When it comes to understanding Medicare, taking the time to fully understand what the options are and how much those options will cost out of pocket is critical.
Each year many qualified beneficiaries accept the first plans offered to them and the end result is paying too much for something that could have been obtained at hundreds of dollars less each year.
This is particularly true when discussing Parts B, C and D.
The following cost analysis shows you the cost for each part of Medicare.
Where income matters for plan costs, a current breakdown of the income thresholds is offered.
Keep in mind that Plan B, C and D can often vary widely from one insurance agent to the next, so plan to spend some time comparison shopping.
The cost analysis offered for Plans B, C and D below are based on cost averages, or the average most beneficiaries pay for a B, C or D plan.
Part A is the portion of Medicare most American workers do not have to pay for.
This is sometimes referred to as Premium-Free Part A. Part A covers hospital services.
However, there are circumstances where some qualifying individuals will still have to pay for Part A out of pocket.
If you end up having to pay for Part A, you may pay up to $422 a month, depending on your particular circumstances.
As of 2018, the Part A deductible and coinsurance hospital inpatient cost breakdown is as follows:
Medicare Part B covers doctor’s visits and resembles the regular type of health insurance you are most likely use to having.
If you opt for the government’s traditional Medicare plan, then Part A and B will be offered at the same time and will both be deducted from your Social Security check each month.
In general, the charge is an average of $183, but could be higher depending on your income.
This amount could also be lower if you already receive Social Security benefits or disability.
After you meet your deductible, you will be responsible for paying at least 20 percent of the amount charged by the doctor.
If you are on Medicaid, then in most states Medicaid will pay the premium for your Part B.
If your tax return shows you have $160,000 in yearly income, then you can expect to pay $428 per month. If you are single and make $85,000 or less, then you would pay on average $134.
It is to your advantage to select a Part B plan when you sign up for Part A because there are stiff penalties if you do not.
This penalty does not go away and is charged to your account for as long as you have Plan B. The current late fee is 10 percent for each one-year period you should have had Plan B.
Medicare Part C is optional, but many select this coverage because is offers additional benefits, such as vision and dental.
Part C is often called the Medicare Advantage plan and is offered through independent insurance agencies.
However, in order to select Part C, you must have already signed up for Parts A and B. This qualifies you to select C and make your adjustments.
You will pay your plan as usual, plus any additional premiums the plan charges you for additional features.
Not all Medicare Advantage programs require a yearly deductible that must be met in addition to the regular Part B deductible.
Each insurance agency establishes the amounts they will charge for their Medicare plans, including the services and any applicable deductibles.
These amounts, and even the coverages offered, can change each year, so you must make a point of reviewing your policy before renewing.
The maximum out-of-pocket expenses, as capped by the government in 2018, is $6700. However, this is only if you use in-network providers.
As with Part C, Part D can vary in its costs. This portion of Medicare is designed to cover prescription drug costs.
The premiums are often based on your income. If you made the following income amounts, you can get a good idea of what you would pay for a Part D plan in 2016:
You are required to have a Part D plan, regardless if you go with a traditional Medicare Part A/B, or a Medicare Advantage plan (Part C).
There are penalties for not having prescription drug coverage for more than 63 days after your initial enrollment period.
In general, everyone has seven months for enrolling in Medicare.
This includes the three months prior to your 65th birthday and extends out three months past your birthday month.
If you are not one of those who will be automatically enrolled, then you can sign up for Part A at any time after the enrollment period starts.
Coverage start dates can vary depending on when you sign up for the plans.
However, if you are required to buy Part A and B, then you will only be allowed to sign up during the various enrollment periods.
The best strategy is to sign up for both A and B as soon as you are eligible to do so, typically three months before your 65th birthday.
This will keep you from having a gap in your coverage. Enrollment periods thereafter are between January 1st through March 31st year.