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You’ve spent decades paying Medicare taxes in addition to your own health insurance costs. But now that you’re eligible for Medicare, you’re in the clear, right?

Not so fast.

How Much Does Medicare Cost in 2021?

Most people can get Medicare Part A for a zero-dollar premium; Medicare Part B has a standard monthly premium of $148.50 in 2021.1 Medicare Part C has an average monthly premium of $21 in 2021,2 and Medicare Part D stand-alone plans are projected to have an average monthly premium of $41.3

There are four different parts of Medicare — labeled A and B (Original Medicare), C (Medicare Advantage) and D (prescription drug coverage). Each comes with its own set of expenses. Let’s take a closer look with a detailed breakdown of the costs associated with each part of Medicare.

How Much Does Medicare Part A Cost?

Medicare Part A usually doesn’t require a monthly premium payment if you or your spouse paid Medicare taxes while working. If you have to purchase Medicare Part A, it can cost up to $471 per month.1  

What it is:Medicare Part A provides coverage for hospital services and care. This includes expenses for care received during stays in hospitals, skilled nursing facilities, hospice or home health care facilities. 

Premium-Free Part A Eligibility

Most people with Medicare Part A do not have to pay a premium. This is appropriately called “premium-free Part A” and there are two ways to get it:1

You’re at least 65 years old and at least one of the following is true:

  1. You receive retirement benefits from either Social Security or the Railroad Retirement Board. 
  2. You’re eligible for either Social Security or Railroad Retirement benefits but have not filed for them. 
  3. Either you or your spouse had a government job that was Medicare-covered.

** or ** 

You’re under 65 years old and at least one of the following is true:

  1. You have received benefits from either Social Security or the Railroad Retirement Board for at least 24 months. 
  2. You have End-Stage Renal Disease and meet certain requirements.4
  3. You have ALS (Amyotrophic Lateral Sclerosis, also known as Lou Gehrig’s disease).
If you do not meet one of the above requirements, you’ll have to pay a premium for Medicare Part A. In 2020, that premium was as much as $471 per month.1

Deductibles

The 2021 Medicare Part A deductible is $1,484 [JB1]for each benefit period.1 This is the amount you will have to pay out of your own pocket before Medicare begins contributing to your healthcare expenses. 

Coinsurance

The amount of coinsurance you will pay under Medicare Part A depends on the benefit period. 

For the first 60 days you are in the hospital, you will pay no coinsurance. 

Beginning on day 61, you will pay $371 in 20211 for each day of the benefit period.

If you are still in the hospital by Day 91, you will then begin paying $742 in 2021.1 This is the beginning of your “lifetime reserve days,” which is a total of 60 days to be used over the course of your lifetime. 

Once you have exhausted all of your lifetime reserve days, you will pay the full cost of the hospital stay for each day. 

How Much Does Medicare Part B Cost?

The standard premium for Medicare Part B is $148.50 per month in 2021.1 You may pay more depending on your income. 

What it is:Medicare Part B is known as medical insurance. This includes doctors’ visits, physical therapy and medical equipment. When Part A is combined with Part B, it is known as “Original Medicare.” 

Income Related Adjustment Amounts (IRMAAs)

The cost of your premium can be affected by your income level. The higher your income, the more you’ll be asked to pay in premiums. The income used to determine your premium payment is based on the income you reported on your IRS tax return from two years prior. See the table below.5

Annual 2019 Income

(individual)

Annual 2019 Income 

(Married, Filing Jointly)

Annual 2019 Income

(Married and Separated)

2021 Medicare Part B Premium

$88,000 or less

$174,000 or less

$88,000 or less

$148.50

$88,001 to $111,000

$176,001 to $222,000

N/A

$207.90

$111,001 to $138,000

$222,001 to $276,000

N/A

$297.00

$138,001 to $165,000

$276,001 to $330,000

N/A

$386.10

$165,001 to $499,999

$333,001 to $749,999

$87,000 to $413,000

$475.20

$500,000 and above

$750,000 and above

$413,000 and above

$504.90

Deductible

The annual deductible for Part B coverage is $198 for 2020. Again, this is the amount you’ll have to pay on your own first before Medicare begins paying its share of your medical bills. 

Coinsurance

Once you meet your Part B deductible, you can expect to pay a 20% coinsurance. This means you will pay 20% of any medical bill while Medicare takes care of the remaining 80%.1

The 20% is taken not from the total amount of the bill, but rather from the “Medicare-approved amount.” The Medicare-approved amount is the total amount that a doctor or healthcare provider can charge for Medicare patients. This is often less than what that doctor or facility charges for non-Medicare patients.

How Much Does Medicare Part C Cost?

A 2020 Medicare Part C plan had a $21 monthly premium on average. About half of Medicare Part C enrollees who enroll in a plan with prescription drug benefits (54%) will end up paying $0 in premiums. The exact costs for Part C will depend on which plan you choose.6

What it is: Part C, also called “Medicare Advantage,” is Medicare Part A and Part B combined and is offered by private insurance. By law, the coverage afforded by these plans must be at least equivalent to that of Original Medicare. 

In addition to the basic coverage of Original Medicare, these Part C plans typically offer additional benefits not covered by parts A and B, such as vision, dental or hearing coverage. 

You Must Still Pay Part B Premiums

This is where things can get tricky. Because you have to carry Medicare Part A and Part B in order to enroll in a Part C plan, you will have to pay a Part B premium in addition to any Part C premium. 

Deductibles

Not all Part C plans require a deductible. Part C deductibles for prescription drugs will be in addition to your Part A or B deductible. 

Coinsurance/Copayments

Once again, coinsurance or copayments can vary greatly. Factors include the plan selected, type of service received, whether that service takes place inside or outside of a network and more.  

How Much Does Medicare Part D Cost? 

The average monthly premium for a stand-alone Part D plan is $30.50.The exact cost of your Part D coverage will depend on the plan you choose.

What it is: Similar to Part C, Part D is also a collection of plans provided by private insurance companies and approved by Medicare. These plans focus on providing comprehensive coverage for prescription drug costs.

Medicare recipients can choose to add a Part D Prescription Drug Plan (PDP) to Original Medicare. If a Medicare Advantage plan does not include drug coverage, you may not add a Part D plan to it. In fact, enrolling in a PDP un-enrolls you from your Medicare Advantage plan.However, if your Private Fee-for-Service plan does not have drug coverage, you can add coverage without losing your Medicare Advantage plan.

Premium Additions for Higher Incomes

Medicare Part D charges higher premiums for people with higher reported income. This means you’ll pay any premium that is mandated by your selected plan in addition to a flat fee based on your reported income. 

Like Part B, the income used to determine your “extra” premium payment is based on the income you reported on your IRS tax return from two years prior. The table below breaks down what a 2021 Medicare Part D enrollee would have pay for a premium.1

2019 Reported Income (Individual)
2019 reported income 
(joint file)
2019 reported income
(married and separate file)
2021 Medicare Part D premium cost
$88,000 or less
$174,000 or less
$88,000 or less
Plan premium only
$88,001 to $111,000
$176,001 to $222,000
N/A
Plan premium + $12.30
$111,001 to $138,000
$222,001 to $276,000
N/A
Plan premium + $31.80
$138,001 to $165,000
$276,001 to $330,000
N/A
Plan premium + $50.20
$165,001 to $499,999
$333,001 to $749,999
$87,000 to $413,000
Plan premium + $70.70
$500,000 and above
$750,000 and above
$413,000 and above
Plan premium + $77.10

Extra Help Costs

Extra Help is a Medicare program to help people with limited income pay for prescription drug costs, including premiums, deductibles, and coinsurance. You can see if you qualify for Extra Help by using the HealthMarkets Extra Help calculator.

Deductibles

Deductibles for Medicare Part D plans will vary from one plan to the next. However, Medicare Part D annual deductibles cannot exceed $445 if you do not have Extra Help. If you have Full Extra Help, there is no deductible. With Partial Extra Help, you’ll have a deductible of either $92 or the plan’s standard deductible (whichever is the cheaper of the two).8

Copayments/Coinsurance

Once again, copayments and coinsurance amounts will depend on the plan selected as well as the service rendered. But coinsurance and copayments for Part D plans can get complicated. 

To fully understand Medicare Part D copayments and coinsurance, you’ll first have to understand the coverage gap and catastrophic coverage.9 The coverage gap comes into play when you and your Medicare Part D plan have combined to pay a certain amount for your prescription drugs during a given year. This predetermined amount is $4,130.9

Once this number has been reached, you are now in the coverage gap and will have to pay 25% of the cost of any brand name or generic drugs. The coverage gap is also called the “donut hole.”

But there is an end to the coverage gap. Once you have spent $6,550 in 2021out of your own pocket for prescription drugs, you are out of the coverage gap and qualify for catastrophic coverage. During catastrophic coverage, you will pay only a small copayment or coinsurance for any more drugs for the rest of the year. 

Late Enrollment Penalties 

More Medicare costs can accrue if you are late to enroll. Late enrollment penalties are in place for Part A, Part B, and Part D. 

Part A Late Enrollment Penalty

If you are not eligible for premium-free Part A and do not purchase it when you first become eligible, your monthly premium can increase by 10%. This penalty will last for twice the number of years that you were eligible for Part A but were not enrolled.10

Part B Late Enrollment Penalty

If you do not sign up for Medicare Part B when you first become eligible but later decide to enroll, you may have to pay a late enrollment penalty for as long as you remain enrolled in Part B.

The late enrollment penalty for Part B can be a premium increase of up to 10% for each 12-month period that you were eligible for Part B but not enrolled. So, for example, if three years lapsed between the time you became eligible for Part B and the time you decided to enroll, you would face a late enrollment penalty of 30% of the premium.11

Part D Late Enrollment Period

A Part D late enrollment penalty will be applied if you went 63 days or more without having Part D or another approved prescription drug plan following the close of your initial enrollment period. The amount of the penalty depends on the number of days you were without prescription drug

coverage.12

The penalty is calculated by taking 1% of the “national base beneficiary premium” (which is $33.06 in in 2021 and multiplying that by the number of months you were not enrolled. This figure is then added to your Part D premium and may be enforced for as long as you have Part D.12

Saving Money on Medicare 

Despite some of the costs of Medicare, there are ways to save money and maximize your coverage. 

  1. Know what you need. For example, if you wear glasses or hearing aids, a Medicare Advantage plan may provide the coverage you need. If you require the use of medical equipment such as oxygen, you’ll need Part B. Are you on a lot of medication? A Part D plan will help with prescription drugs costs. Pay for what you need and use what you pay for. 
  2. Enroll when you’re eligible. Late enrollment penalties can be taxing on your premium costs. Enroll when you first become eligible, unless you are still working, so you can minimize your monthly payments.
  3. Be proactive. Take advantage of any preventive care that you can receive through Medicare. Not only can preventive care measures keep you healthy, it can also steer you away from more serious — and expensive — issues down the road.
  4. Compare your options. The best way to get the most out of your Medicare benefits is to weigh your options. HealthMarkets’ FitScore® can help you compare plans to find your ideal match. 
Ready to start shopping? Visit HealthMarkets online today to and let us help you find the plans that fit your needs.

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References:
1. Medicare costs at a glance. Medicare.gov. Retrieved from https://www.medicare.gov/your-medicare-costs/medicare-costs-at-a-glance. Accessed December 29, 2020. | 2. CMS.gov. September 24, 2020. Retrieved from https://www.cms.gov/newsroom/press-releases/trump-administration-announces-historically-low-medicare-advantage-premiums-and-new-payment-model. | 3. Kaiser Family Foundation. October 29, 2020. Retrieved from https://www.kff.org/medicare/issue-brief/medicare-part-d-a-first-look-at-medicare-prescription-drug-plans-in-2021/ | 4. I have End-Stage Renal Disease. Medicare.gov. Retrieved from https://www.medicare.gov/manage-your-health/i-have-end-stage-renal-disease-esrd. Accessed December 29, 2020. | 5. 2021 Medicare Costs. Medicare.gov. Retrieved from https://www.medicare.gov/Pubs/pdf/11579-medicare-costs.pdf. Accessed December 29, 2020. | 6. KFF.org. October 20, 2020. Retrieved from https://www.kff.org/medicare/issue-brief/medicare-advantage-2021-spotlight-first-look/ | 7. Drug Coverage (Part D). Medicare.gov. Retrieved from https://www.medicare.gov/sign-up-change-plans/get-drug-coverage/get-drug-coverage.html. Accessed December 29, 2020. | 8. CMS.gov. October 20, 2020. Retrieved from https://www.cms.gov/files/document/lis-memo.pdf. | 9. Catastrophic coverage. Medicare.gov. Retrieved from https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/catastrophic-coverage. Accessed December 29, 2020. | 10. Part A late enrollment penalty. Medicare.gov. Retrieved from https://www.medicare.gov/your-medicare-costs/part-a-costs/part-a-late-enrollment-penalty. Accessed December 29, 2020. | 11. Part B late enrollment penalty. Medicare.gov. Retrieved from https://www.medicare.gov/your-medicare-costs/part-b-costs/part-b-late-enrollment-penalty. Accessed December 29, 2020. | 12. Part D late enrollment penalty. Medicare.gov. Retrieved from https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/part-d-late-enrollment-penalty. Accessed December 29, 2020. 

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