Original Medicare Part A & Part B, alongside Medicare Advantage, Medicare Supplement Insurance Plans, and Medicare Part D Prescription Drug Plans provide valuable health insurance to most older and/or disabled Americans. It also comes with many rules, regulations and sometimes significant out-of-pocket costs.
Here’s what you can expect to pay with Medicare:
Most beneficiaries that are retiring pay the standard Original Medicare Part B premium of around $104.90 per month in 2016. However, some pay more. Those beneficiaries who sign up for Medicare in 2016 and those who have not yet claimed Social Security will be charged $121.80 per month for Original Medicare Part B. High-income retirees bringing in more than $85,000 ($170,000 for couples) will also pay higher Original Medicare Part B premiums, ranging from $170.50 to $389.80 monthly depending on how high their income is.
Most beneficiaries, or retirees, don’t pay a premium for Original Medicare Part A hospital insurance. The premium cost for Medicare Part D Prescription Drug Plans vary based on the plan you select, if any. Most beneficiaries have their Medicare premiums deducted from their Social Security check.
Deductibles & Coinsurance
Original Medicare Part B has a $166 deductible in 2016. After you have reached your deductible, Medicare beneficiaries typically pay 20% of the cost of most services. It can quickly add up if a lot of health services are needed over a period of time. There is no annual limit on how much beneficiaries might need to pay out-of-pocket.
There are some services Medicare beneficiaries are eligible for that aren’t subject to cost-sharing requirements, such as wellness visits every 12 months and a variety of preventative care services, including flu shots and cardiovascular disease screenings. Most preventive screening tests like mammograms and colonoscopies are covered under Original Medicare Part B, but only if certain conditions are met.
If a beneficiary is hospitalized, Original Medicare Part A has a $1,288 deductible. If a beneficiary ends up spending more than 60 days in the hospital, it will cost that Medicare beneficiary $322 per day for days 61 – 90 and $644 for up to 60 lifetime reserve days after that. Once the lifetime reserve days are used up, beneficiaries become responsible for their own hospital expenses.
Some Medicare beneficiaries and retirees choose to buy supplemental insurance policies to cover some of the cost-sharing requirements of Original Medicare Part A & Part B. A Medigap policy can help make healthcare costs more predictable. Many plans will cover some of Original Medicare Part B’s out-of-pocket costs and longer hospitals stays than Original Medicare Part A. The most comprehensive plan is Plan F, however, it’s the most expensive, but it will virtually cover every copay and deductible that you have.
Another option is to sign up for Medicare Advantage plan, which means beneficiaries will receive Original Medicare Part A and Part B via a private health insurance plan instead of Original Medicare Part A & Part B. Medicare Advantage plans have a different cost-sharing requirement for medical services and sometimes more coverage restrictions than Original Medicare Part A & Part B.
Prescription Drug Coverage
Seniors can choose among an average of over two dozen plans for their Medicare Part D Prescription Drug Plans. Each offers different prices and coverage. The average premium was $41.46 per month in 2016, and plans are allowed to charge deductibles of up to $260. Premiums are higher for people who go 63 or more days without prescription drug coverage after becoming eligible for Original Medicare and for high-income Medicare beneficiaries.
To get the best value, it’s important to compare plans each year in retirement because prices and covered medications (known as a drug formulary) change annually. There are always new plans coming out, and plans sometimes change their level of coverage.
Avoid late-enrollment penalties
Most sign-up for Medicare during the seven month initial enrollment period that begins three months before the beneficiary turns 65. If the beneficiary doesn’t sign up for Medicare during this initial enrollment period, they could be charged higher premiums for the rest of their life. Original Medicare Part B premiums will increase by 10% for each 12-month period the beneficiary delayed Medicare coverage after becoming eligible for it. If a beneficiary didn’t sign up for Original Medicare because they receive group health insurance through their or a spouse’s employer, the beneficiary will need to sign up for Medicare within eight months of leaving the job or the coverage ending without penalty.
Do you have questions? Are you in need of a Medigap? A Medicare Part D Prescription Drug Plan? Or do you need guidance on when to enroll? Give us a call today and learn more! You can speak with a licensed sales agent with a no-obligation consultation.