Understanding Medicare costs
It’s important to budget for out-of-pocket Medicare costs. The following sections describe those costs in more detail so that you can prepare and select a plan that fits your needs.
What does Medicare cost?
In general, there is a monthly premium for Medicare coverage and fees for care received. There are various out-of-pocket costs associated with Medicare Parts A, B, C and D.
Part A pays for services received if you stay in a hospital to receive care. Most do not need to pay monthly premium for Part A, such as if you or your spouse paid Medicare taxes for at least 10 years while working. 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:
- A deductible is the amount you pay before your insurance pays.
- For Part A (hospitalization), the deductible is $1,600 per benefit period.1
Coinsurance for Part A
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 a hospital. Below are the Part A coinsurance amounts:
- Days 1–60: $0
- Days 61–90: $400 per day
- Days 91 and on: $800 per day, until you have used up your lifetime reserve days. You get 60 reserve days over the course of your life.
- Skilled nursing facility coinsurance: Up to $200.00 per day for days 21-100 per benefit period.
If your time in the hospital exceeds your number of reserve days, you will pay your remaining hospital expenses.
Part B pays for doctor’s services and outpatient hospital services. Part B covers necessary medical treatments and preventative healthcare services. You pay a monthly premium for this coverage, which can be automatically taken out of your Social Security benefits.
Most pay a standard monthly premium, which is set each year. In 2023, the standard monthly Part B premium amount is $164.90 ($1,978.80 per year). If you earn over $97,000 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 2023, the Medicare Annual Part B deductible is $226.00, which you pay only once a year. After your deductible is met, you typically pay about 20% of the following:
- Most doctor services
- Durable medical equipment (DME)
- Outpatient therapy
Part C is Medicare Advantage Plans and the out-of-pocket costs can vary. Medicare Advantage Plans typically function like an HMO or PPO plan with common out-of-pocket costs such as:
- Monthly premiums
- Annual deductible
Medicare Part D provides standalone coverage for your prescriptions and can save you money in the long run. The out-of-pocket costs you can expect with Medicare Part D include:
- Monthly premium
- Annual deductible
- Set amount (copay) or set percentage (coinsurance) for each prescription
- Catastrophic coverage in Part D for 2024 is $8,000
- Once you have paid $8,000 in medications, your costs for medications will be $0.
Get more information
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 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. This amount may change effective January 1, 2024.
2023 amounts may change for 2024
Y0118_23_379A1_M Accepted 10222023
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Page last updated date 10/27/2023