Medicare covers tens of millions of Americans with unique medical needs and strives to accommodate them all. As a result, the famous program is quite complex and many people are hopelessly confused after turning 65. The Medicare Health Experts are your perfect resource to understand the inner workings of Medicare, such as Medicare costs.

Understanding Medicare Costs

It’s common that people will mistakenly think that Medicare is free. In reality, it comes with a variety of different expenses. While Medicare is typically much more affordable than private insurance, you need to be prepared for out-of-pocket expenses. You also have options to expand or alter your Medicare coverage, but these entail a more expensive insurance plan.

Medicare Copays, Premiums, and Deductibles

Standard Medicare consists of Part A and Part B. Part A covers room and board in hospitals, while Part B covers many important procedures. Part A is completely premium-free for 99% of American citizens, including those who’ve paid into Medicare in the past. Those without a work history in America or those who didn’t work enough must pay a hefty monthly premium for Part A.

Part B has the same default costs for all Medicare beneficiaries. It starts with a relatively modest premium each month. From there, a beneficiary will have to pay a deductible and 20% of the costs that Medicare incurs.

Finally, it bears mentioning that Medicare does not cover prescription drugs by default. You can expand your Medicare coverage to include them at the cost of an extra premium. This is one of several ways that you can change the price and scope of your Medicare coverage. Overall, you have three distinct mechanisms to do so.

Medicare Advantage, Medigap, and Part D

If the baseline coverage on Medicare seems inadequate, you might be better off changing your plan. There are two ways you can do so within the framework of the program while making good use of your benefits. The first is purchasing a Medigap plan, which entails an additional premium in exchange for better coverage. Depending on your plan, you’ll have smaller or nonexistent Medicare Part B expenses.

Another important part of Medicare is Part D. If prescription drug prices are too much for you to pay out of pocket, you need this expansion. You’ll pay a premium, but Medicare will cover the costs of prescription drugs.

Your other choice is using Medicare Part C, also known as Medicare Advantage. This allows you to use your Medicare benefits to pay for private insurance. Medicare Advantage plans vary in their cost and coverage from plan to plan, and different regions have different options. It’s possible for Medicare Part C to incorporate the expanded coverage of Medigap plans and Medicare Part D.

Medicare Costs 2020

Medicare premiums and deductibles tend to rise slightly year-by-year. While increases are generally very minor, it’s still important to stay up-to-date on changes and expenses you might incur.

Medicare Part A Cost 2020

If you qualify for a free premium, you won’t have to pay a penny for Medicare Part A unless you visit a hospital. Once you visit a hospital, Part A covers 60 benefit days without additional expenses. If you need more than 60 days of care in a year, it’s necessary to pay a coinsurance fee of $352 per day. This goes on until you’ve used 90 days of Medicare Part A in a year, at which point your lifetime reserve days go into effect.

A Medicare beneficiary has 60 lifetime reserve days during which Medicare will limit your Part A expenses to $704 per day. While the other elements of Part A reset each year, lifetime reserve days are a finite resource. Once you exhaust them, you’ll pay all costs beyond 91 benefit days per year from your own pocket. The exception to these expenses is if you have a relevant Medigap plan that covers it.

Medicare Part B Cost 2020

Medicare Part B costs in 2020 start with a $144.60 premium, although high earners will pay more. After the premium, you’ll pay a $198 deductible and share 20% of Part B expenses. A Medigap plan can eliminate the deductible and Part B expenses.

Compared to Part A, Part B is remarkably simple and straightforward. The only variable is what bracket you’ll fall under. Most beneficiaries fall under the lowest bracket, which includes individuals earning $87,000 per year or lower and couples earning $174,000 per year or less. If that sounds like you, then you don’t need to worry about paying a higher premium.

Medicare Part D Cost 2020

Medicare Part D also charges a premium that the administration pegs to your income. The lowest and most common bracket only pays for the cost of your specific Part D drug plan. As your income grows, your Part D premium increases by $12.20 to $76.40.