Medicare is a health insurance program funded by the federal government of the United States. Medicare is designed for persons aged 65 and above, although younger people with disabilities or some medical conditions may also be eligible for the program.
Medicare has four parts that cover several healthcare services. These include Part A and Part B (jointly referred to as Original Medicare), Part C (Medicare Advantage), and Part D (Medicare Drug Plan).
Each Medicare part or plan comes with different costs. You may have to be familiar with the following terms to understand what we discuss in this article. These terms include:
This is the amount a person pays for Medicare (including Medicare Advantage and Medigap plans) each month.
This is the amount you spend out-of-pocket for covered healthcare services before your health coverage kicks in and begins to pay anything.
This is the amount (usually a percentage) you pay as your share for covered healthcare services. This comes after you pay any deductibles. For example, you pay 20% for your covered services under Medicare Part B. Medicare pays the other 80%.
This is a fixed, out-of-pocket amount you pay for certain healthcare services or items.
So what are the Medicare costs for 2023?
Part A Costs
Most eligible beneficiaries of Medicare do not pay a monthly premium for Medicare Part A. This is also referred to as "premium-free part A." If you are 65 and you or your spouse have paid Medicare taxes while working for at least ten years (40 quarters), you won't have to pay a premium for Part A.
You also won't pay a Part A premium if you are 65 and receive (or are eligible to receive) retirement benefits from either Social Security or the Railroad Retirement Board.
If you're under 65, you can get premium-free Part A if you:
● Have end-stage renal disease (ESRD)
● Are eligible for (and have received) disability benefits from Social Security or Railroad Retirement Board for at least 24 months (2 years)
● Have family relationship coverage, when a person's parent or a spouse paid Medicare taxes for a certain period
If you do not qualify for premium-free Part A, you can buy Part A. If you buy Part A, your premium depends on how long you or your spouse has worked and paid Medicare taxes.
If you or your spouse has worked and paid Medicare taxes for less than 30 quarters, you pay $506 as a monthly premium in 2023. However, you get to pay $278 if you or your spouse has worked and paid Medicare taxes for 30-39 quarters.
Deductible with Coinsurance
With Medicare, the benefit period is how Medicare measures and pays for inpatient hospital and skilled nursing facility (SNF) services. A benefit period begins the day you are admitted into a hospital or SNF and ends when you have been out for 60 days in a row.
So with Medicare Part A, you pay a $1,600 deductible for each benefit period (60 days). For extended hospital stays there is a coinsurance that is also due. Here is the breakdown of coinsurance you pay for each benefit period:
● Days 1 to 60: $0 daily coinsurance.
● Days 61 to 90: $389 daily coinsurance.
● Day 91 and beyond: $778 daily coinsurance per each lifetime reserve day (up to 60 days over your lifetime)
● Beyond lifetime reserve days: all costs
Part B Costs
Most people pay the standard Part B premium amount of $164.90 in 2023. This amount will be automatically deducted from your benefits if you receive benefits from any of:
● Social Security
● Railroad Retirement Board
**Take note, If you are delaying your Social Security Benefits then you will be billed quarterly for your Medicare Part B premiums.
However, you may pay the monthly premium and an extra charge if your modified adjusted gross income (MAGI) is above a certain amount. This extra charge is called Income Related Monthly Adjustment Amount (IRMAA).
Deductible with Coinsurance
The standard deductible for Medicare Part B in 2023 is $226. After meeting your deductible, you pay 20% of the Medicare-approved price of covered Part B services.
Part C (Medicare Advantage Plan) Costs
The premium you'll pay when enrolled in a Medicare Advantage Plan depends on the plan. Some plans do not charge a monthly premium (like some Medicare Advantage plans), while some do. If your plan does, you will pay the stated amount in addition to the Part B premium and the Part A premium (if you are not enrolled in premium-free Part A).
Deductibles, Coinsurance & Copayments
The amount you pay for Part C (Medicare Advantage) deductibles, coinsurance, and copayments varies by plan.
They also depend on:
● The healthcare services you need and how frequently you need them
● Whether you need extra benefits and if your plan charges for it
● Whether or not you go out-of-network
● The plan you're on (HMO, PPO, PFFS, SNP, or MSA)
● Whether your plan has a yearly limit on your out-of-pocket costs for all medical services
● Whether you have Medicaid or get help from your state
Part D Costs
The Part D monthly premium varies by plan. If you have been assessed an IRMAA then you will also pay more for your Part D coverage.
Deductibles, Coinsurance & Copayments
These amounts vary by plan. Plan availability for Part D will be based on the county that you live in.
Late enrollment penalty
In some cases, if you don't sign up for Medicare Part A, Part B, or Part D when you're first eligible, you'll have to pay a late enrollment penalty.
Your monthly premium for Part B will go up by 10% of the standard premium for each 12-month period that you delayed signing up for Medicare unless you had creditable coverage during that period. You'll have to pay this penalty for as long as you are enrolled in any of these Parts.
For each month you delay enrolling in Medicare prescription coverage, you will have to pay a 1% Part D late enrollment penalty (LEP), unless you had creditable prescription coverage during that time. This penalty is paid for as long as you have a Medicare drug plan.
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