-insurance is also calculated per benefit period, which again begins the day you’re admitted to the hospital.
- You pay $0 co-insurance for days 1 through 60
- Co-insurance for days 61 through 90 is $335 per day
Anything beyond 90 days takes you into your “lifetime reserve days.” The co-insurance rate is $670 per day.
You get only 60 lifetime reserve days throughout your entire life. Once you burn through these, you are responsible for all hospital costs.
Other Medicare Part A Costs
Miscellaneous Part A costs include:
- Late enrollment penalty: 10 percent, payable for twice the number of years you could have had Part A but failed to enroll
- Durable medical equipment: 20 percent of the Medicare-approved amount
- Mental health inpatient stay: All deductibles and co-insurance apply as in an acute care hospital, plus 20 percent for mental health services
- Skilled nursing facility: $0 days 1-20, $167.50 days 21-100, 100 percent days 101 and on
How Much Does Medicare Part B Cost?
Even if you choose a Medicare Advantage plan, you still have a Part B premium. The standard amount is $134 per month. You will pay this amount if any of the following are true:
- This is your first year in Part B
- You do not receive Social Security benefits
- You receive a direct bill for your Part B premium
- You meet the yearly income requirement of $85,000 per year for individuals and $170,000 per year for married couples
If you qualify for both Medicare and Medicaid, the State pays your $134 premium. Beneficiaries who receive Social Security benefits typically pay a lower premium. The average in 2018 is around $130.
You may also pay more than the standard Part B premium, based on your taxable income:
Additional Medicare Part B costs include:
- Annual deductible = $183 per year
- Co-insurance typically equals 20 percent of the Medicare-approved amount
- Durable medical equipment = 20 percent co-insurance
- Clinical laboratory services cost $0 for Medicare-approved services
- Late enrollment penalty = 10 percent for every 12-month period you could have enrolled but didn’t, payable for life
Many preventive screenings, such as your Annual Wellness Visit and yearly depression screening, have no co-pay or co-insurance. In addition, the Part B deductible does not apply.
What Does Medicare Part D Cost?
As with Original Medicare, Part D has a variety of cost-sharing features, including monthly premiums and co-pays. All amounts vary according to the plan you choose and your provider, as Part D plans are sold by Medicare-approved private insurance companies.
In addition, Part D plans charge an additional amount on top of your plan’s premium based on income levels. The amounts below will drop slightly in 2019.
In addition to your monthly premium, Part D beneficiaries typically have a co-pay on their prescriptions. The co-pay varies according to your plan’s drug formulary.
Finally, you may have a late penalty if you went more than 63 days without creditable prescription drug coverage. This amount varies each year based on the National Base Beneficiary Premium. In 2018, this amount is $35.02. You will pay 1 percent of this amount times however many months you went without Part D coverage. So, if five months went by, you pay 5 percent of $35.02, rounded up to the nearest dime:
$35.02 x 0.05 = $1.75, rounded up to $1.80
This means you would pay an additional $1.80 for your Part D plan’s monthly premium.
Adding a Medigap Plan
You can reduce your out-of-pocket expenses with a Medigap plan. As with Part D, these plans are offered by Medicare-approved private insurers. Premiums vary, as do plan details. To learn more about your Medigap options, call us toll-free at 844-655-4347 to speak to a licensed agent.