How Much Will Medicare Cost Me?

For most people approaching age 65, enrolling in Medicare will be their very first experience of purchasing health insurance on their own. They are typically more familiar with participating in an employer sponsored plan. Medicare is something very new to them, and all they know so far is that they could be penalized for enrolling late or incorrectly and that there are different “parts” they need to review.

The main concern for most individuals is cost. Having paid for health insurance all of their working life, and knowing that healthcare costs rise as we age, they are worried about how they will pay for insurance in their later years. Medicare is specifically designed for aging individuals and has many subsidies due to the tax dollars those individuals have already paid into the system. Each Medicare part is priced separately. Let’s start with the cost of original Medicare, which is Part A and Part B.

Medicare Part A is hospital insurance, and most people (with some exceptions) will not need to pay a premium for it. Because there is typically no premium, it is wise to enroll in Medicare Part A at eligibility (up to 3 months before one’s 65^th birthday) even if the individual is still participating in an employer’s plan.

Medicare Part A premiums are covered because either the individual or their spouse has already paid Medicare taxes for at least 10 years while earning W-2 income. If that tax-paying history does not exist, the individual will pay monthly premiums for Medicare Part A. This often affects recent immigrants, and the payment is either $278 or $506 in 2023.

Medicare Part A does have deductibles and copays that individuals will pay out of pocket for inpatient hospital care, skilled nursing services, and home health care medical equipment. The deductible in 2023 for an inpatient hospital stay is $1,600. Copayments are based on the amount of time spent receiving care. Home health care and hospice care covered under Medicare do not have a deductible or copay.

Medicare Part B is outpatient medical insurance. Medicare Part B covers doctor visits, lab work, durable medical equipment, home health care, Part B drug administration, outpatient surgery, and other outpatient care. This premium is $164.90 per month in 2023 for individuals earning $97,000 or less and married couples filing jointly earning $194,000 or less. Premiums are higher for those who earn more.

The premiums are based on the income earned 2 years prior to the current year, so premiums can change from year to year. Individuals who are eligible for Medicaid, or state assistance due to low income, may not have Medicare Part B premiums. If someone has a life event that impacts their income for assessing Medicare premiums, they can file Form SSA-44 to try to pay a lower amount. Medicare Part B also has deductibles and copayments depending on the type of care, including a low annual deductible.

Medicare Part C is not an actual benefit, but rather the classification of Medicare Advantage plans. These plans are sold by private insurers and offer many options for coverage, benefits, and premiums. No one is required to enroll in a Medicare Advantage plan.

Medicare Advantage plans replace original Medicare. They are not Medicare Supplement plans. Through deceptive marketing practices, people are led to believe that Medicare Advantage supplements their original Medicare coverage, and this is simply not true. It is a completely separate product. It is always vital to speak with a trusted Medicare insurance agent about existing coverage and what has been offered or promised.

Medicare Part D covers prescription drug plans. These plans are not technically required, but there is a penalty that can extend over a lifetime for not enrolling. Alternative coverage such as VA coverage, TriCare, creditable employer prescription drug coverage, or low income assistance will exempt an individual from the penalty. If someone does not enroll in prescription drug coverage during open enrollment, or within 63 days of losing creditable coverage, they will be fined 1% of the average annual cost of a Medicare prescription drug plan for each month of coverage missed every month for life.

Late enrollment penalties are assessed if a person does not have coverage that is at least as good as original Medicare and misses the open enrollment period. The penalty will be assessed for either double the number of years of coverage missed (Part A) or the lifetime of coverage (Part B and D). To avoid unnecessary penalties, always take advantage of the initial enrollment period at age 65.

There is no cost to talk to an insurance agent about Medicare. At Real Health Quotes, we are experienced advisors who will answer all of your Medicare questions, help you understand the bottom line to everything you’ve seen and heard about Medicare, and guide you through the enrollment process and beyond. You do not need to figure out Medicare all on your own.

Contact us to learn more about your options and explore the best coverage for you.

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