When many people get close to 65 and start thinking about Medicare for the first time, they are surprised to learn that Medicare is not free. In fact, Medicare can be quite expensive.
There are various different parts of Medicare, each with its own costs and intricacies.
In general, most people will pay the following in premiums (per month):
- Medicare Part A = $0
- Medicare Part B = $135.50
- Medicare Advantage (Part C) = $0 and up
- Prescription Drug Plans (Part D) = $33.19
- Medicare Supplement = $150-$400
You cannot have all of these pieces at once though, so don’t waste your time tallying all of the costs up. Let’s break it down.
Medicare Part A
Many people receive Medicare Part A premium-free. If you or your spouse paid Medicare taxes for 40 quarters (each quarter is approximately 3 months of employment, so 40 credits translates to 10 years of working experience), you won’t have to pay any Medicare Part A monthly premiums.
Most people receive Medicare Part A premium-free. But if you do have to pay for it your premium will be $437 per month.
If you do end up paying for Medicare Part A in 2019, your premium will be $437 per month!
If you’ve worked between 30 and 39 quarters, you will pay $240 per month (in 2019).
Learn more about Medicare Part A.
Medicare Part B
You will need to pay a monthly premium for Part B. In 2019, the standard Medicare Part B premium is $135.50, increasing to $144.30 in 2020. However, you may pay more or less than this amount depending on your income and other factors.
Medicare Part B is frequently referred to as the “medical insurance” portion of Original Medicare. It can help cover doctor visits, preventive care, medical devices, hospital outpatient care, home health care, and more.
Learn more about Medicare Part B.
Medicare Advantage (Medicare Part C)
Medicare Advantage is a private alternative to Original Medicare (Parts A & B), and typically offers additional benefits, such as prescription drug coverage, dental, vision, and hearing services.
There are zero-premium Medicare Advantage policies, so you will often hear people say that Medicare Advantage is “free”. However, it’s important to keep in mind that you will still need to pay your Medicare Part B premium.
Even though you’ll hear about zero-premium Medicare Advantage policies, you would still be on the hook for your Medicare Part B premium.
Translation: Medicare is not free, even with a zero-premium policy.
Learn more about Medicare Advantage plans.
Prescription Drug Plans (Medicare Part D)
A Medicare Prescription Drug Plan (PDP) provides coverage for medications. Anyone who is eligible for Original Medicare (Parts A & B) can sign up for one of these plans, which are offered by private companies approved by Medicare.
And — no surprise here — Prescription Drug Plans (PDP) also require you to pay a monthly premium. The premiums are determined based on the plan you choose and the coverage you receive. In 2019, the base beneficiary premium is $33.19.
Learn more about Prescription Drug Plans.
Medicare Supplement (Medigap)
Medicare Supplement plans also require you to pay a monthly premium. Depending on the plan you choose, monthly premiums on average range anywhere from $150 to $400.
As you may recall, Original Medicare Parts A and B typically cover about 80% of your costs. Well that leftover 20% of costs that you might be left on the hook for can be incredibly expensive depending on the medical scenario you find yourself in. That’s where Medicare Supplement policies come into the picture.
A Medicare Supplement policy is private health insurance that is designed to cover the “gaps” (hence the nickname ‘Medigap’) left over from your government provided Original Medicare plan. In most states, there are 10 Medigap plan types available for purchase that have all been standardized by the Federal Government.
Learn more about Medicare Supplement Plans.
So, is Medicare free?
No. No it is not.