What You Need to Know About Medicare Costs

Updated on April 16, 2019
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Dreamworker has spent years studying and dealing successfully with a number of health issues.

When people approach the age when they start thinking about Medicare their first question always is going to be, “What is this going to cost me?”

This is a simple question with a complicated answer because what people end up paying depends on the plans they choose, their ages when they buy in, their income, and where they live.

Furthermore, few realize that Medicare and Medicare Advantage are two entirely different types of health insurance plans, the first one actually being administered by the government and the second only regulating it.

You should take the time to read them if you want to gain a better understanding of them.

Financial information about the costs involved in buying Medicare Health Insurance Plans.
Financial information about the costs involved in buying Medicare Health Insurance Plans. | Source

Medicare Advantage Overview

It is common for people who are just starting out with Medicare to become confused about all of the financial requirements, terminology and plan types so they usually start out by purchasing a Medicare Advantage Plan.

Some geographic locations offer many different plans, while others offer only a few. While they may look the same at first, they really are not because each one offers different costs, benefits, co-pays, and services.

Today’s average cost for a Medicare Advantage plan ranges from $0 to $300 per month, with the average being around $64. However, people still must pay their Part B premium, that in 2018, costs the average person $134 per month.

However, some individuals pay as much as $428.60 per month depending on income, geographic location, and marital status.

Some plans play fair, but others do not.
Some plans play fair, but others do not. | Source

Medicare Advantage Benefits

By law, Medicare Advantage plans must provide all of the benefits of Medicare Parts A and B and also offer additional services.

  1. Prescription coverage is included in most plans, which means people don't have to pay extra for this service.
  2. Some plans offer coverage for dental, vision or hearing aids, but these are extremely small benefits that usually don't pay enough to make them worth having, and not all plans offer every one of them.
  3. Almost all plans offer a free gym membership.
  4. The biggest perk, of course, is that they save people the trouble of having to juggle a lot of information in order to buy coverage.

Financial Caveats of MA Plans

While signing up for a plan like this is very easy to do and may seem reasonably priced, the monthly costs represent only one part of what people will have to pay if they need health services.

For example, many plans charge extra for deductibles, office visits, medications, physical therapy, hospital stays and other services.

This means that those who have few problems do well with them, but individuals who need care can end up paying far more than expected.

Out of pocket limits can cost thousands of dollars per year, and these limits do not apply to prescription medications.

Some plans do everything possible to make patients pay more. For example, most require referrals to see specialists, but upon arrival patients often find that no referrals were sent. Thus, they must return to their doctor's office to get new ones before they can be seen. The result is that instead of two doctor's visits they have co-pays for three unless you decide to pay cash.

Another ploy is to tell patients they owe money that they do not owe. It can take months to deal with such issues because the plan makes it impossible to resolve them. What they want is for you to pay so that they don't have to!

The point here is that while some plans may play fair, many do not. They lure you in with zero or cheap premiums and offers of free gym memberships, and then make getting the help you need difficult and expensive.

What this means is that the “good deal” you thought you had might turn out to be a very costly headache at a time when you least need to have more problems than you already do!

Make sure you understand costs before signing up for any Medicare program.
Make sure you understand costs before signing up for any Medicare program. | Source

Medicare, Medigap and Part D Costs

People who choose to purchase a combination of Original Medicare, Medigap, and Part D are going to appear to pay more than those who choose MA plans, but this isn’t always the case.

Much depends on their geographical location, and the Medigap and Part D plans they choose to purchase.

There are numerous companies that offer Medigap plans. Each offers the same exact plans, but their costs can vary from company to company. Clients get to choose from a menu of benefits, and this is what determines how much they pay.

The same is true of Part D plans. However, they are a bit trickier because there are so many companies that offer them, prices vary considerably, and the drugs each one covers can be quite different as well.

So, it not only costs more on the surface to buy into these plans, it takes a bit of work and research for people to decide exactly what they want or need.

  • What people pay for Medicare coverage will be the same as they pay when they choose a Medicare Advantage plan, usually $134 per month but possibly much more (as noted above).
  • For the very best Medigap plan with a large, credible company, a couple in their mid 70’s like my husband and myself will pay approximately $410 per month.
  • Part D plan prices average $34 per month per person but can be much higher depending on where you live, the medicines you need, and the plan you choose.

In 2018, my husband and I will pay $254 per month for our Part B coverage, $52.80 for our Part D plan and $410.74 for our Medigap plan. This adds up to $717.54 per month for the both of us, which according to eHealthInsurance is actually about $100 per month less than the average American pays for family plan coverage.

It likely is more expensive in most cases than a Medicare Advantage plan would be, but it is important to bear in mind that there is more than money that is important when it comes to protecting your health.

Medicare, Medigap and Part D Benefits

Here are some of the good points of owning these three plans:

You can get top notch medical care wherever you go in the US, as long as the doctors and medical facilities you use accept Medicare. This means that people never have to worry about how much they’ll have to pay if they get sick or need surgery when they’re away from home.

With the right plan combination, you never pay to see a doctor or specialist, use an Emergency Room, have surgery, pay for rehab, or worry about paying for co-pays or deductibles.

You do have to pay for medications, but you can choose from a variety of plans that allow you to sign up for less and pay less in many instances. Some even offer free generics if you buy them through mail order services.

Last year our total costs for our Part D plan and medications were less than $1200!

Original Medicare Caveats

One thing people need to be careful about is choosing just Original Medicare for their coverage.

While it's an inexpensive health insurance to buy in itself, as a stand-alone it does not provide coverage for

  • co-pays,
  • deductibles or
  • drugs

and will cost you 20% of your total costs.

This may sound reasonable, but it is a sure way to head towards bankruptcy in many circumstances due to the high out of pocket costs for these items.

The fact that Medicare pays 80% sounds great, but if your hospital bill is $100,000, this means you'll have to come up with $20,000 in addition to your deductibles, which can be substantial. In 2018 they are more than $1200 per quarter for hospital stays and another $183 per year for Part B coverage.

Also, you'll pay a separate cost for your part D plan, which can be hundreds of dollars per year depending on the coverage you choose.

Another thing you should know is that Medicare, even when combined with Medigap and Part D policies, does not cover vision, dental or hearing services and in many cases will not pay for an ambulance.

Medigap Caveats

A big problem with Medigap plans is that they only will pay for items that are first approved by Medicare.

For example, if Medicare does not approve a patient's use of an ambulance, Medigap won't pay either. This means that the patient must pay for his ride, and the cost can be significant. Where I live it's just under $700 per ride!

Another issue is that you can only buy a Medigap plan if you have Original Medicare.

Finally, not all companies that offer Medigap policies are equally sound financially, so it is possible that you can buy coverage from a company that goes out of business or stops carrying these policies.

You can always buy a different one, but it would cost you more to do so. Therefore, you want to make sure that you buy from a highly credible provider.

Part D Caveats

Some people cut corners and refuse to buy Part D plans because they don't feel like they need them.

However, if you buy one after the first year, you will pay an ongoing ten percent plan cost penalty that increases by 10% each year.

Another problem is that plans can drop coverage for certain medications during the year, but you can't drop the plan! However, you can file an appeal or may even be able to use a substitute medication if your doctor approves it.

Finally, and most importantly, not all plans are offered in every geographical location. Also some are much more expensive to have than others.

They can also change their plans yearly, which means you must take the time every year to make sure your medications are covered and that your plan is still affordable for you.


People who have good health or have had good experiences love their Medicare Advantage policies, but those with health problems or who have seen the darker side of these plans don't feel the same way.

Some people think my husband and I are foolish to be spending so much money on the plans we have, when we could get good coverage for practically nothing.

We remind them that any company that is charging little or nothing must make up the losses somewhere which is why their patients pay extra for deductibles, hospital fees, doctor visits, lab fees and physical therapy.

We are also able to access the best specialists and hospitals at no cost.

This year, the two of us will pay a total of $8,610 for all of our plans combined.

It’s a bit more than last year and will be a bit less than next year. However, what we will get for our investment will be worth the every penny because over the past ten years our Medicare and Medigap plans have saved us more than half a million dollars!

Choose Plans Carefully

Choosing the best plan can be overwhelming and perhaps even a bit frightening because it is impossible to see into the future.

Being healthy today does not guarantee that you will be healthy tomorrow, so it's important to hope for the best while planning for the worst.

Medical care is never going to be cheap, so not make sure that you have the best possible coverage.

There are vast differences between Original Medicare and MA costs, so choose carefully.

Did it surprise you to learn how much Medicare Plans can cost?

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This content is accurate and true to the best of the author’s knowledge and does not substitute for diagnosis, prognosis, treatment, prescription, and/or dietary advice from a licensed health professional. Drugs, supplements, and natural remedies may have dangerous side effects. If pregnant or nursing, consult with a qualified provider on an individual basis. Seek immediate help if you are experiencing a medical emergency.

Questions & Answers

  • I have Medicare A & B & all I want to know is if the premium is going up with our raise this year?

    Yes. Part B cost will raise $1.50 per month to $135.50 for most people, the annual deductible will rise $2 per month to $185, Part A is always free, but the quarterly deductible for hospital admittance will increase $24 per deductible to $1364. Costs always go up when we get social security increases. Bear in mind that the hospital admissions deductible is payable every quarter, which means if you happen to be a patient who entered the hospital at the end of one quarter but remains there after another quarter begins, you will have to pay that amount twice.

  • What's the difference in Social Security and Social Security disability?

    Social Security is money the government pays individuals when they reach a certain age if they have worked enough quarters to earn it. Social Security Disability is a government payment that people who have become disabled apply for if they cannot work due to health problems.

  • We know we want Original Medicare, A, B, Part D for drugs, and a medical plan G. How do we go about selecting the right company for Medigap?

    All companies must offer the same Medigap plans. The difference comes in the financial stability of the company. Choose one that has been in business for a long time and is known to pay up when required to do so. Choose the best plan you can afford, and choose a company that has reasonable costs. It takes some research on your part but will be well worth your time if you choose well.

  • I have Medicare B from last year do I need to sign up again?

    No. Once you sign up for A and B you never have to sign up again unless you are changing to another plan.

© 2018 Sondra Rochelle


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