How Much Does Medicare Cost?
Most people don’t pay a premium for Medicare Part A, but the standard premium for Part B is $148.50 in 2021. You may have to pay a premium for a Medicare
Advantage plan or Medicare Part D prescription drug coverage. There are also deductibles and coinsurance that add to your out-of-pocket costs.
While Medicare provides federally administered health insurance to millions of older Americans, it does not cover all medical bills. You may face several out-of-pocket costs. But there are other plans and options to help you meet those expenses.
- You have to pay a certain amount for medical care before Medicare kicks in. This varies for Medicare Parts A through D. This amount is called your deductible. It resets each year.
- This is usually measured as a percentage of your doctor, hospital or other medical bill. Coinsurance is a cost you may have to pay for your share of medical services even after you’ve paid your deductibles.
- Lifetime Reserve Days
- Medicare only pays for 90 days of hospitalization, but it gives you an extra 60 “lifetime reserve days” for your entire lifetime. These are additional days Medicare pays for hospitalization if you need more than 90 days in the hospital. If you use all these up, you will have to pay out-of-pocket for hospitalization.
Medicare Part A Costs
Medicare Part A, which provides hospital insurance, charges no monthly premium to anyone who paid Medicare taxes through their employer for at least ten years. Those who haven’t worked that long have to pay premiums for Part A coverage.
|Charges||2021 Cost||2020 Cost||Year-to-Year Change|
|Monthly premium for anyone who has worked 40 quarters (10 years)||$0||$0||$0|
|Monthly premium for anyone who has worked fewer than 30 quarters (7.5 years)||$471||$458||$13|
|Monthly premium for anyone who has worked 30 to 39 quarters (7.5 to 9.75 years)||$259||$252||$7|
|Coinsurance per day for days 61 to 90 of hospitalization||$371||$352||$19|
|Coinsurance per day for hospital stays beyond 91 days (using lifetime reserve days)||$742||$704||$38|
|Coinsurance per day for skilled nursing facility stays||$185.50||$176||$9.50|
Medicare Part B Costs
Medicare Part B covers doctor visits, outpatient services, certain home health services, some medical equipment and certain items not covered under Part A.
Part B premiums are based on a progressive scale depending on how much income you have and whether you filed an individual or joint tax return.
|Income Level for Individual Taxpayer (2021)||Income Level for Joint Tax Filers (2021)||Monthly Medicare Part B Premium (2021)|
|$88,000 or less||$176,000 or less||$148.50|
|$88,000 to $111,000||$176,000 to $222,000||$207.90|
|$111,000 to $138,000||$222,000 to $276,000||$297.00|
|$138,000 to $165,000||$276,000 to $330,000||$386.10|
|$165,000 to $500,000||$330,000 to $750,000||$475.20|
|$500,000 and up||$750,000 and up||$504.90|
The deductible for Medicare Part B saw only a slight increase between 2020 and 2021.
|Charges||2021 Cost||2020 Cost||Year-to-Year Change|
After meeting your deductible, you are responsible for 20 percent of all Part B costs under coinsurance.
Cost for Medicare Advantage Plans
Medicare Advantage plans, also called Medicare Part C, are sold by private companies that have contracted with the federal government. There are no fixed premiums, deductibles or coinsurance. Instead, they vary from plan to plan. You first have to have Original Medicare — Parts A and B — before you can buy a Medicare Advantage plan.
The companies that administer the plans set the amounts charged for premiums, deductibles and coinsurance once a year. Medicare does not have a hand in determining the costs. Changes take effect on Jan. 1 of the following year.
- Whether your Part B premium is included in the Advantage plan. Some Medicare Advantage plans cover all or part of your Part B premium.
- Whether you have Medicaid or other state assistance.
- Whether the plan charges for extra benefits you need.
- Whether or not the plan charges a premium since some plans do not.
- The type of Medicare Advantage plan you have and whether a doctor or other health care provider accepts it.
- The type of health services you use.
- The annual limit your plan sets for out-of-pocket costs for health care.
- The amount of your coinsurance or copay, which can differ from Medicare Part B.
- The amount of the Medicare Advantage plan deductible or whether it even has a deductible.
- How often you use health services.
- Added costs of seeing a health care provider outside your plan’s network.
How Much Does Medicare Part D Cost?
Medicare Part D plans, sometimes called PDPs, add prescription coverage to Original Medicare. Medicare Advantage plans may also include Part D prescription drug coverage.
The cost of a Part D plan varies depending on cost and which drugs it covers. Individuals living in a high-income household pay more. The standard Part D premium adds this income-related monthly adjustment amount (IRMAA).
Part D is an optional coverage that anyone on Medicare can sign up for.
If you do not sign up for Part D coverage when you first enroll in Medicare, you can still sign up later. But you will pay an ever-increasing penalty unless you have other creditable prescription drug coverage or you receive certain other assistance from the state or federal government.
The penalty applies anytime you go 63 days or more after your initial Medicare enrollment period ends and you don’t have a Medicare prescription drug plan, a Medicare Advantage plan that offers drug coverage or another creditable prescription drug insurance plan.
The Part D penalty you owe is based on how long you waited to enroll in a prescription drug plan. It adds a cost for each month you went without enrolling on to all future monthly premium payments.
Average Cost of Medicare Supplemental Insurance
Medicare supplemental insurance, also known as Medigap, are private plans you can buy to cover some of the out-of-pocket costs of Medicare Part B. These are different from Medicare Advantage plans.
The average monthly premium for Medigap was $175 per month, according to a 2017 study published by Harvard University. But costs can vary widely for a Medigap plan.
Companies are free to set their own prices for each plan they offer, but the rates are filed and reviewed by the various state insurance departments. Different insurers may charge different premiums for the exact same plan, so it’s important to compare prices between companies to find the best deal.
About 25 percent of Medicare beneficiaries purchase these plans from large private insurers such as UnitedHealth, Aetna, or BlueCross BlueShield. Average out-of-pocket costs are approximately $1,600 per year and the average [annual] Medigap premium is approximately $2,100, implying mark-ups of 31 percent.
The private insurers usually get your Part B claim information directly from Medicare then pay your doctor directly. But if the insurer does not offer this service, ask your doctor if he or she participates in Medicare. If your doctor accepts assignment for all Medicare patients, your Medigap insurance provider is required by law to pay the doctor once you request it.
Some states also allow insurers to offer Medicare SELECT. These plans can require you to use specific doctors and hospitals. If you buy a Medicare SELECT policy, you have 12 months to change your mind and buy a standard Medigap policy instead.
10 Cited Research Articles
- U.S. Centers for Medicare & Medicaid Services. (2020, November 6). 2021 Medicare Parts A and B Premiums and Deductibles. Retrieved from https://www.cms.gov/newsroom/fact-sheets/2021-medicare-parts-b-premiums-and-deductibles
- U.S. Center for Medicare and Medicaid Services. (2020, January). 2020 Medicare Costs. Retrieved from https://www.medicare.gov/Pubs/pdf/11579-medicare-costs.pdf
- U.S. Center for Medicare and Medicaid Services. (2019, November 8). 2020 Medicare Parts A and B Premiums and Deductibles. Retrieved from https://www.cms.gov/newsroom/fact-sheets/2020-medicare-parts-b-premiums-and-deductibles
- Curto, V. (2017, October). Pricing Regulations in Individual Health Insurance: Evidence from Medigap. Harvard University. Retrieved from https://scholar.harvard.edu/files/vcurto/files/Curto_Medigap.pdf
- U.S. Centers for Medicare and Medicaid Services. (n.d.). Medicare Costs at a Glance. Retrieved from https://www.medicare.gov/your-medicare-costs/medicare-costs-at-a-glance
- U.S. Center for Medicare and Medicaid Services. (n.d.). Your Medicare Costs. Retrieved from https://www.medicare.gov/your-medicare-costs
- U.S. Center for Medicare and Medicaid Services. (n.d.). Costs for Medicare Advantage Plans. Retrieved from https://www.medicare.gov/your-medicare-costs/costs-for-medicare-advantage-plans
- U.S. Center for Medicare and Medicaid Services. (n.d.). How to Get Prescription Drug Coverage. Retrieved from https://edit.medicare.gov/drug-coverage-part-d/how-to-get-prescription-drug-coverage
- U.S. Center for Medicare and Medicaid Services. (n.d.). Part D Late Enrollment Penalty. Retrieved from https://edit.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/part-d-late-enrollment-penalty
- U.S. Center for Medicare and Medicaid Services. (n.d.). Medigap Costs. Retrieved from https://edit.medicare.gov/supplements-other-insurance/whats-medicare-supplement-insurance-medigap/medigap-costs