Section 3: Costs and Coverage
How to Estimate Your Costs
Consider the affordability of various Medicare options
ESTIMATED READ TIME: 5 MINUTES
IN THIS ARTICLE
• What you pay for original Medicare
• What you pay for Medicare Advantage
• Keep these times in mind
• How to use Medicare’s options tool
• How to get personal assistance, financial help
When deciding whether to get your coverage through original Medicare or a private Medicare Advantage plan, you’ll need to consider not only your lifestyle and health status, but also the effect on your wallet. Here’s how to estimate your costs.
What you pay for original Medicare
Part A. Most people don’t have to pay a premium for Part A, which covers hospitalization and care in a skilled nursing facility after being hospitalized. But for those who haven’t paid Medicare taxes for at least 40 quarters, the premium can be as much as $506 a month in 2023. All people with traditional Medicare, however, have to pay a $1,600 deductible for a hospital stay during each benefit period.
For a long hospital stay, you’ll be billed the following copayments:
• $400 a day for days 61 to 90 per benefit period
• $800 a day after day 90 for up to 60 lifetime reserve days. Each of these days can be used only once, but you may apply the days to different benefit periods.
• All costs after use of lifetime reserve days
For a long stay in a skilled nursing facility, you’ll be billed:
• $200 a day for days 21 to 100 per benefit period in 2023
• All costs for days 101 and beyond
Part B. Most people pay $164.90 a month for Part B in 2023, which covers doctor visits and other outpatient services. You may pay more if you’re single and earn more than $97,000 or if you’re married and earn more than $194,000.
• $226 annual deductible in 2023
• 20 percent of the cost of doctor visits, lab tests and other outpatient services. Part B also covers some medical equipment you use in your home.
Part D. If you don’t have prescription drug coverage from a retiree plan, Tricare or other source, you can buy a stand-alone Part D policy through a private insurer.
• Monthly premium varies by company
• $505 or lower deductible annually
• Copayments or coinsurance for your prescription drugs
Medigap. You can get help paying for many of Medicare’s deductibles and copayments by buying a Medigap plan through a private insurer. Of course, you’ll need to pay a premium for the policy and that premium can vary widely depending on the insurance company and the features you want to include.
One example from suburban Nashville, Tennessee, shows policy prices ranging from $22 a month for a 65-year-old woman who doesn’t smoke and chooses a high-deductible plan to almost $425 a month for a 65-year-old man who smokes. The least expensive policies use attained-age pricing, with a monthly bill that starts low when you’re younger but goes up as you age. These policies can become the most expensive when you’re older and more likely to have health problems, which can make it tough to switch insurers.
You’ll get the lowest premiums if you sign up during your Medigap open enrollment period, the six-month period that starts the first of the month when you enroll in Medicare Part B.
What you pay for Medicare Advantage
If you choose Medicare Advantage, you’ll still have to sign up for parts A and B of Medicare, but you’ll get your health care and often your prescription drug coverage from a private insurer.
• Premium-free Part A for most people
• $164.90 a month for Part B for most people in 2023; high earners pay more
• Premiums. Depending on which Medicare Advantage plan you choose, you may need to pay a monthly premium in addition to the Part B premium.
• Copayments and deductibles for medical care. You may have to pay copayments for hospital stays as well as copayments or coinsurance for doctor visits and other outpatient services. In 2023, your out-of-pocket medical expenses for deductibles, copayments and coinsurance from in-network providers can’t exceed $8,300.
• Copayments and deductibles for prescription medications. Most plans cover prescription drugs without a separate premium, but you’ll have to pay deductibles and contribute to the costs of your medications like you would with a stand-alone Part D plan.
Keep these times in mind
When you deal with Medicare, you’ll encounter a lot of important deadlines. To avoid penalties and lifelong higher costs, familiarize yourself with these time frames.
Medicare supplement insurance, aka Medigap, has its own six-month open enrollment period that starts when you enroll in Part B. During that time, Medigap providers have to sell you a policy that covers your existing health problems. After that, insurers generally can deny you coverage or charge higher rates based on your health history.
How to use Medicare's Options tool
Medicare provides a tool that can help you estimate your costs for original Medicare and Medicare Advantage, including the Part D and Medigap plans in your area. The tool provides coverage details for each plan as well as cost estimates based on the medications you take. Here’s how to use it:
Type your zip code into the tool and choose whether you want to compare costs for original Medicare and supplemental policies or Medicare Advantage.
Sizing up original Medicare
1. For personalized information about coverage and costs, choose “look at plans.”
2. To learn about Part D costs, type in your medications and doses and click on the names of the pharmacies you use. (Many Part D plans have lower costs at preferred pharmacies.) You’ll then see a list of plans in your area, their monthly premiums and annual deductibles.
You’ll see an estimate of your annual costs, including premiums and copayments for your prescription drugs. Keep in mind that a plan with low premiums could be more expensive in total if it requires you to pay more of the costs of your medications. Check to see if your drugs are subject to additional regulation within a plan, such as prior authorization from your insurer before you can buy them or limits on the number of doses covered within a certain time.
You also can learn about ways to lower your prescription costs, including generic drugs and assistance programs.
3. To learn more about the Medigap plans in your area, type in your zip code, age, sex and whether you use tobacco. You’ll see premium ranges and more information about coverage. Click “view policies” for contact information for each insurer that offers a Medigap plan in your area; premium estimates; and whether it uses attained-age, community or issue-age pricing.
Comparing Medicare Advantage plans
1. To find the price range for plans in your area, type in your zip code.
2. Click on “look at plans” and type in your medications, doses and the pharmacies you use. You’ll see a list of plans in your area and their monthly premiums, the annual costs for your prescriptions, medical and drug deductibles, and the maximum amount you’ll pay out of pocket for in-network health services.
3. Click on “plan details” for information about benefits and copayments or coinsurance for doctor visits, hospital coverage, imaging, lab tests and other care. You’ll also see information about other benefits, including dental, hearing and vision coverage.
4. Click on the link to the plan’s provider network for the plan's resource to look up covered doctors and hospitals. Before choosing a plan, double-check with your doctor to make sure he or she is in the plan's network.
How to get personal assistance, financial help
If you need help with your Medicare decisions, a State Health Insurance Assistance Program (SHIP) counselor can help you review options and let you know if you’re eligible for programs to help you pay your Medicare premiums or out-of-pocket costs. You can search for individual state offices on the website, email email@example.com or call 877-839-2675.
Among the financial assistance programs are:
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