You paid into Medicare all of your working career. You would think Medicare would be free once you enroll—but that’s only partially true. If you’re confused about what you’ll pay for Medicare, we have you covered.
- What you pay for Medicare depends on the type of enrollment you have: Parts A, B, C, and/or D.
- Part A covers inpatient hospitalization, skilled nursing facilities, home health care, and hospice care. It doesn't generally charge a premium.
- Part B is considered your medical insurance. It covers medical treatments and comes with a monthly premium of $148.50 in 2021.
- Parts C and D are optional and may cover additional costs, including prescriptions.
Medicare Part A Costs in 2021
Part A covers inpatient hospitalization, skilled nursing facilities, home health care, and hospice care. For most people, this is the closest thing to free they’ll get from Medicare, as Medicare Part A (generally) doesn't charge a premium.
Tip: If you don't qualify for Part A, you can buy Part A coverage. In 2021, it costs $259 or $471 each month, depending on how long you paid Medicare taxes.
That doesn’t mean you aren’t charged a deductible. For each benefit period, you pay the first $1,484 in 2021. A benefit period begins when you enter the hospital and ends when you haven’t received any inpatient hospital services for 60 consecutive days. If you re-enter the hospital the day after your benefit period ends, you’re responsible for the first $1,484 of charges again.
Part A also charges coinsurance if your hospital stay lasts more than 60 days. In 2021, for days 61 to 90 of your hospital stay, you pay $371 per day; days 91 through the balance of your lifetime reserve days, you pay $742 per day. Lifetime reserve days are 60 days that Medicare gives you to use if you stay in the hospital for more than 90 days. You only get 60 and they don’t renew.
If you did some simple math, you probably noticed that an extended hospital stay could cost you a lot of money. That’s why it’s important to consider adding a Medicare supplement to your Original Medicare plan or enrolling in a Medicare Advantage plan if you don't have other health coverage in addition to Medicare.
Medicare Part B Costs in 2021
Part B is considered your medical insurance. It covers medical treatments and comes with a monthly premium of $148.50 in 2021. A small percentage of people will pay more than that amount if reporting income greater than $88,000 as single filers or more than $176,000 as joint filers.
Part B also comes with a deductible of $203 per year in 2021. Unlike Part A, your deductible isn’t tied to a benefit period or other complicated formulas. Once you pay your $203, which is likely to happen after your first or second doctor visit or procedure of the year, Medicare pays 80% of the Medicare-approved amount. That leaves you on the hook for only 20%.
Medicare Part C Costs in 2021
Parts A and B are called Original Medicare. As part of what you paid into Medicare throughout your working years, you receive Original Medicare at very little cost to you. Although it might feel like you’re paying more than you should, the cost to purchase the same insurance on the open market would be significantly higher when you factor in what will likely be decades of coverage.
In 2021, Part C or Medicare Advantage premiums "are expected to decline 32.4% from 2017," according to the Centers for Medicare & Medicaid Services. The average plan premium is about $21.00 a month in 2021.
But coinsurance, copayments, premiums, and deductibles may still vary depending on your plan of choice.
Medicare Part D Costs in 2021
Once you reach retirement age, you’re probably taking at least one prescription medication on a regular basis. That’s where Part D comes in.
You can choose from two options to get prescription medication. You can either sign up with private insurance companies you can compare on the Medicare website, or you can get prescription drug coverage through your Part C program.
Like Part C, each plan has different coverage, deductible, and copayment options. In general, Part D is included in your plan premium, but those with a reported income of more than $88,000 will pay an additional amount. Before signing up with a company, make sure that it covers the drugs you take in one of the lower tiers to keep your costs under control.
Sometimes, other types of benefits, insurance, and social services can influence Part D benefits.
To enroll in Part D, you must have Part A and/or Part B or Part C.