Understanding Your Medicare Out-of-Pocket Costs
Your Medicare out-of-pocket costs are what you could pay for health care and vary based on which Part of Medicare you’re enrolled in.
Medicare Part A and Part B are administered by the federal government and help cover hospital and medical costs. Enrolling in Medicare Part B is optional, but if you’re enrolled in Part B you must also enroll in Part A.
Medicare Advantage (Medicare Part C) is sold by private insurers as an alternative to Medicare Part A and Part B. All Medicare Advantage plans must provide at least the same benefits as Medicare Part A and Part B, and some provide additional benefits such as prescription drug coverage. You must be enrolled in Medicare Part A and Part B before you can enroll in a Part C plan.
Medicare Prescription Drug Plans (Medicare Part D) are sold by private insurers to help cover prescription drugs, which are not typically covered by Original Medicare. Most Medicare Advantage plans cover prescription drugs, but if you’re enrolled in a Medicare Advantage plan that doesn’t, you are eligible to enroll in a Part D plan.
Each part of Medicare comes with its own out-of-pocket costs. This guide looks at the different parts of Medicare and outlines some of the out-of-pocket expenses you could face with each.*
Before we jump into specific out-of-pocket costs, let’s first take a moment to understand the key terms you’ll find in this guide.
Your Medicare premiums are what you pay each month for your Medicare benefits.
Your Medicare deductibles are the amount you must pay out-of-pocket before Medicare will pay its share for covered services.
Coinsurance is the amount you pay for a covered service after your deductible is met. Coinsurance is usually a percentage (for example, 20%).
Similar to coinsurance, your Medicare copayments are the amount you pay for a covered service after your deductible is met. However, copayments are usually set dollar amounts rather than a percentage (for example, $20 for a doctor’s visit).
Medicare Part A measures your use of hospital and skilled nursing facility services through benefit periods. A benefit period begins the day you’re admitted to the hospital and ends when you’ve been discharged for at least 60 days. If you’re admitted to the hospital after being discharged for 60 days, a new benefit period begins.
Lifetime Reserve Days
Lifetime reserve days are additional days of inpatient care that Medicare Part A will help cover if you’re in the hospital for more than 90 days during a benefit period. Every Medicare beneficiary is limited to 60 lifetime reserve days over the course of their life. Once your 60 lifetime reserve days are used up, you will not receive any more.
Medicare Part A Out-of-Pocket Costs
Medicare Part A (hospital insurance) helps cover inpatient hospital stays, hospice care, skilled nursing facility care and some home health care.
- Most people do not pay a premium for Part A, provided they paid sufficient Medicare taxes while working. If you must pay a Part A premium, it may cost up to $437 a month in 2019.
- The Medicare Part A deductible in 2019 is $1,364 per benefit period.
- In 2019, the Medicare Part A coinsurance amounts are as follows:
- Days 1-60: $0 coinsurance per benefit period
- Days 61-90: $341 coinsurance per day of beach benefit period
- Days 91 and beyond: $682 coinsurance per each lifetime reserve day
- Beyond lifetime reserve days: all costs
Medicare Part B Out-of-Pocket Costs
Medicare Part B (medical insurance) helps cover certain doctors’ services, medical supplies, preventive services and outpatient care.
- The standard Part B premium in 2019 is $135.50 a month, but could be higher based on your income.
- The Medicare Part B deductible is $185 per year in 2019.
- The Part B coinsurance is typically 20% of the Medicare approved amount for services after your deductible is met.
Medicare Part C Out-of-Pocket Costs
Medicare Part C (Medicare Advantage) plans are sold by private insurers who determine premium amounts and out-of-pocket costs (like deductibles, coinsurance and copayments).
When you enroll in a Medicare Advantage plan, you still pay your Part B premium ($135.50 a month in 2019). Some Medicare Advantage plans require that you pay a Part C premium in addition to the Part B premium, but some Medicare Advantage plans have monthly premiums as low as $0.
A licensed insurance agent can help you compare Part C plan costs. You can speak with a licensed agent now.
Medicare Part D Out-of-Pocket Costs
Medicare Part D (Prescription Drug Plans) are sold by private insurers. Premium amounts and out-of-pocket costs such as deductibles, coinsurance and copayments, are determined by the insurance company (not by Medicare), so specific amounts can vary greatly.
To learn more about Medicare, read through some of the other guides in this series or speak with a licensed insurance agent.
New to Medicare Series
Part 3: Understanding Your Medicare Out-of-Pocket Costs
* All cost information taken from Medicare.gov, 2019 “Medicare Costs at a Glance.” https://www.medicare.gov/your-medicare-costs/costs-at-a-glance/costs-at-glance.html