It isn’t easy to put a precise price tag on Medicare because of how it is designed to work. There are four different parts of Medicare, namely A, B, C, and D.  It’s not mandatory to enroll in all of them, and some parts (Medicare part A) are usually premium-free.

You can utilize the parts in different ways, depending on your needs. Coverage costs for the non-free parts are affected by state and income. Understanding how the program works and the expected costs will help you prepare for the future.

In this post, we discuss everything you need to know about Medicare costs in 2020. So, let us get started.

Medicare Costs

Just like any other health insurance cover, Medicare beneficiaries face some out-of-pocket expenses. The three main out-of-pocket expenses you will incur include:

• Deductible: This term refers to an annual amount that an individual must spend out of pocket within a specific period before an insurer takes over and starts to fund their treatment.
• Copayment: This is a fixed amount of money that an insured person is expected to pay when receiving a certain treatment. For Medicare, copayment usually applies to prescription drugs.
• Coinsurance: This refers to a percentage of the overall treatment cost that the insured will have to fund out of pocket. For Medicare Part B, the coinsurance is usually 20%.

Medicare Cost in 2020

To establish the actual Medicare cost, you need to consider the monthly premium (if applicable), deductible, copayment, and coinsurance costs. Knowing how these expenses work is crucial to understanding the cost of Medicare.

While it might be relatively easy to calculate the monthly premium costs of Medicare, it might be quite difficult to calculate precisely how much money you will spend in additional out-of-pocket- expenses. You should also remember that enrolling in a Medigap plan may force you to incur additional premium costs.

Here is a quick summary of how much Medicare costs in 2020:

1. Medicare Part A

Medicare Part A is designed to cover healthcare costs such as inpatient hospital visits, skilled nursing facilities, home healthcare, etc.

The premiums for Medicare Part A are $0 as long you paid Medicare taxes when you were still working. However, the zero-dollar monthly premium depends on how many quarters you worked and paid Medicare taxes.

If you worked for more than 40 quarters in your lifetime while paying Medicare taxes, you are eligible for the premium-free Medicare Part A.

If you worked for 30-39 quarters during your lifetime, you would be forced to pay a monthly premium of $252 for Medicare Part A in 2020. If you worked for less than 30 quarters, you will be expected to pay $458 per month for Medicare Part A.

Medicare Part A deductible is $1,408 per benefit period.  In this case, a benefit period starts when you are admitted to hospital and ends once you haven’t undergone hospitalization for 60 days.

Medicare Part A coinsurance varies depending on how long you stay in hospital. Although coinsurance is usually a percentage of the total medical bill, Medicare designates the coinsurance as a flat fee.

2. Medicare Part B

Medicare Part B works in tandem with Medicare Part A to cover the cost of doctor visits, medical equipment, and physical therapy. When Part A is combined with Part B, it is referred to as “original Medicare.”

The standard monthly premium for Medicare Part B is $144.60, although individuals who receive Social Security benefits pay approximately $130 every month. You may also pay between $202.40 and $491.60, depending on your income: the higher your income, the higher your monthly premium.

The deductible for Medicare Part B is usually $185 per year, while the coinsurance is 20% for all covered supplies and services.

The 20% is taken from the “Medicare-approved” amount and not the total amount indicated on your medical bill.

The “Medicare-approved” amount refers to the total amount that a healthcare provider or doctor can charge Medicare patients. The amount is usually lower than what the doctor or healthcare facility would charge non-Medicare patients.

Medicare Part B monthly premiums tend to be higher for individuals who have a relatively higher income. For instance, if you earn an average of $136,000 per year, your monthly premium will be about $289.20.

3. Medicare Part C

Medicare Part C is also known as Medicare Advantage and is purchased through a private health insurance provider.  Therefore, the rates for this part tend to vary greatly depending on your preferred health insurance provider.

In 2020, the average monthly premium for Medicare Part C is $33, according to data compiled by the Centers for Medicare and Medicaid (CMS).  Monthly premiums for Medicare Advantage range from $0 to $481 depending on a wide range of factors, such as income.

Keep in mind that in addition to your Medicare Part C monthly premium, you will still be responsible for paying the monthly premiums for Original Medicare (Part A and B).

The deductibles and coinsurance for Medicare Advantage also vary by plan.  However, there is a limit to the maximum amount of money you can pay out of pocket. Once you exceed the limit, your Part C provider will pick up the remaining costs of all covered healthcare services.

Typically, the out-of-pocket limit for Medicare Part C is $6,700 a year in most states. You could save a lot of money if you have a relatively smaller out-of-pocket expenses limit.

4. Medicare Part D

Medicare Part D is a prescription drug coverage provided by Medicare-approved private healthcare insurers.  Since it is underwritten by private insurers, Medicare Part D coverage costs tend to vary depending on the plan and provider you choose.

Medicare Part D is optional, and you should only go for it if your Part C doesn’t include drug coverage. In most cases, monthly premiums for Medicare Part D vary based on income. Individuals with relatively higher incomes tend to pay more for Part D monthly premiums.

How Much Does Medicare Supplement/Medigap Cost?

Medicare supplement, also known as Medigap, is a healthcare insurance policy purchased through a private healthcare insurance provider to cover the cost not included in your regular Medicare coverage.

Since it is not part of Medicare, Medigap’s cost varies significantly from state to state and from one provider to the next. In 2020, Medigap plans C and F are no longer available for purchase by individuals new to Medicare.

Each healthcare insurance company determines the rate of Medigap based on your location, needs, age, and income. Be sure to compare quotes from different companies when choosing your Medicare supplement provider.

The Bottom Line

Medicare costs tend to change every year. In most cases, what you pay depends on which Medicare plan you choose. Take time to understand the different options and how they suit your needs before you make up your mind.

The information we have discussed in this post may assist you in making an informed decision. Contact us today to speak to a licensed insurance agent who will guide you through the entire process of choosing and purchasing Medicare Insurance.