While Medicare covers a significant portion of your medical expenses, it is important to be prepared for potential high out-of-pocket costs. Here is a breakdown of the details:
Premiums: Each part of Medicare may have its own monthly premium. Most individuals do not pay a premium for Part A, which covers hospital services. You will be responsible for the Part B premium, which is deducted from your monthly Social Security benefits if you are receiving them. If you enroll in a Medicare Advantage (MA) plan or a Part D plan, you may also have monthly premiums depending on the plan you choose.
Deductibles: Before Medicare begins to pay for your care, you may have to meet a fixed amount known as a deductible. Both Part A and Part B of Original Medicare have annual deductibles, and some MA and Part D prescription drug plans have deductibles as well. Medigap policies often cover the deductibles of Original Medicare.
Copayments: These are fixed amounts you pay for specific services. For example, under an MA plan, you may have a copayment for each doctor visit or medical service, typically around $25.
Coinsurance: This refers to the percentage of the cost of services that your plan will charge you. If you are enrolled in Original Medicare, you will be responsible for 20% of the cost of services. So, if you have a blood test that costs $100, Medicare will pay $80, and you will be responsible for $20. Medigap policies also typically cover this 20% share.
Note: If you are enrolled in Original Medicare, it is important to ensure that your healthcare providers accept Medicare and participate in what is called “assignment.” This means that the provider agrees to accept the Medicare-approved amount as full payment for the services they provide. If you see a non-participating provider, they may charge up to 15% more than the Medicare-approved amount. If you are enrolled in an MA plan, it is recommended to try to see network providers, as some MA plans may not cover out-of-network care at all, while others provide limited coverage.