B Premiums And Medicare Advantage
You can elect to have Original Medicare or a Medicare Advantage plan. Medicare Advantage plans are offered by private insurance companies and will cover everything that Original Medicare offers and more.
Even if you decide on a Medicare Advantage plan and pay premiums to the insurance company, you still have to pay Part B premiums to the government. You must take that added cost into consideration.
Medicare Coverage Options That May Help With Your Medical Expenses
Here are a couple of coverage options that may be good to know about. Perhaps one of them could help with your medical expenses under Medicare.
Medicare Supplement insurance plans are designed to work alongside Medicare Part A and Part B. They may help pay some of your medical expenses for covered services that Medicare doesnât pay. These out-of-pocket costs may include deductibles, coinsurance, copayments, and other costs.
For example, if you spend a lot of time as a hospital inpatient, you might want to know that Medicare Supplement insurance plans typically cover your inpatient costs under Part A for an additional 365 days after your Medicare benefits expire.
Offered by private insurers, Medicare Supplement insurance plans provide standardized plans with lettered names in most states, which makes these Medicare Supplement insurance plans easy to compare.
Medicare Advantage provides an alternative way to receive your Medicare Part A and Part B benefits. Theyâre offered by private insurance companies contracted with Medicare. Medicare Advantage plans may offer additional benefits that might reduce your medical expenses.
Each Medicare Advantage plan must limit the annual out-of-pocket medical expenses you pay for covered services. The limit might change from year to year. After you reach that limit, the plan may pay 100% for covered medical services for the rest of the year.
Medicare Advantage Vs Dental Vision And Hearing Plans
Coverage for dental, vision and hearing care are additional benefits that Medicare Advantage plans may offer and which are not covered by Original Medicare. So how does the cost of a Medicare Advantage plan compare to individual plans for these benefit areas?
- Dental plansA typical standalone dental insurance plan can cost around $350 per year .2
- Vision insurance can typically cost around $20 per month or less.3
- Hearing plansUnlike dental and vision insurance, hearing insurance plans are not a common insurance product. Some hearing aid companies may offer extended warranties, but the warranties apply only to the hearing aid product itself. Any medical care related to your hearing will either be covered under another health insurance plan or paid out of pocket.
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How Can I Lower Medicare Costs
The Medicare Savings Program helps low-income beneficiaries pay Original Medicare premiums, copays, and deductibles. The Medicare Extra Help program assists low-income beneficiaries with prescription drug coverage.
Some Medicare beneficiaries are also eligible for Medicaid, the federal-and-state-funded health insurance program for low-income Americans. Eligibility varies by state â you can see our state-by-state guide to Medicaid here to find out if youâre eligible, and read more about Medicare vs Medicaid.
Beyond that, cost-saving comes down to finding the best plan and program structure for you. Some people may be looking for different Medicare benefits and more robust coverage than others. As weâve discussed, these elections and their costs will vary, depending on whatâs offered by your state and your income level.
Is End Stage Renal Disease Covered By Medicare
End Stage Renal Disease occurs when your kidneys can no longer function enough to meet your bodys needs. With ESRD, toxins and fluids can build up in your kidneys and cause serious medical issues. Due to its serious nature, Medicare does cover End Stage Renal Disease even if youre not old enough to enroll in Medicare.
If youre on Medicare because of ESRD, your coverage begins on the first day of your fourth month of coverage. You may be able to get your Medicare dialysis coverage to begin with the first month of dialysis if you meet the following criteria:
- Take part in home dialysis training during the first three months of your regular dialysis. A Medicare-certified training facility must offer the training.
- Your doctor expects that you can finish your training and perform home dialysis treatments.
Beneficiaries receiving Medicare only because of ESRD will stop receiving benefits either:
- 12 months after the month you end dialysis treatments
- 36 months after the month you have a kidney transplant
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Medicare Part D Costs And Coverage
Medicare Part D, which is provided through private insurers like Medicare Advantage, covers prescription drugs. All Part D drug plans must provide a minimum coverage level set by Medicare. However, the type of drugs covered depends on the formulary, which is a list of prescription drugs covered. Formularies vary from plan to plan.
Formularies are broken into tiers. Each tier has a different cost-sharing amount. For example, Tier I drugs may include low-cost generic medications while Tier III drugs may include non-preferred name-brand medications. Part D coverage is often included in Medicare Advantage plans.
The cost of a Part D plan varies depending on cost and which drugs it covers. If you live in a high-income household, you may have to pay an extra cost to your standard Part D premium due to the income-related monthly adjustment amount .
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, which applies if you dont have some form of drug coverage 63 days after your initial Medicare enrollment period ends, 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.
Whats The Medicare Income Monthly Adjustment
Most people will pay the standard monthly premium amount for their Medicare Part B coverage. However, if your modified adjusted gross income is above a certain amount, you may pay an Income Related Monthly Adjustment Amount . Medicare uses the modified AGI that you reported on your IRS tax return 2 years ago. For example, if your yearly income in 2019 was above $111,000 up to $138,000 or above $222,000 up to $276,000 your monthly premium will be $297. The maximum monthly premium in 2021 is $504.90.
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How Much Does Part D Cost
Medicare Part D provides coverage for prescription drugs. It can offer a degree of cost protection.
Premium amounts vary by plan and by where you live. In 2022, the average Part D monthly premium is $33.37. The annual deductible is no more than $480. As with Part B, you may need to pay an extra monthly charge if you make more than a certain amount. Its called the Part D IRMAA. You may also have to pay a copayment or coinsurance when you pick up your prescribed medicines. The more costly the prescription, the more youll pay.
Ensuring you have consistent drug coverage is key. If you go 63 or more days in a row with no Medicare drug coverage or other creditable prescription coverage, you may have to pay a penalty if you sign up for Part D later.
Premium Surcharge Is Based On 2020 Tax Return You Can Appeal It If Your Income Has Changed
The government determines whether you have to pay an income-related premium surcharge based on your income tax return from two years ago, since that is the most recent tax return they have on file at the start of the plan year. 2020 tax returns were filed in 2021, so those were the most current returns available when income-related premium adjustments are determined for 2022.
But if a life-change event has subsequently reduced your income, theres an appeals process you can use. In the appeal, you can request that the income-related premium adjustment be changed or eliminated without having to wait for it to reflect on a future tax return.
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Medicare And Medicaid Costs
Medicare is administered by the Centers for Medicare & Medicaid Services , a component of the Department of Health and Human Services. CMS works alongside the Department of Labor and the U.S. Treasury to enact insurance reform. The Social Security Administration determines eligibility and coverage levels.
Medicaid, on the other hand, is administered at the state level. Although all states participate in the program, they aren’t required to do so. The Affordable Care Act increased the cost to taxpayersparticularly those in the top tax bracketsby extending medical coverage to more Americans.
According to the most recent data available from the CMS, national healthcare expenditure grew 4.6% to $3.8 trillion in 2019. That’s $11,582 per person. This figure accounted for 17.7% of gross domestic product that year. If we look at each program individually, Medicare spending grew 6.7% to $799.4 billion in 2019, which is 21% of total NHE, while Medicaid spending grew 2.9% to $613.5 billion in 2019, which is 16% of total NHE.
Saving Money With Medicare Advantage
After familiarizing yourself with the costs of Medicare Advantage, it may be helpful to learn more about a few ways to save on some potential plan costs.
- If you qualify for Medicaid, your Medicaid benefits can be used to help pay your Medicare Advantage premiums.
- A Medicare Savings Account is a type of Medicare Advantage plan that deposits money into a savings account that can be used to pay for out-of-pocket expenses prior to meeting your deductible.
- If your Medicare Advantage plan includes a doctor and/or pharmacy network, you can save a considerable amount of money by staying within that network when receiving services.
- Some Medicare Advantage plans may include extra health perks such as gym memberships. There is even the possibility of Medicare Advantage plans soon covering expenses like the cost of air conditioners, home-delivered meals and transportation.
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What Are The Components Of Medicare
Medicare is a federal program that provides health insurance to people who are age 65 and older, blind, or disabled. Medicare consists of four “parts”:
- Part A pays for hospital care
- Part B provides medical insurance for doctors fees and other medical services
- Part C is Medicare Advantage, which allows beneficiaries to enroll in private health plans to receive Part A and Part B Medicare benefits
- Part D covers prescription drugs.
Almost all seniors are automatically enrolled in Part A at no additional cost once they turn 65. Parts B, C, and D are voluntary and require enrollees to pay premiums to receive coverage.
Watch A Video To Learn More About Medicare Costs
NOTE: Video does not contain audio
An animated white speech bubble appears over an animated characters yellow and blue head.ON SCREEN TEXT: What are the costs you could pay with Medicare?
The speech bubble and character fall away. Blue text appears surrounded by animated dollar signs on a light blue background.
ON SCREEN TEXT: There are four kinds of costs you may pay with all Medicare plans.
The text and dollar signs fall away. Darker blue text appears surrounded by animated calendars on a light blue background.
ON SCREEN TEXT: 1 Premiums A fixed amount you pay to Medicare, a private insurance company, or both. Premiums are usually charged monthly and can change each year.
ON SCREEN TEXT: January June February April May
The text and calendars fall away. Darker blue text appears above an animated piggybank graphic on a light blue background.
ON SCREEN TEXT: 2 Deductibles A set amount you pay out of pocket for covered health services before your plan begins to pay.
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ON SCREEN TEXT: 3 Co-payments A fixed amount you pay when you receive a service covered by Medicare. Your plan pays the remaining amount.
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Why Do Some People Pay Less For Their Medicare Part B Premium
Some people who get Social Security benefits will still pay less than $170.10 in 2022. This affects around 2 million Medicare beneficiaries. Legislation prevents the cost of Medicare Part B from increasing more than the Social Security annual cost-of-living increase.
In recent years, we have had low COLA increases, so these individuals have only been paying less than the standard base Part B premium. Though the Social Security COLA increases for the last couple of years have been somewhat larger, there is still a small group of beneficiaries being protected by the hold harmless provision.
Though this all very confusing, remember that you do not have to calculate this yourself. Again, Social Security will determine your Part B premium for 2022 and notify you by mail if you exceed the Medicare income limits and must pay a higher adjusted amount.
Most Medicare beneficiaries qualify for premium-free Part A. However, the Medicare Part B premium is deducted from your Social Security check if you are receiving Social Security benefits. In 2022, the Part B premium is $170.10.
You can also request your Part D premium be deducted from your Social Security check.
Most People Pay the Standard Part B Premium
Youll pay the standard Medicare Part B premium amount if:
What Is The Average Cost Of Medicare Part D Prescription Drug Plans
In 2022, the average monthly premium for a Medicare Part D plan is $47.59 per month.1
Medicare Part D plan provide coverage solely for prescription medications. Part D plan costs may vary based on your plan and your location.
Learn about the average cost of Part D plans in your state.
You can also compare Part D plans available where you live and enroll in a Medicare prescription drug plan online in as little as 10 minutes when you visit MyRxPlans.com.2
Depending on your income, you may be required to pay a higher Part D premium. As with Medicare Part B premiums, this adjusted amount is called the IRMAA .
If you are required to pay a higher Part D premium, it will be based on your reported income from two years ago .Medicare Part D IRMAA
More than or equal to $500,000
More than or equal to $750,000
More than or equal to $409,000
$77.90 + your plan premium
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Find A $0 Premium Medicare Advantage Plan Today
1 MedicareAdvantage.com’s The Best States for Medicare report.
2 AHIP. . The State of Medicare Supplement Coverage: Trends in Enrollment and Demographics. https://www.ahip.org/wp-content/uploads/AHIP_IB-Medicare-Supp-Cvg-Report.pdf.
3 TZ Insurance Solutions LLC internal sales data, 2019. This data is based on the Medicare Supplement Insurance policies TZ Insurance Solutions LLC has sold. It is not a comprehensive national average of all available Medicare Supplement Insurance plan premiums.
About the author
Christian Worstell is a licensed insurance agent and a Senior Staff Writer for MedicareAdvantage.com. He is passionate about helping people navigate the complexities of Medicare and understand their coverage options.
His work has been featured in outlets such as Vox, MSN, and The Washington Post, and he is a frequent contributor to health care and finance blogs.
Christian is a graduate of Shippensburg University with a bachelors degree in journalism. He currently lives in Raleigh, NC.
Where you’ve seen coverage of Christian’s research and reports:
MedicareAdvantage.com is a website owned and operated by TZ Insurance Solutions LLC. TZ Insurance Solutions LLC and TruBridge, Inc. represent Medicare Advantage Organizations and Prescription Drug Plans having Medicare contracts enrollment in any plan depends upon contract renewal.
Medicare has neither reviewed nor endorsed this information.
If Your Income Has Gone Down
If your income has gone down due to any of the following situations, and the change makes a difference in the income level we consider, contact us to explain that you have new information and may need a new decision about your income-related monthly adjustment amount:
- You married, divorced, or became widowed.
- You or your spouse stopped working or reduced your work hours.
- You or your spouse lost income-producing property because of a disaster or other event beyond your control.
- You or your spouse experienced a scheduled cessation, termination, or reorganization of an employers pension plan.
- You or your spouse received a settlement from an employer or former employer because of the employers closure, bankruptcy, or reorganization.
If any of the above applies to you, we need to see documentation verifying the event and the reduction in your income. The documentation you provide should relate to the event and may include a death certificate, a letter from your employer about your retirement, or something similar. If you filed a federal income tax return for the year in question, you need to show us your signed copy of the return. Use Form Medicare Income-Related Monthly Adjustment Amount Life-Changing Event to report a major life-changing event. If your income has gone down, you may also use Form SSA-44 to request a reduction in your income-related monthly adjustment amount.
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Medicare Part A : Out
Most people don’t need to pay monthly premiums for Part A. You won’t pay a premium if you or your spouse paid Medicare taxes for at least 10 years while working.
However, you will need to help cover the cost of some fees when you receive care. These expenses come in the form of deductibles and copayments.
If you are admitted to the hospital, you should expect to pay the following:
A deductible is the amount you pay before your insurance pays.
For Part A , the deductible is $1,556 per benefit period.1