Medicare Part A Medicare Part B Medicare Advantage plan (Medicare Part C) Medicare Part D

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, there are still expenses you should be aware of.

Take a moment to familiarize yourself with the out-of-pocket (OOP) 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 2021.

 

 

Medicare Part A (inpatient hospital, skilled nursing facility, certain home health and hospice care): Out-of-pocket costs

Most people don't need to pay monthly premiums for Part A. You won't pay a premium if you or your spouse paid Medicare taxes for at least 10 years while working.

However, you will need to help cover the cost of some fees when you receive care. These expenses come in the form of deductibles and copayments.

If you are admitted to the hospital, you should expect to pay the following:

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A deductible is the amount you pay before your insurance pays.

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For Part A (hospitalization), the deductible is $1,484 per benefit period1.

Coinsurance

Coinsurance is the percentage of your medical bill that you pay until your deductible has been met.

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: 
  • Days 1–60: $0
  • Days 61–90: $371 per day ($11,130 per year)
  • Days 91 and on: $742 per day, until you have used up your lifetime reserve days. You get 60 reserve days over the course of your life. After that, you pay the full cost, which could be over $270,830 per year for an extended stay. 2
  • Skilled nursing facility coinsurance: Up to $67,707.50 per year 3
 
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 online webinars. 

 

 

Medicare Part B (doctors' services and outpatient hospital services): 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 Social Security benefits. 

Most people pay a standard monthly premium, which is set each year. In 2021, the standard monthly Part B premium amount is $148.50 ($1,782 per year). If you earn over $88,000 a year, you will pay a higher premium. If the premium is deducted from your Social Security benefits, you will pay a lower premium. 

Your total annual costs for Medicare Part B premium can be up to $6,058.80.

Medicare Part B deductible

With Medicare Part B, you have a set deductible. For 2021, the Medicare Annual Part B deductible is $203, which you pay only once a year. After your deductible is met, you typically pay about 20% of:
  • Most doctor services
  • Durable medical equipment (DME)
  • Outpatient therapy

 

 

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 prescription 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 2021:  $6,550 
    • Once you have paid $6,550 in medications, your costs for medications will be $3.70 per generic drug and $9.20 or 5% (whichever is greater) per brand-name drug.

Find the combination of coverage you need with Medicare Supplement and Medicare Advantage plans

Choose additional coverage for your common healthcare needs including: 
  • Prescription eyewear and contact lenses
  • Dental care and procedures
  • Hearing aids
  • Nursing home care after 100 days

Budgeting for Medicare

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