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The total costs of Medicare might depend on the part you get, your income, and plan.
Medicare Part A is free for many people
Premiums and deductibles vary across different parts of Medicare
If you delay signing up for Medicare parts A, B, or D you might have to pay a late penalty for as long as you’re enrolled in Medicare
Private health insurers offer Medicare Part C, Medicare Part D, and Medigap, so plans vary in price
It’s difficult to put a price tag on Medicare because of how the program works. There are four parts of Medicare (A,B, C, D) and a supplement plan called Medigap. You aren’t required to enroll in all of it, and some parts (Medicare Part A) are often premium-free.
You can utilize these parts in different ways, and you aren’t required to enroll in each one, so what you pay depends on your choices. Prices are affected by state and income, and other times by plan — this is true when the plan is provided by a private health insurance company. The chart below broadly shows the costs of Medicare in 2019.
|Plan||Premium (monthly)||Deductible||Copay/coinsurance||Out-of-pocket maximum||Provider||Late enrollment penalty|
|Medicare Part A||$0, or $240 or $437 if you claim it early||$1,364 per benefit period||$0, $341, or $682 per benefit period day, depending on usage||None||Federal government||Yes|
|Medicare Part B||$135.50 and up||$185 per year||20%||None||Federal government||Yes|
|Medicare Part C||Varies||Varies||Varies||$6,700 in-network||Private insurers||No|
|Medicare Part D||$33.19 and up||Varies||Varies||$5,100||Private insurers||Yes|
|Medigap||Varies ($20 to $500+)||Varies||Varies||Varies by plan||Private insurers||No|
In this article:
Beneficiaries face the same three major out-of-pocket expenses associated with any health insurance plan, which include:
Knowing how these expenses work is essential to understanding the costs of Medicare.
Together these costs make up your out-of-pocket expenses, or how much of your own money you spend on medical care. You can easily calculate the monthly premium costs of Medicare, but it might be harder to know exactly how much you’ll spend in additional out-of-pocket medical expenses throughout the year. It will depend on how much care you seek.
Enrolling in an Advantage plan or a Medigap plan may incur additional premium costs, but if you foresee yourself spending a lot on medical care you might be able to potentially lower your total health care spending. However, keep in mind that because Medicare Advantage and Medigap plans are run by private insurers, the plan prices and coverage will vary greatly; you will have to do your research and make thorough comparisons to see if the additional spending is worth the extra coverage and if it will actually save you money in the long run.
If you’re on federal retirement benefits, your Medicare Part B premiums get deducted from your Social Security checks. You can elect to get your Medicare Part D premiums deducted from your benefit checks, too. Contact your insurer.
If you’re not on federal retirement benefits, you’ll get a Medicare Premium Bill for any parts of Medicare that you’re paying for each month. You can pay this bill via your bank’s online service or by mailing back a credit card, debit card, check or money order payment.
However, Medicare Easy Pay is probably the simplest way to pay your Medicare Premium Bill. It automatically deducts your payment from a linked bank account around the 20th of each month. Deductibles and copays are generally paid directly to health care providers at the time of service.
Premiums for Medicare Part A are $0 if you’re getting or are eligible for federal retirement benefits. It’s also premium-free if you’re under 65 and receiving Social Security disability benefits for 24 months, or are diagnosed with end-stage kidney disease. If you’re eligible for Medicare, but not other federal benefits, you’ll pay a Part A premium of $240 or $437 each month, depending on how long you’ve paid Medicare taxes.
The deductible for Medicare Part A is $1,364 per benefit period. A benefit period begins the day you’re admitted to a hospital and ends once you haven’t received in-hospital care for 60 days.
The Medicare Part A coinsurance amount varies, depending on how long you’re in the hospital. Coinsurance is typically a percentage of the costs, but Medicare designates the coinsurance as a flat fee.
Here’s how much you’ll pay for inpatient hospital care with Medicare Part A:
The cost of a stay at a skilled nursing facility is slightly different, and hospice care is free.
Read more about how Medicare Part A covers these costs here.
The premium for Medicare Part B in 2019 is $135.50 per month. You may pay less (around $130) if you’re receiving Social Security benefits. You also may pay more — between $189.60 and $460.50 — depending on your income. The higher your income, the higher your premium.
The deductible for Medicare Part B is $185 per year.
The Medicare Part B coinsurance amount is 20% for covered supplies and services.
Learn more about Medicare Part B, including Part B premiums prices based on income level.
The premium for Medicare Part C — also called Medicare Advantage — depends on your plan and the insurer, since these health plans are provided by private insurance companies. In 2019, the average monthly premium for Part C was $28, but it can be higher than $200.
In addition to the Medicare Advantage premium, you will still be responsible for paying the premiums for Medicare Part A and B (collectively known as Original Medicare). This would mean on average, your monthly premiums might be $163.50. ($28 + $135.50)
Deductibles, copays and coinsurance for Medicare Part C vary by plan. However, there is a limit to how much you can spend on out-of-pocket expenses. After that limit, your Medicare Part C plan will pick up all the remaining cost of covered health care services.The out-of-pocket limit for Medicare Advantage can’t exceed $6,700 a year for in-network services. That means you could save more money if you have a lower out-of-pocket expenses limit. The limit is $10,000 for out-of-network services.
The average out-of-pocket limit for Medicare Advantage enrollees was $5,059 in 2019, according to the Kaiser Family Foundation.
Learn more about Medicare Part C.
Medicare Part D is prescription drug coverage. It is provided by Medicare-approved private insurers.
Premium costs vary by plan, state and income, but the average basic monthly premium for a Medicare Part D plan in 2019 was about $43, according to the Centers for Medicare and Medicaid (CMS). High-income Medicare beneficiaries are subject to an income-related monthly adjustment amount (IRMAA), meaning if you make more, you’ll pay more. For 2020 plans, the additional costs will be based on your 2018 income.
Getting Medicare Part D requires enrolling in Original Medicare, so you’ll pay any of those premiums, too.
The deductibles vary, but no Medicare Part D plan can have a deductible higher than $415 in 2019 and $435 in 2020.
Copays and coinsurance vary by plan and tier (some drugs cost more than others; you can read about prescription drug coverage here) and whether you’ve hit the Medicare Part D coverage gap, or “donut hole.”. After the insurer has covered a certain amount on prescriptions, they will temporarily limit how much your plan will help pay for prescriptions.
Learn more about Medicare Part D plans and the “donut hole” here.
You will have to pay penalties for some parts of Medicare if you don’t sign up when you’re first eligible and don’t have a particular set of circumstances — like leaving your workplace coverage.
Parts A, B, and D come with these penalties, which are calculated based on how long you went without the plan and the “base premium price” (designated by Medicare each year). The penalties are added to your monthly premium.
Medicare Supplement Insurance, also known as Medigap, is designed to help Original Medicare beneficiaries pay their out-of-pocket expenses, like copays and deductibles.
Premiums for this supplement insurance vary according to plan and provider. The average Medigap premiums can be anywhere from $20 to over $500.
Essentially, you are paying an extra monthly cost to have more coverage later on if Original Medicare falls short.
Deductibles range from $185 (the deductible you pay for Medicare Part B) to $5,240, if you opt for a high-deductible Medigap plan.
Learn more about Medicare Supplement Insurance (Medigap).
The Medicare Savings Program helps low-income beneficiaries pay Original Medicare premiums, copays, and deductibles. The Medicare Extra Help program assists low-income beneficiaries with prescription drug coverage.
Some Medicare beneficiaries are also eligible for Medicaid, the federal-and-state-funded health insurance program for low-income Americans. Eligibility varies by state — you can see our state-by-state guide to Medicaid here to find out if you’re eligible, and read more about Medicare vs Medicaid.
Beyond that, cost-saving comes down to finding the best plan and program structure for you. Some people may be looking for different Medicare benefits and more robust coverage than others. As we’ve discussed, these elections and their costs will vary, depending on what’s offered by your state and your income level.
Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.
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