Medicare is the federal government program that provides health care coverage (health insurance) if you are 65+, under 65 and receiving Social Security Disability Insurance (SSDI) for a certain amount of time, or under 65 and with End-Stage Renal Disease (ESRD).
There are four basic parts of Medicare: A, B, C and D. Each part helps pay for certain health care services. Each part also has certain costs that you may have to pay. Your Medicare costs will depend on what coverage you choose and on what health care services you use.
Medicare Part A
Part A is hospital coverage. It covers care you receive while an inpatient in a hospital or skilled nursing facility.
In general, Part A covers:
- Inpatient care in a hospital
- Skilled nursing facility care
- Inpatient care in a skilled nursing facility (not custodial or long-term care)
- Hospice care
Home health care
What Does Medicare Part A Cover?
Medicare Part A covers the hospital charges and most of the services you receive when you’re in the hospital. But it doesn’t cover the fees charged by doctors who participate in your care while you’re in the hospital. Medicare Part B helps pay those costs.
What Does Medicare Part A Cost?
You usually don’t pay a monthly premium for Medicare Part A (Hospital Insurance) coverage if you or your spouse paid Medicare taxes for a certain amount of time while working. This is sometimes called “premium-free Part A.”
Most people get premium-free Part A.
You can get premium-free Part A at 65 if:
You already get retirement benefits from Social Security or the Railroad Retirement Board. You’re eligible to get Social Security or Railroad benefits but haven’t filed for them yet. You or your spouse had Medicare-covered government employment.
If you’re under 65, you can get premium-free Part A if:
You got Social Security or Railroad Retirement Board disability benefits for 24 months.
You have End-Stage Renal Disease (ESRD) and meet certain requirements.
Part A premiums
If you buy Part A, you’ll pay up to $422 each month in 2018. If you paid Medicare taxes for less than 30 quarters, the standard Part A premium is $422. If you paid Medicare taxes for 30-39 quarters, the standard Part A premium is $232.
In most cases, if you choose to buy Part A, you must also:
Have Medicare Part B (Medical Insurance)
Pay monthly premiums for both Part A and Part B
Medicare Part B
Part B is medical coverage. It covers doctor visits, clinic services and care you receive as an outpatient.
Medicare Part B helps pay for care you receive in a clinic or hospital as an outpatient. Part B also covers most doctor services you receive as a hospital inpatient. Most other hospital services are covered by Part A.
What Does Medicare Part B Cover?
Medicare Part B covers doctor visits and most routine and emergency medical services. It also covers some preventive care, like flu shots. The list below shows more examples of what Part B covers.
What Does Medicare Part B Cost?
Some people automatically get Medicare Part B (Medical Insurance), and some people need to sign up for Part B. Learn how and when you can sign up for Part B.
If you don’t sign up for Part B when you’re first eligible, you may have to pay a late enrollment penalty.
Part B premiums
You pay a premium each month for Part B. Your Part B premium will be automatically deducted from your benefit payment if you get benefits from one of these:
- Social Security
- Railroad Retirement Board
- Office of Personnel Management
If you don’t get these benefit payments, you’ll get a bill.
Most people will pay the standard premium amount. If your modified adjusted gross income is above a certain amount, you may pay an Income Related Monthly Adjustment Amount (IRMAA). Medicare uses the modified adjusted gross income reported on your IRS tax return from 2 years ago. This is the most recent tax return information provided to Social Security by the IRS.
The standard Part B premium amount in 2018 will be $134 (or higher depending on your income). However, some people who get Social Security benefits pay less than this amount ($130 on average). You’ll pay the standard premium amount (or higher) if:
- You enroll in Part B for the first time in 2018.
- You don’t get Social Security benefits.
- You’re directly billed for your Part B premiums (meaning they aren’t taken out of your Social
- You have Medicare and Medicaid, and Medicaid pays your premiums. (Your state will pay the
standard premium amount of $134.)
- Your modified adjusted gross income as reported on your IRS tax return from 2 years ago is
above a certain amount. If so, you’ll pay the standard premium amount and an Income Related Monthly Adjustment Amount (IRMAA). IRMAA is an extra charge added to your premium.
If you’re in 1 of these 5 groups, here’s what you’ll pay:
Part B deductible & coinsurance
You pay $183 per year for your Part B deductible. After your deductible is met, you typically pay 20% of the Medicare-approved amount for these:
- Most doctor services (including most doctor services while you’re a hospital inpatient)
- Outpatient therapy
- Durable medical equipment (DME)
Medicare Part C
Part C is Medicare Advantage. These plans combine the coverage of Parts A and B into one plan. They often include prescription drug coverage, too.
Medicare Advantage plans are offered by private insurance companies approved by Medicare. You must be enrolled in both Part A and Part B to join a Medicare Advantage plan. You’ll still be in the Medicare program, but you will receive your benefits through the plan instead of through Original Medicare.
What Does Medicare Part C Cover?
Medicare Advantage (Part C) plans combine coverage for hospital care, doctor visits and other medical services all in one plan. Plans are required to provide all of the benefits offered by Medicare Parts A and B (except hospice care, which continues to be provided by Part A). Many plans also provide prescription drug coverage and additional benefits like routine dental and eye care.
What Does Medicare Part C Cost?
Each Medicare Advantage (Part C) plan sets its own specific costs, but the types of costs they include are similar.
Your out-of-pocket costs in a Medicare Advantage Plan (Part C) depend on:
- Whether the plan charges a monthly premium . Some plans have no premium.
- Whether the plan pays any of your monthly Medicare Part B (Medical Insurance) premium.
Some plans pay all or part of your Part B premium.
- Whether the plan has a yearly deductible or any additional deductibles.
- How much you pay for each visit or service ( copayment or coinsurance ). For example, the plan
may charge a copayment, like $10 or $20 every time you see a doctor. These amounts can be
different than those under Original Medicare .
- The type of health care services you need and how often you get them.
- Whether you go to a doctor or supplier who accepts assignment if:
- You’re in a PPO, PFFS, or MSA plan.
- You go out-of-network .
- Whether you follow the plan’s rules, like using network providers.
- Whether you need extra benefits and if the plan charges for it.
- The plan’s yearly limit on your out-of-pocket costs for all medical services.
- Whether you have Medicaid or get help from your state.
How Medicare Advantage Cost Sharing Works
Most Medicare Advantage plans use a combination of deductibles, co-insurance and co-pays to share the cost of the services you use. Cost-sharing usually applies to all of the services the plan covers.
You need to read the details of each individual Medicare Advantage plan to get the full story on its costs. Most plans have network doctors and pharmacies that may offer plan members discounted pricing.
Medicare Part D
Part D is prescription drug coverage. Plans cover many medications that are prescribed by your doctor or other qualified health professionals.
Original Medicare (Parts A and B) does not cover prescription drugs. Many people who choose Original Medicare add a prescription drug (Part D) plan or choose a Medicare Advantage plan that includes Part D.
In general, you may enroll in a Part D plan if you are entitled to Medicare Part A or if you are enrolled in Medicare Part B. In addition, you must live in the service area of a Part D plan.
What Does Medicare Part D Cover?
Medicare Part D Plans are required to cover certain common types of drugs, but each plan may choose which specific drugs it covers. The drugs you take may not be covered by every Part D plan. You need to review each plan’s drug list, or formulary, to see if your drugs are covered.
Prescription drug plans do not cover:
- Drugs that are not on the plan’s drug list
- Drugs that are covered under Part A or Part B
- Drugs that are excluded by Medicare
What Does Medicare Part D Cost?
The insurance companies that offer Medicare Part D drug plans and Medicare Advantage (Part C) plans with drug coverage set their own prices, but the types of costs they include are similar.
Part D plan premiums and cost sharing can vary widely, even for similar coverage. You need to review plan details carefully.
How Medicare Part D Cost Sharing Works
Medicare Part D has different stages of cost sharing until you reach a set limit on out-of-pocket costs for the year. The limit is $5,000 in 2018. After that, your plan pays most of the cost of your drugs for the rest of the year.
Co-pays, co-insurance amounts and your plan deductible, if any, count as out-of-pocket costs. Premium payments do not.
Part D cost-sharing stages are explained below. The costs shown are for 2018. You may not go through every stage in any given year. If you get Extra Help from Medicare for Part D costs, the coverage gap stage doesn’t apply to you.