How much each participant pays for his or her Medicare coverage depends on a number of factors. The first involves deciding what types of benefits are needed, which is where the different parts come in. Additionally, costs can be broken down in each of these parts even further by dividing them into two basic categories: 1) premiums and 2) deductibles and coinsurance.
Each part of Medicare covers different types of medical expenses.
Standard Part Premiums
Each part of Medicare covers different types of medical expenses, so each one has its own premium or payment amount participants must remit monthly in order to keep coverage for that specific part.
With that in mind, here are the basic costs you can expect to pay in 2018, per Medicare.gov:
Medicare Part A covers expenses related to inpatient hospital care, skilled nursing facility care, hospice, and home health care. Also commonly referred to as “premium-free Part A,” most recipients aren’t charged a monthly premium for it.
Specifically, if you are 65 years old or older, Part A is generally offered free of charge if you’re either receiving or eligible to receive Social Security or Railroad Retirement Board benefits. You also don’t typically have to pay for Part A if you’re over 64 and you or your spouse had government employment that covered Medicare.
Individuals under the age of 65 may also qualify for premium-free Part A in certain circumstances. The first requires having received disability benefits from Social Security or the Railroad Retirement Board for at least 24 months. However, if you’re under 65 and have end-stage renal disease, you may be eligible for premium-free Part A as well.
If you don’t fall under any of these categories, you’re likely have to pay for Part A coverage. In this case, the premium amount is based on how many calendar year quarters you’ve paid Medicare taxes.
The more quarters you’ve paid, the lower the rate. For instance, if you’ve paid Medicare taxes for 30 to 39 quarters, the standard premium is $232. But if you’ve paid Medicare taxes for 29 quarters or less, you can expect to pay around $422.
It’s also important to note that if you purchase Medicare Part A, you may also be required to purchase Part B, which has its own premiums.
With Part B Medicare, participants are entitled to coverages related to both preventive services and medically necessary services. This includes costs associated with ambulance calls, medical equipment, mental health, and some prescription drugs.
Premiums for Part B are income dependent. So, while the standard premium is $134, you could pay more if you made a certain level of income in years prior.
For instance, if you earned between $85,00 and $107,000 as an individual or between $170,000 and $214,000 filing jointly for the 2016 tax year, your 2018 premium would be $187.50 per person. And if you earned above $160,000 individually or $320,000 filing jointly, your 2018 premiums for Part B are $428.60 each.
If you receive Social Security benefits, the typical premium is less than the standard and closer to $130 per month, on average. In this case, this amount is deducted from your benefit payment, which is also how your Part B premiums are paid if you are receiving Railroad Retirement Board benefits. Otherwise, you will receive a Medicare Premium Bill that you pay on your own.
You can also be assessed a late enrollment penalty if you don’t sign up for Part B coverage when you’re eligible. This penalty is assessed by increasing your monthly premiums 10 percent for every year you could have had Part B but didn’t. So, if you wait three years to sign up for Part B, your penalty would be 30 percent.
And you’ll pay the assessed penalty the entire time you have Part B coverage. So, signing up for it when you’re eligible can save you a lot of money in the long run.
With Medicare Part C—often referred to as Medicare Advantage—participants receive coverage through private insurance companies pre-approved by Medicare to provide the same basic services participants would normally receive under the Original Medicare plan.
These plans are offered by a variety of companies so Part C premiums vary depending on the insurance company you choose. Premiums are also different based on coverages offered by each plan. Though they have to provide the basics, the U.S. Department of Health and Human Services says that some offer extra coverages, such as vision, hearing, dental, and health and wellness programs.
Medicare Part C is often referred to as Medicare Advantage.
Medicare.gov adds that there are some plans that require no Part C premium whatsoever.
If you want coverage for prescription drugs, you can receive this benefit under Medicare Part D. However, like Part C, Part D premiums vary by plan. Additionally, the more income you earned in years prior, the more you can expect to pay for your prescriptions in the future.
For instance, for the 2018 year, if you made $85,000 or less as an individual or $170,000 or less when filing a joint return, you are required to simply pay the premium for the plan you choose every month. But if you make more than these amounts, you are also assessed an “income-related monthly adjustment amount.”
This amount is a set number of dollars you’re required to pay above and beyond your Part D premium. For 2018, this amount begins at $13.00 and goes up to $74.80, with the exact dollar figure assessed based on your 2016 income. Likewise, rates for 2019 are determined by your income in 2017, and so on.
Part D coverage also assesses a late enrollment penalty that may apply if you go without prescription drug coverage (whether through Part D or any other drug coverage plan). This penalty may also apply if you are not enrolled in Medicare Advantage for 63 or more continuous days beyond your initial enrollment period.
Deductibles And Coinsurance
In addition to premiums, Medicare recipients are also required to pay certain deductibles and coinsurances.
In addition to premiums, Medicare recipients are also required to pay certain deductibles and coinsurances.
If you’re confused about what each one is, Verywell Health explains that deductibles are fixed dollar amounts you’re required to pay every year (or benefit period) before the health insurance “kicks in fully.” Put another way, this is the amount you have to pay out-of-pocket for medical expenses incurred before your health insurance company will start paying its portion according to your policy.
For instance, if your deductible is $1,000, you will pay all medical expenses incurred until you’ve paid $1,000. Once you pay this amount, coinsurance starts to kick in (if your plan has coinsurance). So, coinsurance is different than deductibles in that, instead of being based on dollar amounts, it is set as a percentage.
As an example, your healthcare plan may agree to pay 70 percent of inpatient mental health benefits. In this case, your share of the bill is 30 percent, regardless of what that final bill amount is.
That being said, many plans have caps, or maximum amounts you could be required to pay under the coinsurance provision. This helps protect you in the event that your medical costs exceed certain amounts.
What are the deductibles and coinsurance costs for Medicare recipients? Here is a breakdown based on the part chosen:
Under Medicare Part A, the deductible is $1,340 per benefit period. According to Medicare.gov, benefit periods begin upon admittance to a hospital or skilled nursing facility and end when the recipient has gone 60 days without care.
If the patient is readmitted, a new benefit period begins, requiring a new deductible to be paid. Additionally, there is no limit on the number of benefit periods a Medicare recipient can receive.
Coinsurance costs under Part A are dependent upon benefit periods as well. For the first 60 days of a benefit period, there is no coinsurance. However, from day 61 to day 90 of care, the coinsurance is $335 per day.
If the stay is over 90 days, the coinsurance is $670 per “lifetime reserve day,” with a maximum of 60 of these days over the course of your lifetime. Once those days are met, all costs are paid under Medicare Part A.
Deductibles under Part B are $183 per year. Any medical expenses incurred over that amount generally require that the participant pay 20 percent of the costs. However, this 20 percent involves the participant paying only the amounts Medicare has agreed can be assessed for these expenses.
One exception is in regard to clinical lab services. When these types of expenses are incurred, participants aren’t required to pay any deductible for Medicare-approved services. The same is true with regard to home health care services, though there is a 20 percent coinsurance cost of Medicare-approved amounts for expenses associated with durable medical equipment.
There are also 20 percent deductibles of Medicare-approved amounts for costs related to a majority of doctor services, outpatient medical and hospital services, and outpatient mental health services. There are also percentage-based coinsurance costs for mental health services requiring partial hospitalization.
Just as premiums vary for Part C, largely because these plans are offered by private insurance companies, deductibles and coinsurance costs differ as well. Therefore, it is important to thoroughly review each plan and all of its related expenses beforehand so you know what to expect cost-wise for any medical services you may encounter should you select that individual policy.
Deductibles, copayments, and coinsurances also vary for Part D and are set by the individual plans.
Medicare Financial Assistance Programs
If you are unable to cover the costs of your premiums, deductibles, coinsurance, or copayments because your income is extremely limited and you don’t have access to other financial resources, you may qualify for a Medicare Savings Program that can potentially help cover some or all of these expenses.
You may qualify for a Medicare Savings Program that can potentially help cover some or all of your expenses.
The four programs currently being offered are:
Qualified Medicare Beneficiary Program: This program helps pay for Part A and Part B premiums, as well as deductibles, coinsurance, and copayments. To qualify in 2018, you can’t have income over $1,032 per month as an individual or $1,392 as a married couple. Financial resource limits also cannot exceed $7,560 for individuals or $11,340 per couple.
Specified Low-Income Medicare Beneficiary (SLMB) Program: The SLMB program helps cover Part B premiums and requires that individuals earn less than $1,234 per month and married couples earn under $1,666. Additionally, 2018 resource limits are $7,560 for individuals or $11,340 for couples.
Qualifying Individual (QI) Program: QI is first-come, first-serve. Also, like SLMB, it helps pay for Part B premiums. This program requires that individuals apply yearly and has monthly income limits of $1,386 for individuals and $1,872 for married couples. Resource limits are the same as the SLMB Program, which are $7,560 for individuals and $11,340 for couples.
Qualified Disabled and Working Individuals (QDWI) Program: If you want help paying Part A premiums, the QDWI Program may be able to help. In addition to having monthly income limits ($4,132 for individuals and $5,572 for married couples) and resource limits ($4,000 for individuals and $6,000 for couples), you may also qualify for assistance under QDWI if you:
- Are under the age of 65, working, and disabled;
- Returned to work and, subsequently, lost your premium-free Part A plan; or
- Aren’t receiving any type of medical assistance from the state.
Some individuals also qualify for Extra Help, a Medicare program designed to assist with premiums, deductibles, coinsurance, and drug program costs.
There are different levels of assistance available under the Extra Help Program. Medicare.gov says that these levels are determined based on factors such as whether you live in an institution, get home or community-based services, receive Supplemental Security Income (SSI), or have Medicaid.
Once your plan accepts you into the Extra Help program, your costs for generic drugs in 2018 is $3.35 per prescription or $8.35 for brand name drugs.
As you can see, each individual’s 2018 Medicare costs associated with premiums, deductibles, and coinsurance can vary based on many different variables. However, there are a few different programs that can potentially help if those costs are too high for you, your family, or a loved one.
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