Is Medicare Expensive?

American senior citizens are usually shocked and, unfortunately, not thrilled when they find out that Medicare is not free. That’s right; you still have a monthly Medicare premium even though you paid Medicare taxes while working. When you turn 65, you are entitled to the U.S. federal health insurance, Medicare. If you are wondering what the actual Medicare costs are, keep reading.

How much does Medicare cost?

The federal government offers Medicare insurance, also known as traditional Medicare, to those 65 years and older. Others can qualify for Medicare due to disability, as well. There are two parts to Original Medicare:

• Part A – Inpatient hospital care
• Part B – Outpatient services

Medicare does not cover all of your medical services at 100%. Like regular insurance, you still have premiums, deductibles, and coinsurance.

Medicare Part A

Those who have worked 40 quarters, equivalent to ten years, will not have a monthly premium for Part A. If you don’t have 40 quarters, but your spouse does, you can qualify for a $0 Part A premium through them. However, many of you might only have 30-39 quarters. In this case, you will pay a pro-rated Part A premium of $274 per month in 2022. If you have less than 40 quarters, you’ll pay the total Part A premium of $499 in 2022.

Let’s say you are admitted to the hospital for three or more days and become an inpatient. In this case, you will pay the Part A deductible of $1,556 in 2022. After you meet the deductible, Medicare Part A covers up to 60 days of your inpatient stay. After day 60, you will be charged a daily copayment (unless you have secondary insurance).

Medicare Part B

No matter your work history, you will pay the Part B premium (unless you have Medicaid assistance). In 2022, the standard Part B premium is $170.10 per month. Some of you will pay more for Part B, though.

The Social Security office looks at your modified adjusted gross income every year from two years ago. So, in 2022, Social Security looked at your 2020 tax returns. When they look at your tax returns, they will see which of the seven tax brackets you fall in.

In 2022, if you made more than $91,000 as a single filer or more than $182,000 jointly, you will pay an Income Related Monthly Adjustment Amount (IRMAA) charge. You will pay this additional charge on top of your Part B premium if you remain in a high tax bracket.

There is a Part B deductible you will pay when you receive an outpatient service. In 2022, the annual Part B deductible is $233. After you meet the deductible, Part B covers 80% of your Medicare-approved services. Many beneficiaries find the remaining 20% coinsurance to be expensive when they have a costly procedure. Consider a Medigap or Medicare Advantage plan from a private insurance carrier to avoid detrimental out-of-pocket costs.

What’s the cost of a Medigap plan?

Medigap plans are secondary insurance to Original Medicare. You are still responsible for your Original Medicare premiums even when enrolling in a Medigap plan. There are ten Medigap plans and two high-deductible plans, all covering different benefits. With all plans covering a different set of benefits, the plans are priced differently. But, all Medigap plan premiums are based on multiple factors.

For example, Medigap plan premiums are based on age, gender, tobacco use, zip code, and the carrier. Therefore, you and your spouse may not have the same Medigap premium. You will want to shop plans among multiple carriers to find the best rate.

Are Medicare Advantage plans free?

Medicare Advantage plans are separate from Original Medicare. When you enroll in a Medicare Advantage plan, the insurance carrier provides you with your Parts A and B benefits. You still pay your Original Medicare premiums when enrolled in an Advantage plan.

The two most purchased Advantage plans are HMO and PPO plans. HMO Advantage plans can have premiums as low as $0 in many zip codes. However, you will have a copay or coinsurance for your healthcare services throughout the year. You can find your cost-sharing amounts in the plan’s Summary of Benefits (SOB). Take note that your HMO plan will not cover you if you go outside the plan’s network unless it’s an emergency.

PPO Advantage plans typically have higher premiums than HMO plans because you can go out of the network for your health care. But, your costs may be more expensive if you go outside the plan’s network. You can find your cost-sharing amounts in your plan’s SOB.

Summary

The question of “Is Medicare expensive,” isn’t strictly black and white since some might find it expensive compared to their past insurance, and others might find their Medicare premiums to be cost-friendly. It’s best to know your Medicare costs before turning 65 years old!

Author: Alexandria Roland

Alexandria Roland is a Medicare expert, licensed insurance agent, and digital marketing coordinator at Boomer Benefits. As a content creator, she shares her knowledge of Medicare through many outlets, including writing. Alex helps to manage a growing online community of over 30,000 seniors in the Boomer Benefits Medicare Q&A Facebook Group.