Medicare Costs

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Medicare Costs

Understanding your Medicare coverage costs is an important part of the coverage selection and enrollment process.  By knowing what your costs will be BEFORE you enroll in a plan, you can avoid receiving unpleasant bills in the mail that you weren’t expecting.

Your Medicare costs will vary depending on where you live, your income, the specific plan you select and the out-of-pocket expenses relating to your plan.  Additionally, you could qualify for programs that will provide financial assistance and offset some or all of these expenses.  If you think you are eligible for financial assistance, contact your local Medicaid office to gather more information.

The associated Medicare coverage costs you might have to pay include:

Premiums – The set amount that you are required to pay out-of-pocket monthly, whether through your checking account or Social Security check, for Medicare Part B, Medicare Advantage (Part C), your Medicare Part D prescription drug plan and/or your Medicare Supplement plan.

Deductibles – The set amount that you are required to pay out-of-pocket for covered services before your insurance plan begins to provide benefits. Supplement plan.

Coinsurance/Copayments – The portion of the medical services or prescription drugs that you are responsible to pay. Copayments are fixed dollar amounts;  in comparison, coinsurance is calculated as a percentage.

** WATCH: Medicare Costs Video **

Premiums for Part A

For most, the premium for Part A is zero because you’ve already paid for it through FICA taxes, which were deducted from your paycheck each month while you were working.

However, if you do have to pay Part A premiums because you worked less than the required 40 quarters, you can possibly get a pro-rated premium which can lower your monthly cost.  Typically, those who worked between 30 and 40 quarters would receive a pro-rated premium of $252/month for 2020.

If you have no work credits, your Medicare Part A premium for 2020 is $458/month.

Deductibles for Part A

For 2020, there is a $1,408 deductible if you experience a hospital stay, which is referred to as a hospital benefit period.  A hospital benefit period begins when you check into a hospital or skilled nursing facility (SNF) and ends 60 consecutive days after you have been discharged from either the hospital or SNF.  (If you purchase a Medigap/Medicare Supplement plan, your plan should cover this cost for you).

Coinsurance/Copayments For Part A

After the deductible, there is no initial copay or coinsurance for your first 60 days of stay in a benefit period.  However, if your stay extends past 60 days, you are required to pay a copayment for Part A.  In 2020, for example, days 61-90 require a $352/day copayment.

In a skilled nursing facility, you are required to pay a copayment if your stay exceeds 20 days.  From days 21-100 in 2020, your copayment would be $176/day, and from days 101 and beyond, you would be responsible for all costs.

Hospital Stays

For a hospital stay in 2020, you are required to pay a deductible of $1,408.

This is not an annual deductible, and you’re required to pay this fee for each separate hospital benefit period.

Your payment can vary depending on the length of your hospital stay. Please note that if you have a Medicare Supplement plan, the copayment/coinsurance for your hospital stay might be covered.

Skilled Nursing Facility Stays

Medicare does not charge a deductible for a skilled nursing facility stay.  From days 21-100 in 2020, your copayment would be $176/day, and from days 101 and beyond, you would be responsible for all costs.  However, they will only cover up to a maximum of 100 days, and only if you meet the following criteria:

  •  You must be admitted in to the hospital for a minimum of three (3) days.
  •  You must be admitted to the hospital as an inpatient.  Just going to the emergency room or being in “observation status” is not applied towards your three-day requirement.
  • You must have had Medicare Part A coverage during the time you were in the hospital as Part A covers your hospital stay.
  •  Your physician must determine that you need skilled nursing care at a minimum of seven (7) days a week, or skilled therapy services for a minimum of five (5) days a week.  Note: Medicare will not cover your stay if you just need help with personal care, such as eating, dressing and bathing.
  • Your admittance in to an SNF must be within 30 days of your hospitalization.

Home Healthcare Services

You don’t have to pay a deductible or copayment for home healthcare services.  However, Medicare will only cover these costs if you meet ALL of the following criteria:

  • You’re under the care of a physician.
  • You’re homebound.
  • You need part-time skilled medical care.
  • You need skilled care from a nurse and/or a speech, physical, or occupational therapist.

Note:  Your physician may recommend that you receive services that are more frequent or out of the scope of what Medicare covers.  In this situation, you run the risk of having to pay all or a portion of the costs.

It’s up to you to ask questions so that you understand why your doctor is recommending certain services, what you’ll be responsible paying for and if Medicare will cover these costs.

Hospice Care

You’re not required to pay a deductible or copayment for hospice care.  Your Medicare coverage requires you to pay only a small portion of the costs for medications and inpatient respite care. Medicare will cover the remaining costs if the following criteria is met:

  • Your physician has confirmed and certified your illness is terminal and your life expectancy is 6 months or less.
  • You’ve accepted palliative care and no longer seek care to cure your illness.
  • You’ve signed a statement acknowledging your choice to accept Hospice care and no longer seek alternative treatments to cure your illness.

Costs For Part B

Premiums for Part B

There is a monthly premium for Part B coverage that you are required to pay, which is determined by your modified, adjusted household gross income (MAGI). The Social Security administration uses your IRS tax return from two years prior to calculate and determine what your premium will be for Medicare Part B.

Most people new to Medicare will pay $144.60 for Part B premiums in 2020. This is the current standard premium and applies if you meet the following criteria:

Criteria for Part B Current Standard Premium

  • You enrolled in to Part B for the first time in 2020.
  • You are not currently receiving Social Security or Railroad benefits.
  • You have Medicare and Medicaid, and Medicaid pays your premiums. (Your state will pay the standard premium amount of $144.60).
  • Your modified adjusted gross income as reported on your IRS tax return from 2 years ago (2018) is $87,000 or less individually or $174,000 or less jointly.

Medicare Part B Income Related Monthly Adjustment Amount (IRMAA)

Medicare has implemented a policy where your Part B premium can be increased based on your modified, adjusted household gross income (MAGI) on your tax return from two years prior. This increase is called Income Related Monthly Adjustment Amount (IRMAA).

Simply put, this is a surcharge that you might have to pay if your income exceeds certain thresholds. So if your modified, adjusted gross income is greater than the thresholds, you will be responsible for a larger portion of the Part B cost.

This increase in payment is in addition to the purchase of a Medicare supplement or Medicare Advantage plan.

To better understand how your income can impact your Part B premiums, please see the 2020 Part B IRMAA rates below.

If filing individual income tax returns, and your income is:

• Less than or equal to $87,000 annually
INCOME-RELATED MONTHLY ADJUSTMENT AMOUNT – $0
TOTAL MONTHLY PREMIUM AMOUNT – $144.60

• Greater than $87,000 and less than or equal to $109,000 annually
INCOME-RELATED MONTHLY ADJUSTMENT AMOUNT – $57.80
TOTAL MONTHLY PREMIUM AMOUNT – $202.40

• Greater than $109,000 and less than or equal to $136,000 annually
INCOME-RELATED MONTHLY ADJUSTMENT AMOUNT – $144.60
TOTAL MONTHLY PREMIUM AMOUNT – $289.20

• Greater than $136,000 and less than or equal to $163,000 annually
INCOME-RELATED MONTHLY ADJUSTMENT AMOUNT – $231.40
TOTAL MONTHLY PREMIUM AMOUNT – $376.00

• Greater than $163,000 and less than or equal to $500,000 annually
INCOME-RELATED MONTHLY ADJUSTMENT AMOUNT – $318.10
TOTAL MONTHLY PREMIUM AMOUNT – $462.70

• Greater than or equal to $500,000 annually
INCOME-RELATED MONTHLY ADJUSTMENT AMOUNT – $347.00
TOTAL MONTHLY PREMIUM AMOUNT – $491.60

 If filing joint income tax returns, and your combined income is:

• Less than or equal to $174,000 annually
INCOME-RELATED MONTHLY ADJUSTMENT AMOUNT – $0
TOTAL MONTHLY PREMIUM AMOUNT – $144.60

• Greater than $174,000 and less than or equal to $218,000 annually
INCOME-RELATED MONTHLY ADJUSTMENT AMOUNT – $57.80
TOTAL MONTHLY PREMIUM AMOUNT – $202.40

• Greater than $218,000 and less than or equal to $272,000 annually
INCOME-RELATED MONTHLY ADJUSTMENT AMOUNT – $144.60
TOTAL MONTHLY PREMIUM AMOUNT – $289.20

• Greater than $272,000 and less than or equal to $326,000 annually
INCOME-RELATED MONTHLY ADJUSTMENT AMOUNT – $231.40
TOTAL MONTHLY PREMIUM AMOUNT – $376.00

• Greater than $326,000 and less than or equal to $750,000 annually
INCOME-RELATED MONTHLY ADJUSTMENT AMOUNT – $318.10
TOTAL MONTHLY PREMIUM AMOUNT – $462.70

• Greater than or equal to $750,000 annually
INCOME-RELATED MONTHLY ADJUSTMENT AMOUNT – $347.00
TOTAL MONTHLY PREMIUM AMOUNT – $491.60

Note: Medicare beneficiaries who meet certain income guidelines can get their Part B premium covered by the Medicare Savings Program in their state.

Your Part B premium is deducted monthly by Social Security from your Social Security income or Railroad benefits check. If you have not enrolled in Social Security income or Railroad benefits yet, your bill will be mailed to you quarterly. Social Security will also notify you by mail annually each December of your premium amount for the following year.

Deductibles for Part B

The annual deductible for Medicare Part B is $198 in 2020. That means, when you receive services covered by Part B, you’ll pay $198 out-of-pocket before Medicare pays their portion of the remaining balance.

Coinsurance For Part B

Once you’ve paid your deductible, you’ll then pay 20% of the Medicare-approved cost for most Medicare Part B covered services.

Medicare Advantage

Medicare Advantage plans operate with deductibles, coinsurance and copayments, where supplement programs will have a zero or low deductible for medical care. For budget conscious consumers, Medicare Advantage can save a consumer money on monthly premiums by combining medical and prescription coverage.

Consult with a licensed Medicare Portal insurance agent to determine the plan that best suits your needs and budget, and if a Medicare Advantage plan is the right fit for you.

Costs for Part D

Part D coverage is designed with a formulary, tiers, co-payments and co-insurance.  All plans will offer benefits for both generic and brand name drugs. Every provider of Part D benefits has the freedom to select their formulary as well as establish their co-payments and tiers.  It is vital that you use one of the tools available to search your drug options or contact us here at Medicare Portal to help you in evaluating your plan options.

Medicare Part D, when purchased with a Medigap plan, has its own separate premium. If a beneficiary purchased a Medicare Advantage plan, their Part D benefits would be included in the plan and, therefore, the premium would reflect this combination of benefits.

Medicare Part D Income Related Monthly Adjustment Amount (IRMAA) – Find out if you are subject to additional Part D premiums. Read more about how your income can affect your Medicare Prescription Drug Coverage premiums on our Medicare Costs page.

Costs for Medigap

A Medicare Supplement plan, also known as Medigap, is health insurance that is offered by private insurance companies to fill the gaps that Original Medicare doesn’t cover.

Many Medicare beneficiaries don’t realize that Original Medicare doesn’t pay for all of your medical expenses. Approximately 80% of your medical costs are covered, which means that you are left to pay the remaining 20%. These costs, which are comprised of copayments, coinsurance and deductibles, can add up quickly, especially if you have an unexpected medical condition or emergency!

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