The type of coverage and plan you choose will determine your Medicare costs.
Typically, there are costs you pay and costs your Medicare plan pays. The types of costs you have can vary. For example, Original Medicare (Parts A and B) may have different costs than a Medicare Advantage plan (Part C).
By the way, the information on this page is also summarized in this video.
This is a set amount you may need to pay for healthcare services before your Medicare coverage starts paying its share. You’ll pay the full cost until your total out-of-pocket costs reach this amount. After paying the deductible, depending on your plan you may pay 20% of the cost of each Medicare-covered service or item. This is called coinsurance.
When you see a doctor or specialist, visit a hospital or other facility, or have a medical procedure done, this is the amount you may need to pay at the time of your visit.
Plans with coinsurance typically split the cost of covered healthcare services with you after you pay any deductible. You might pay 20%, for instance, while your plan pays 80%.
Cost sharing is your share of the cost for the healthcare services you receive. It can include deductibles, copays, and coinsurance.
This is the most you’ll have to pay for healthcare services in a year. Medicare Advantage plans have a maximum out-of-pocket limit, which may reduce your risk.
Here are a few tips when weighing plan costs.
If you are choosing a Medicare Advantage plan, it’s best to look at all your costs, not just the premium.
For example, a lower monthly premium could mean a higher deductible, higher copays, higher coinsurance, and so on.
Adding a Medigap policy to Original Medicare can cover some costs not paid by Medicare. But Medigap policies tend to have high monthly premiums, so consider whether you’ll actually be saving on your costs.
In addition, your cost for healthcare services may be lower with a Medicare Advantage plan than with Original Medicare.
“Maximum out-of-pocket” is the most you’ll have to pay for healthcare services in a year. Medicare Advantage plans have a maximum out-of-pocket limit. Original Medicare doesn’t.
Having this limit gives you more control over expenses and may reduce risk, as your plan will pay 100% of covered medical services after you reach this amount.
There are a number of ways you can get help paying for your medical costs when you’re on Medicare.
You may qualify for financial assistance programs such as:
Also referred to as the Low Income Subsidy, this program helps you pay your prescription drug coverage (Part D) premiums, deductibles, coinsurance, and/or copays. People with Medicaid get Extra Help automatically when they enroll in Medicare. Others who qualify can enroll through the Social Security Administration.
This program helps pay your Medicare Part A and/or Part B premiums, deductibles, and/or coinsurance. You may have to enroll in the Medicare Savings Program separately, even if you already have Medicaid.
The Medicare Savings Program also allows you to sign up for an Original Medicare plan outside of your Initial Enrollment Period (IEP) and before the General Enrollment Period (GEP).
These Medicare Advantage plans are designed to help you manage your healthcare and services. You may be eligible if you have both Medicare and Medicaid, have certain chronic or disabling conditions, live in an institution, or need at-home nursing care.
The three types of Medicare Special Needs Plans (SNPs) are:
What does Medicare cost?
We’ll explain it as simply as possible here, with more details on our website.
Typically, there are costs you pay and costs your Medicare plan pays.
What are your costs?
First, there’s your regular monthly payment for healthcare coverage. This is your premium.
And second: your share of the cost for healthcare services you receive.
This includes deductibles, copays, and coinsurance. Your share of the cost may vary greatly by plan, so it’s important to understand what your financial responsibility will be.
For most people, there is no monthly premium for Part A (your hospital insurance). The federal government assesses a premium for Part B (your medical insurance), which is usually deducted right from your Social Security benefits.
With a Medicare Advantage plan (Part C), you’ll pay the Part B premium plus an additional plan premium, but there are options with low or even $0 premiums.
There are separate premiums for a standalone Medicare prescription drug plan (Part D) and Medigap policy (if you add those to Original Medicare).
Here are a few tips for you.
One, think beyond premiums if choosing a Medicare Advantage plan.
A lower monthly premium could mean a higher deductible, higher copays, and higher coinsurance.
Two, weigh your options.
Adding a Medigap policy to Original Medicare can cover some costs not paid by Medicare. But Medigap policies tend to have high monthly premiums, and do not cover prescription drugs, so consider whether you’ll actually save.
In addition, your cost for healthcare services may be lower with a Medicare Advantage plan than Original Medicare, and prescription drugs are often covered.
And finally, watch your total out-of-pocket costs for healthcare services each year.
Original Medicare doesn’t have a maximum out-of-pocket limit. Medicare Advantage does.
Now, what if you have Medicaid? Then, most of your healthcare costs will be covered by Medicare (though Medicaid may pay for some services not covered by Medicare). As a Medicaid member, you may benefit from several programs, including:
Extra Help, which will cover some or all of your prescription drug coverage premiums, deductibles, coinsurance, and/or copayments.
The Medicare Savings Program, which helps pay your Medicare Part A and/or Part B premiums, deductibles, and/or coinsurance.
And, Special Needs Plans (SNP), a type of Medicare Advantage plan that provides added benefits and savings, at little or no cost.
So, those are the basics of Medicare costs. Knowing what costs you’ll pay and why can help you make better decisions about your coverage.
