Medicare provides health insurance to most older Americans, but there are still expenses that have to be paid out-of-pocket. Medicare has a complicated set of rules that can be difficult to understand. So here are some of the expenses you can expect with Medicare:
The standard Medicare Part B premium is $104.90 per month in 2016, but it can cost more for some Medicare beneficiaries. Those who sign up for Medicare in 2016 and those who have not yet claimed Social Security will be charged $121.80 per month for Medicare Part B. Those who are bringing in an income of $85,000 or higher ($170,000 for couples) will pay higher Part B premiums ranging from $170.55 to $389.80 per month depending on their income.
Medicare Deductibles and Co-Insurance
The deductible for Medicare Part B in 2016 is $166. After this deductible is paid, Medicare beneficiaries typically pay 20 percent of the cost of most doctor visits. This can quickly add up if there are a lot of health services needed over time. There is no annual limit on how much you can pay out-of-pocket.
Medicare provides some free preventative care services such as wellness visits once every twelve months, flu shots, and cardiovascular disease screenings.
Medicare Part A has a deductible of $1,288 if you are hospitalized. If you spend more than sixty days in the hospital it will cost $322 a day for days 61 through 90. You have sixty lifetime reserve days for days 91 through 150 in which you will pay $644 each day. After your lifetime reserve days are up, you will be responsible for the entirety of your hospital expenses.
Medicare Supplemental Insurance
Some Medicare beneficiaries buy supplement insurance policies to cover some of the cost-sharing expenses of traditional Medicare. A Medigap policy can make your Medicare costs more predictable. Depending on what Medigap plan you choose, your out-of-pocket costs can be great or practically nothing. Many Medigap plans cover some of Medicare Part B’s out-of-pocket costs and longer hospital stays than traditional Medicare. The most inclusive plan is Plan F. It is the most expensive but it will cover almost every copay and deductible that you have.
Another option is to sign up for Medicare Advantage (Part C), which means you’ll receive your Medicare Plans A and B through a private plan instead of Original Medicare. With Medicare Advantage, sometimes more coverage restrictions apply. To save money on out-of-pocket costs you’ll have to see in-network doctors and only do referrals from your primary physician. If you’re willing to trade the ability to see any doctor you want without a referral then you will see lower out-of-pocket costs.
Medicare Prescription Drug Coverage
There are about two dozen plans for Medicare Part D prescription drug coverage to choose from. Each one offers different prices and coverage. The average premium in 2016 is $41.46 per month and plans are allowed to charge up to $360 deductibles. Premiums are higher for people who go 63 days or more without prescription drug coverage after they are eligible for for Medicare. High-income Medicare beneficiaries also pay more for Medicare Part D. The plans change every year so to save the most money, it is best to review your plan and the other plans available each year to see what works best for you.
Avoid Late Enrollment Penalties
The initial enrollment period lasts seven months and begins three months before you turn 65. If you don’t sign up for Medicare during this initial enrollment period then you could be charged a higher premiums for the rest of your life. Medicare Part B premiums increase by 10 percent every 12 months that you don’t sign up for Medicare. If you don’t sign up because you have medical benefits through your spouses job, then you need to sign up within 8 months of leaving that job or the coverage ending to avoid the penalty.
If you are nearing or already 65 and would like more information on Medicare Plans in Washington State, please visit our Overview of Medicare, as well as our guide for those who are New to Medicare. For assistance in choosing a Medicare plan, contact us to get in touch with a licensed insurance agent today!