Understanding What Medicare Costs

Why this page has no price list

Medicare figures change every plan year, and plan costs vary by county. A number published on an agent's website goes stale quietly and then misleads people. The current official figures are published at Medicare.gov and that is where to get them. What follows is how the pieces fit together, which does not change.

The pieces

• Part A covers inpatient hospital care. Most people have paid for it through payroll taxes and owe no premium for it.
• Part B covers doctors and outpatient care and has a monthly premium. Higher earners pay an income-related adjustment on top.
• Part D covers prescriptions and has its own premium, which varies by plan.
• Medicare Advantage plans may have their own premium, sometimes none, and have copays and an annual out-of-pocket maximum.
• Medicare Supplement policies have a monthly premium that varies by the lettered plan, your age and where you live.

The costs people forget

Premiums are the visible number, so that is what people compare. The costs that actually determine what you spend in a bad year are the deductibles, the copays, the out-of-pocket maximum, and whether your specific drugs sit on a good tier. A plan with a lower premium is not automatically cheaper for you.

Penalties are a cost too

Both Part B and Part D have late enrollment penalties that are added to your premium permanently once they attach. They are entirely avoidable and they are the most expensive avoidable mistake in Medicare.

Help paying

If cost is the deciding factor, look at Medicare Savings Programs and Extra Help before you narrow your choices. They change what is affordable.