The American Medicare health insurance program covers many of the most necessary medical benefits for recipients at a greatly reduced cost. Unfortunately, Medicare is not really free.

There are certain costs that you must share with the government in order to get the health care you need. Below, we’re going to go over those costs in more detail so that you can appropriately plan for your medical expenses.

Do Patients Pay For Medicare?

There are certain predictable costs you can expect from Medicare, especially if you stick with Original Medicare (Parts A and B). Some of these include your annual deductible, monthly premiums, and coinsurance costs.

Others are known but less predictable, such as coinsurance for extended hospital stays or multiple blood transfusions. Let’s first look at the costs you can effectively budget for to see the expenses associated with Medicare.

Medicare Part A Costs

Most beneficiaries will be eligible for premium-free Medicare Part A upon retirement. You will receive Medicare Part A premium-free if you have worked at least 40 quarters (or 10 years) during your lifetime. You may also be eligible to receive premium-free Part A if your spouse has a 40-quarter work history, even if you don’t.

If you are single, or if neither you nor your spouse has a sufficient work history, you will have to pay a monthly premium for Medicare Part A.

These premiums start at $274 if you have at least 30 quarters of work history under your belt. Anything less than that will require you to pay the full monthly premium of $499.

Medicare Part B Costs

Regardless of your work history, you will have to pay a monthly premium for Medicare Part B. The monthly premium for each individual who is enrolled in Medicare Part B will be $170.10.

This is if you make $91,000 or less filing single or $182,000 or less filing jointly with your spouse. If you make more than that, your monthly premium goes up depending on your income. You can take a look at Medicare.gov for more information on Part B premium costs for higher-income earners.

You also have an annual deductible which you must meet out of pocket before Medicare kicks in and starts sharing the costs of Medicare Part B benefits with you. The annual deductible for each recipient will be $233.

After that, you will only pay 20% of your cost of care (in the form of coinsurance) and Medicare will pay the other 80%. Those services include things like:

Medicare Part C (Medicare Advantage) Costs

Medicare Advantage policies are sold and operated by private health insurance companies, so it’s a little difficult to predict your regular, guaranteed costs.

You won’t really know how to budget accordingly until you know what plan you are purchasing and what company you are purchasing it from.

But one thing you can count on is your monthly premium. For some lucky beneficiaries, however, you may be able to get Medicare Advantage premium-free if you choose a lower-cost plan.

This is because the federal government will pay most if not all of your premium in exchange for you paying into the Medicare system via taxes during your working years.

Other costs you might have to pay with Medicare Advantage include coinsurance, co-pays, and deductibles. The vast majority of Medicare Advantage plans also come with prescription drug coverage, so you may have to pay monthly premiums and/or share the cost of your prescription drugs with your Medicare Advantage provider.

Medicare Part D Costs

Medicare Part D prescription drug coverage is only available to those with Original Medicare — you cannot sign up for Medicare Part D if you have Medicare Advantage. Like Medicare Advantage, administration for Medicare Part D drug plans comes from private insurance companies.

Expenses you should budget for include:

  • Your monthly premium (which you can get deducted from your Social Security benefits if you wish)
  • An annual deductible. Keep in mind that some drug plans don’t come with an annual deductible. But for those that do, the maximum they can charge is $480 per year.

The Donut Hole

With a Medicare Part D drug coverage plan, you may enter a coverage gap known as the “donut hole” if you spend more than a certain amount of money on drugs in any given year. For 2022, that threshold will be $4,430.

Then you are responsible for 25% of the total cost of brand-name and generic drugs. You will have to spend a certain amount of money out of pocket for your prescriptions for the rest of the year before you exit the coverage gap and Medicare takes on a greater share of the cost again.

But you will automatically exit this coverage gap at the beginning of a new year. Each plan is different, so the amount you have to spend in order to exit the coverage gap may vary.

How To Protect Yourself From Costly Medicare Coverage Gaps

Original Medicare — especially if you pair it with a Medicare Part D prescription drug plan — is fairly comprehensive. But it won’t cover everything. If you aren’t careful, the gaps in coverage that Medicare won’t pay for can get very expensive, very quickly.

But you have a couple of fairly affordable options which can help cover the gaps in your Medicare coverage and protect your life savings.

Taking Advantage of Medicare Advantage

The law requires Medicare Advantage plans to offer you the exact same benefits that you get from Original Medicare Parts A and B.

More often than not, though, your Medicare Advantage provider will offer additional benefits that will plug the coverage holes inherent in Original Medicare.

It’s also not uncommon to also get extra benefits like dental and/or vision coverage. And we told you earlier that Medicare Advantage plans usually come with prescription drug coverage, too.

Because of this, you will not need to sign up for Medicare Part D. As a matter of fact, you cannot legally sign up for Medicare Part D if you have Medicare Advantage.

Medicare Supplement Insurance (Medigap) Costs and Benefits

Medigap insurance is a standardized form of supplemental coverage for Original Medicare which the federal government regulates. Private health insurance companies sell and operate these policies.

There are 10 different plans you can choose from with varying levels of coverage. For the most part, the most important expense you can budget for with a Medigap policy is your monthly premium.

Beyond that, you may be subject to certain coinsurance and copayments after you have exhausted both your Medicare and Medigap benefits.

Medicare Isn’t Free, So Get Supplemental Coverage

Even though Original Medicare covers many of its beneficiaries’ medical expenses, it’s not free and it doesn’t cover everything. That’s why a Medicare Supplement plan could be the key to getting the benefits you need. This can help both your health and your wallet at the same time.

With licensed insurance agents who fully understand and can easily explain your options, we can match you with the best Medigap plan. This is free of charge to callers and you can ask any questions you have.

So give us a call today if you’d like to know your options. Or just complete our easy online rate form to be hooked up with the best plans in your area!

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by Lindsay Malzone, Lindsay Malzone is the Medicare expert for Medigap.com. She's been contributing to many well-known publications as an industry expert since 2017. Her passion is educating Medicare beneficiaries on all their supplemental Medicare options so they can make an informed decision on their healthcare coverage.