What Does Medicare Cost
Medicare does not cover the entire cost of the medical care you receive. You must contribute to your medical bills with Medicare.
You may have to pay the following types of Medicare costs:
- Co-Payment or Co-Insurance
A premium is a fixed amount you pay for the priviledge of having Medicare. The other costs (deductible, copay and coinsurance) occur only when you use your Medicare benefit.
Let’s explore what each of these Medicare costs mean for your budget.
Your Medicare Costs
Your Medicare choices determine which costs you will pay and the amount you pay.
A premium is a fixed fee you pay as a cost of having insurance. Most people pay their premiums monthly. You may pay a premium to Medicare, or to a private insurance company, or to both. Your plan choices determine your premiums.
A deductible is the amount you must pay toward your medical expense before your insurance begins paying. Medicare Part A requires you to pay a deductible for each benefit period. Medicare Part B requires you to pay an annual deductible. Some (not many) Medicare Part C (Medicare Advantage) plans requires you to pay an annual deductible.
A co-payment (co-pay) is a fixed fee you pay for each service (like a doctor office visit) or product (like a prescription drug). This is your part of the medical cost and your insurance pays for the rest.
Co-insurance means that you split the Medicare approved cost of a medical service or product with your insurance. Your plan may require you to pay 20% of the expense and your insurance pays the remaining 80%, for example.
Medigap & Medicare Costs
Medicare supplement insurance, or Medigap, is an optional insurance available to you if you select original Medicare (Medicare Part A and Medicare Part B).
Medicare supplement insurance can cover some of your out-of-pocket Medicare expenses. For example, you can use it to cover:
- Medicare Part A deductible.
- Medicare Part B deductible.
- Co-insurance charges.
Maximum Out-Of-Pocket Expense
If you choose original Medicare, there is no limit to your out-of-pocket expenses.
However, with Medicare Advantage, there is a maximum out-of-pocket expense each calendar year. This is one big advantage of Medicare Part C over original Medicare if you have high medical expenses.
Evaluate Your Medicare Costs
When you are comparing Medicare plan options, it’s easy to only look at the difference in the premium prices. However, that is a short-sighted way to evaluate plans because it doesn’t look at the whole range of expenses.
For example, a plan with a low premium might have higher copays on doctor visits and a higher deductible. Based on how you use your Medicare benefit, this plan could actually cost you more than a plan with a higher premium.
Now that you understand the basic Medicare costs, let’s talk about your Medicare options.