Seniors 65 or older and people with disabilities have access to a valuable government health program, Medicare. Medicare is a government-sponsored plan that pays for much of the cost of hospital stays and doctor’s office visits of the plan beneficiaries. Recently, even the preventive care services were also included in its covered services that allow people to make most of their Medicare benefits. Besides benefits and advantages, the Medicare plan also comes with difficult rules and out-of-pocket costs.
Medicare beneficiaries are responsible to pay the following out-of-pocket costs:
Beneficiaries enrolled in the Medicare plans are usually required to pay the standard Medicare Part B premium. The standard Medicare Part B premium in 2020 is $144.60 per month. However, some beneficiaries may pay different amounts. Some Social Security beneficiaries pay lower Part B premiums because their Social Security payments have not much increased to cover the standard Medicare premiums. Medicare beneficiaries having high-income, who contribute more than $87,000 pay higher Part B premiums that range from $202.40 to $491.60 monthly depending upon their income. The majority of Medicare beneficiaries don’t have to pay a premium for Medicare Part A, which is hospital insurance. Medicare Part D prescription drug plan premium cost depends on the plan selected by the beneficiaries. For most of the Medicare beneficiaries, their premiums get deducted from their Social Security check.
Medicare Deductibles and Coinsurance
The deductible amount for Medicare Part B plan in 2020 is $198, besides which beneficiaries usually need to pay 20% of the cost of most doctor’s services. This amount can be huge if a lot of healthcare services are used over time, as there is no annual limit which enrollees might need to pay out-of-pocket. Though Medicare beneficiaries are eligible for some of the healthcare services that are not subjected to these cost-sharing requirements like a variety of preventive care services, and a wellness visit every 12 months. Some preventive screening tests such as mammograms and colonoscopies are free in the Medicare Part B plan if beneficiaries meet certain conditions. If a health issue is discovered during a preventive visit that leads to other medical services, then that service may have an additional cost.
Medicare Hospital Stays Costs
In case, if Medicare beneficiaries get hospitalized, then their Medicare Part A will have a deductible of $1,408. This deductible amount is applicable only for 60 days and if the beneficiaries require a longer stay, then from 61st day to 90th-day beneficiaries have to pay $352 deductible amount per day. Beyond 90 days of hospitalization, beneficiaries will have to pay $704 for up to 60 lifetime reserve days. Thus, beneficiaries who frequently require hospitalization, their out-of-pocket cost is huge. After their lifetime reserve days are used up then they will be responsible for their hospital expenses.
Medicare Supplemental Insurance
Some Medicare beneficiaries buy supplemental insurance plans to cover a few of the cost-sharing requirements of traditional Medicare along with some additional medical services. Medicare supplemental insurance plans or Medigap plans make post-retirement healthcare costs more predictable. Most of the Medicare supplemental plans cover some of the Medicare Part B’s out-of-pocket costs and longer hospitalization costs compare to traditional Medicare. Depending upon the type of supplemental plan chosen by the beneficiaries, their out-of-pocket costs can be huge or virtually zero. Besides this, Medicare beneficiaries may also sign up for a Medicare Advantage plan, in which they receive Medicare Part A and Part B benefits through a private health insurance carrier instead of Original Medicare. However, people should know that Advantage plans have different cost-sharing requirements for healthcare services and sometimes there are more coverage restrictions compared to Original Medicare. Beneficiaries who see only in-network doctors and obtain referrals from their primary care physician for visiting a specialist, then they have a low out-of-pocket cost.
Medicare Prescription Drug Coverage
Medicare beneficiaries have the option to choose from different plans for their stand-alone Medicare Part D prescription drug plan offering different coverage at different prices. The average premium of Medicare Part D prescription plan is $30 per month in 2020 along with deductibles of up to $435. The Part D premium cost increases for high-income Medicare beneficiaries and for people who go 63 days or more days without prescription drug coverage after becoming eligible for Medicare. Medicare beneficiaries need to be aware that prices and covered medications change every year, so they should compare plans to find the best value for their money. Besides, every year some new plans come out, so it is worth for the people to look at their Part D plan every year.
Medicare Late-Enrollment Penalties
Medicare beneficiaries are required to sign up for Medicare during the seven-month initial enrollment period, which begins three months before their 65th birthday. Individuals, who failed to sign up during this initial enrollment period, may be charged a late enrollment penalty as long as they are enrolled in Medicare. People must be aware that their Medicare Part B premiums increase by 10% for each 12-month delayed period after becoming eligible for it. If, beneficiaries failed to sign-up, because they were receiving group health insurance through their job or their spouse’s job, then they need to sign up for Medicare within eight months of leaving the job or the end of the coverage to avoid the penalty.
Healthcare Services that are not Covered by Medicare
Some of the common healthcare services, like dental care, eyeglasses, vision care, and contact lenses, are not covered by Original Medicare, so Medicare beneficiaries will need to plan a budget for these services. It is observed that seniors don’t have dental insurance and it is not covered by Medicare also, so they will need to pay for the dental care costs from out-of-pocket. Besides, Medicare covers only up to 100 days of nursing home care, after which the Medicare beneficiaries will be responsible for paying their long-term care costs.