The Cost of Original Medicare Premiums, Copayments and Deductibles

While our health concerns are paramount in determining the right fit for various Medicare plans, it’s also important to understand the financial aspects of Medicare. Once you enroll in Medicare Parts A and B, you are responsible for paying coverage-related premiums, deductibles and copayments. In this blog post, we’ll explore the anticipated costs for Original Medicare.

Costs for Medicare Part A

Before addressing cost, it’s important to understand what Medicare Part A covers. Medicare Part A offers coverage for inpatient hospital care, nursing facility care, hospice care and in-home care.

Determining your costs for Medicare Part A includes understanding how your premium is calculated. For most beneficiaries, Medicare Part A does not require a premium because you or your spouse worked the required 40 quarters to receive premium-free Part A for the rest of your life. If you don’t qualify for premium-free Part A, you’ll pay a monthly premium that is calculated each year. In 2021, if you paid Medicare taxes for 30 to 39 quarters, the premium is $259 per month; if you paid Medicare taxes for fewer than 30 quarters, the premium is $471 per month.

Medicare isn’t free. Thus, you are responsible for certain out-of-pocket costs when you seek care under Medicare. Under Part A Medicare, your costs primarily include deductibles and copayments. For example, if you go into the hospital, you would be responsible for a $1,484 deductible for your stay. After the deductible, depending on the length of your stay, you could be responsible for more Part A related expenses starting on the 61st day. After meeting your deductible, coinsurance is $0 for the first 60 days of each benefit period. A benefit period refers to the duration of time you’re admitted to a hospital or skilled nursing care and ends after you’ve been discharged for 60 days without readmission. From day 61 to day 90, your coinsurance rate rises to $371 per day of each benefit period. After day 90, you will pay $742 coinsurance for every “lifetime reserve day” for each benefit period. That’s up to 60 days over your lifetime.

Costs for Medicare Part B

The costs for Medicare Part B share some similarities with Part A, but there are a few key differences. Medicare Part B covers outpatient medical care, doctor’s visits, preventative services, occupational therapy, physical therapy, mental health services and some home health care services. Like Part A, costs for Part B can change every year.

Unlike Part A, you are required to pay a monthly premium to remain enrolled in Part B benefits no matter how many quarters you worked in the past. In 2021, the standard premium for Medicare Part B is $148.50. Most people pay the standard monthly premium, but if your modified adjusted gross income (MAGI) as reported on your IRS tax return from two years prior is above a certain amount ($88,000 individually or $176,000 jointly in 2019 for 2021), you’ll pay the standard premium amount and an Income Related Monthly Adjustment Amount (IRMAA). IRMAA is an additional charge applied to your monthly premium.

Since the passage of the Medicare Access and CHIP Reauthorization Act (MACRA) in 2015, all new Medicare beneficiaries will be responsible for the Part B annual deductible. In 2021, the deductible is $203. After meeting the deductible, Medicare will pay approximately 80% of covered medical expenses, leaving you with approximately 20% of the costs. This includes doctor services while you’re an inpatient, as well as outpatient therapy and durable medical equipment expenses. For example, if you meet your deductible and the covered service charge is $200, you are responsible for $40 (20% coinsurance) of that bill.

Out-of-Pocket Cost Considerations for Care Outside of Coverage

During your evaluation of cost, it’s also important to note that you will have out-of-pocket costs for services and care not covered Original Medicare (Part A and Part B). Remember that this coverage does not encompass all of the medical care you will need. The following services or care are not covered under Original Medicare:

  • Long-term nursing care (over 21 days)
  • Physical exams outside of annual wellness visits
  • Foot care
  • Acupuncture and naturopathy services
  • Cosmetic procedures
  • Vision care
  • Hearing aids
  • Dental care
  • Medical services outside of the U.S.

Professional Assistance Evaluating Medicare Costs and Plan Choices

Cost is one important determination in evaluating which Medicare coverage and benefits you select each year, and being able to forecast anticipated costs based on plan choice. Knowing the costs for Medicare Parts A and B are helpful in understanding how to budget and look for supplemental plans that can help you manage these costs. Your options will include plans such as Medicare Advantage (Part C) plans and Medicare (Part D) Prescription Drug plans. For help evaluating any Medicare plan, including benefits and costs, contact Medicare Portal for free individualized assistance.


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