(5 min read) The cost of Medicare can vary depending on several factors such as your income, the type of coverage you choose, and whether you receive any subsidies or assistance.

Here are some general guidelines for the costs associated with each part of Medicare:

• Part A (hospital insurance) is generally $0 for a lot of people (because you or a spouse have paid Medicare taxes long enough while working – 40 quarters in government speak). This is sometimes called “premium-free” Part A. If you don’t qualify for premium-free Part A, you may be able to buy it, and the cost can vary depending on your income and how long you or your spouse worked and paid Medicare taxes. Part A comes with a $1,600 deductible for each benefit period before Original Medicare starts to pay for things deemed medically necessary. There’s no limit to the number of benefit periods you can have.
• Part B (medical insurance) has a standard monthly premium of $164.90 each month in 2023 (or higher, depending on your income; see IRMAA article below). The amount can change each year. You’ll pay an annual $226 deductible before Original Medicare starts to pay. Part B is an 80% to 20% split. Medicare pays 80%, and you must pay the other 20% of Medicare-approved items.
  • There’s no yearly limit on what you pay out-of-pocket unless you have supplemental coverage, like a Medicare Supplement Insurance (Medigap) policy, or you have a Medicare Advantage Plan.
• Part D (prescription drug coverage) has a monthly premium that varies depending on the specific plan you choose and the drugs covered. Plans have a deductible, and there may be other out-of-pocket costs like copayments or coinsurance. Medicare drug coverage helps pay for prescription drugs you need. It’s available to everyone with Medicare. Even if you don’t take prescription drugs now, consider getting Medicare drug coverage to avoid a late enrollment penalty.
• IRMAA Brackets – Click here – a beneficiary’s Part B and D monthly premium is based on income. These income-related monthly adjustment amounts affect roughly 7 percent of people with Medicare Part B. Click the link above to see the thresholds for this year.
• Medicare Supplement Insurance policy or Medigap is Medicare Supplement Insurance that helps fill “gaps” in Original Medicare and is sold by private companies. Original Medicare pays for much, but not all, of the cost for covered health care services and supplies. The premium can change each year, and you must have Part B and keep paying your Part B premium to keep your Medigap policy. Some Medigap policies include extra benefits like coverage when traveling out of the country. Every Medigap policy must follow federal and state laws designed to protect you, and it must be clearly identified as “Medicare Supplement Insurance.” Insurance companies can sell you a standardized policy identified in most states by letters. Plans can range anywhere from $30 to well over $400 a month, depending on your chosen plan and geographic location. _source
• Medicare Advantage plan is a Medicare-approved plan from a private company that offers an alternative to Original Medicare for your health and drug coverage. These “bundled” plans include Part A, Part B, and sometimes Part D. The cost of Medicare Advantage plans can vary depending on your specific plan and the benefits offered. Some plans have no monthly premium, while others may have a monthly premium in addition to any Part B premium.  In 2023 the maximum out-of-pocket for in-network care you would have to budget for is $8,300, which does not include drug coverage, and the maximum out-of-pocket cost for out-of-network care is set at $12,450, which also does not include drug coverage. _source

^{source – medicare.gov}

As you can see, there are many moving parts, so it is difficult to give an answer that would apply to everyone. Things to consider:

• Do I qualify for premium-free Part A?
• Do I have to pay an IRMAA above my base Part B premium of $164.90?
• Do I have to pay an IRMAA for my Part D coverage?
• How much should I expect to pay for the prescriptions I take regularly?
• How much will supplemental coverage cost?
• Based on the above, how much do I need to budget for health care costs in a given year?

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