What you pay for Medicare depends on how much you earn each year and how much care you need. You pay a separate amount for each part of Medicare.
Medicare Part A
Part A is your hospital coverage.
Premium costs. If you or your spouse worked for at least 10 years and paid Medicare taxes, you won't pay any monthly fee, called a premium, for Part A. Most people don’t pay a premium.
If you or your spouse paid Medicare taxes for less than 10 years total, you will have to pay a monthly fee for Part A coverage. The premium could be as much as $407 a month.
Deductible costs. If you stay overnight in the hospital or use other Part A services, you'll pay a deductible. The deductible is the amount you must pay before Medicare pays anything for your care.
For 2017, the deductible for each hospital stay is $1,316.
Copay costs. You also pay copays for Part A. It's a set amount you pay for specific types of care. If you're in the hospital for more than 60 days, your copay is $329 a day for days 61 to 90. After that, your copay is $658 a day.
Medicare Part B
Part B is for your doctor visits, tests, and other services.
Premium costs: Each month you pay a premium of $134. If your income is higher than $85,000, you have to pay a higher premium. How much you make determines how much you pay, ranging from $187.50 to $428.60.
Deductible costs: You also pay a $183 deductible each year. After you pay it, you pay coinsurance, which is 20% of your medical costs.
Penalties: If you don't sign up for Part B when you first become eligible, you may have to pay a penalty if you did not have health insurance through an employer or union. The penalty is an additional 10% of the Part B premium for each 12-month period you did not enroll.
Medicare Part D
Part D is your prescription drug coverage.
Premium costs. The monthly fee you pay varies by the plan you choose. The average premium for 2017 is $34. If you have a higher income, you may pay more each month. If your income is over $85,000 you will pay your plan premium plus an additional fee, ranging from $13.30 to $76.20, depending on your income.
Deductible costs: Each year you pay a deductible before Medicare starts sharing the cost for your medicines. Although the deductible may vary from plan to plan, no plan may charge more than $400 in 2017.
After you've paid the deductible, your Medicare prescription drug plan kicks in and you pay a copay or coinsurance.
Out-of-pocket costs: The part you pay for your medicines is either called a copay or coinsurance. The amount depends on the plan you've chosen. You may pay more for some drugs than others, such as brand-name drugs.
Costs in the donut hole: If you and your drug plan spend a certain amount on medicines, you'll have a gap in your drug coverage, which is often called the donut hole. In 2017, once you and your drug plan have spent $3,700 on covered drugs, you are in the donut hole.
While in the donut hole, in 2017 you will pay 40% of the cost for a brand-name medicine. This will steadily decrease until it reaches 25% in 2020. Although you only pay 40% of the cost of a brand-name drug, 90% of the cost is added to the maximum spending limit. That's a bonus because you only pay a discounted price for a brand-name drug, but you get "credit" for a larger amount. That means you'll reach the maximum more quickly, when Medicare will start sharing the costs with you again.
For generic drugs, you pay 51% of the cost in 2017. This will steadily decrease to 25% in 2020. Unlike brand-name drugs, only the amount you pay counts towards getting you out of the coverage gap.
You’ll Pay This Percentage for Brand-Name Drugs
in the Donut Hole
You’ll Pay this Percentage for Generic Drugs
in the Donut Hole
Costs after the donut hole: Once you’ve spent $4,950 in out-of-pocket costs in 2017, you are out of the coverage gap. 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 2017, for generic medicines, you'll pay 5% of the drug's cost or $3.30, whichever is higher. For brand-name drugs, you'll pay 5% of the drug's cost or $8.25, 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. Medicare Advantage plans typically cover hospitalization (Part A), outpatient care (Part B), and prescription drugs (Part D) under one plan.
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 and where you live.
This is supplemental health insurance provided by private insurance companies that covers some of the costs Medicare doesn't, including copays and deductibles. You don't need, nor can you buy, a Medicare Advantage Plan if you carry a Medigap policy.
To join a private Medigap plan, you pay a monthly fee to an insurance company in addition to the premium you pay to the government for Medicare Part B.
The costs of Medigap plans vary a lot, depending on the coverage, the company, your location, and your age. So make sure to shop around before buying one. If you wish to buy a Medigap policy, you should do so when you first become eligible for Medicare. Outside of the six month open enrollment period, which starts the month you turn 65, you’re not guaranteed to qualify for a policy.
Medigap options can vary from state to state. Be sure to find out what is offered in your state. You can get help from your State Health Insurance Assistance Program. Call 800-MEDICARE to find yours.