In order to break down and understand the costs associated with Medicare, you need to understand the costs associated with each part of Medicare.

 

Medicare Part A

Medicare Part A is part of Original Medicare.  You can consider it your hospital insurance.  Generally speaking it helps to cover:

  • Inpatient Care
  • Nursing Home Care
  • Nursing Facility Care
  • Home Health Care
  • Hospice Care

 

For most people, there is no monthly premium for Part A.  If you or your spouse has worked at least 40 quarters, you will not need to pay on a monthly basis to keep your Part A active.

If you have worked less than 40 quarters, you may be responsible for a monthly premium.  In 2021, if you have worked less than 30 quarters, your monthly premium for Medicare Part A is $471.  If you have worked between 30-39 quarters, then your monthly premium is $259.  If you are still working, once you meet 40 quarters, your monthly premium will disappear. 

Medicare Part A also has a deductible.  In 2021, the Part A deductible is $1484.  This is applied per benefit period (hospital stay), not annually.  Once you’ve met your deductible (out of pocket), the cost sharing begins.  At that point, you may or may not have coinsurance dependent upon the length of your stay.

Days 0-60 $0

Days 60-90: $371/day

If you hit 90 days (during that benefit period), you may have to tap into your lifetime reserve days.  You have an additional 60 lifetime reserve days which can only be used once.  The current rate is $742/day.  If you’ve used up your lifetime reserve days Medicare will no longer continue to contribute (unless you enter into a new benefit period).

 

Medicare Part B

Medicare Part B is also part of Original Medicare.  You can consider it your outpatient insurance.  It covers services that are medically necessary and preventative services such as wellness visits.  Generally speaking it helps to cover:

  • Doctor’s Visits
  • Mental Health Services
  • Outpatient Procedures
  • Ambulance Services
  • Durable Medical Equipment
  • Limited Prescription Drugs

There is always a monthly premium for Part B.  In 2021, the base monthly premium for Part B is $148.50.  However, it can go up from there because the Part B monthly premium is based on your income.  If course, you can apply for a reconsideration using form SSA-44.

Additionally, you’ll have to meet a once annual deductible.  In 2021, the deductible is $203.  Once you’ve met that deductible, you’ll be responsible for coinsurance. Usually, you’ll pay 20% of the costs and Medicare will cover 80%.  Of course, this only applies to doctors who accept Medicare and services that are covered.

Additionally, doctors who accept Medicare may choose to charge more than what Medicare will pay.  These are known as Part B excess charges.  They may charge up to 15% more.  If you do not have a supplement plan which covers Part B excess charges, you are responsible for the additional charges.  

 

Medigap Plans

Medicare Supplement Plans (Medigap Plan) are a form of voluntary, secondary insurance which cover the gaps of Original Medicare.  They do not provide additional benefits, but will lower or waive your coinsurance and deductibles.  There are 10 different plans with different levels of coverage and price points.  

You can view all of the available plans on Medicare.gov.  Prices for plans are determined by your plan, carrier, age, and other factors.  You will have to pay an additional monthly premium which does vary.  But most plans will waive the Part A deductible and coinsurance.  Most plans will also waive the Part B coinsurance so it’s much easier to estimate your yearly health care costs.

 

Advantage Plans

Medicare Advantage Plans (Medicare Part C) replace Original Medicare entirely.  Some plans require an additional monthly premium, some just require you to continue to pay for Medicare Part B.  You’ll have some form of coinsurance or copays to be aware of, but these are determined by your plan and carrier.  Plans are not standardized, so benefits and prices can vary widely.  Many plans offer fringe benefits not offered by Original Medicare and Medigap Plans such as dental, vision, prescription drug coverage, etc…But you’ll have to operate within a network of doctors and hospitals.  You can view available plans on Medicare.gov.

 

Medicare Part D

Finally, there is Medicare Part D.  Medicare Part D is prescription drug coverage.  Plans are regulated by the federal government and all plans must meet certain criteria.  However, carriers can choose to offer better benefits to compete for your business.  

There are four stages to Part D.

  1.  The Deductible
  2. The Period of Initial Coverage
  3. The Coverage Gap
  4. Catastrophic Coverage

The max deductible that can be required by any plan in 2021 is $445.  Some plans will lower or waive the deductible to compete for your business.  Once you are in the initial coverage period your plan will determine your copay for your medication based on its tier.  Some plans offer lower copays than others.  Some offer more flexibility in pharmacy.  Once you are in the coverage gap, you will be charged up to 25% of the drug’s cost.  Finally, in catastrophic coverage, you can be charged up to 5% of the drug’s cost or a set copay ($3.70 for generic, $9.20 for brand name).  Each stage has a financial cap set by the federal government.  Once you hit that threshold, you move onto the next stage.

You will also be responsible for a monthly premium to keep your insurance active.  Depending upon your location, you may also be able to find a plan for less than $10 per month. Of course, it goes up from there.  You can view available plans on Medicare.gov

If you’d like our assistance you can reach us at iHealthBrokers at 888-918-0518 or schedule a call today.  Our services are 100% FREE!