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Health Care Reform:

Health Insurance & Affordable Care Act

What Does Medicare Cost?

Medicare Part D continued...

Although you have to start paying your drug costs on your own, you receive a 52.5% discount for covered brand-name drugs. That means you pay 47.5% of the drug's cost. Prescription drug plans will pay 21% of the cost of covered generic drugs . That means you pay 79% of the cost of generic drugs that are covered by Medicare.

You have to pay for your medicines yourself until you reach an out-of-pocket threshold, which is also called a maximum spending limit. In 2013, that limit, which is also called your out-of-pocket threshold, is $4,750. For 2014, it will be $4,550.

On the plus side, the entire cost of a brand-name drug is added to the maximum spending limit. That's a bonus because you only pay about half the cost of a brand-name drug, but you get "credit" for the whole amount. That means you'll reach the maximum more quickly, when Medicare will start sharing the costs with you again.

Your deductible, the full cost of brand-name drugs, plus the amount you spend on generic drugs also count toward that $4,750 limit. But your monthly premiums do not. Keep in mind, if you don't use expensive drugs, you won't need to spend $4,750.

Costs after the doughnut hole: When Medicare starts paying again, it's called catastrophic coverage. Then, you only have to pay a small copay or coinsurance toward your prescription drug costs for the rest of the year. In 2013, for generic medicines, you'll pay 5% of the drug's cost or $2.65, whichever is higher. For brand-name drugs, you'll pay 5% of the drug's cost or $6.60, whichever is higher. In 2014, you'll pay $2.55 for generics and $6.35 for brand-name or 5% of the drug's cost, whichever is higher.

Medicare Advantage (Part C)

These are health plans sold by insurance companies but overseen by Medicare. They are alternatives to original Medicare, and usually offer more services than original Medicare.

To qualify for Medicare Advantage, you need to have Medicare Parts A and B. So that means you'll at least need to pay the Part B monthly premium.

On top of that fee, you may need to pay a monthly premium for the Medicare Advantage plan itself. The prices vary a great deal depending on the plan you've chosen. Some may have further charges, like deductibles and premiums for additional coverage for things like prescription drugs.

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