Do you wonder what the costs of Medicare really are? We have broken down an article detailing the costs of Original Medicare as well as the late penalties that exist for it and a couple of Medicare insurance products.
Be aware, there are some Medicare insurance products like Medicare supplements that greatly reduce coinsurance/copayments for Original Medicare.
Costs of Medicare Part A
In 2020, Medicare Part A has a deductible of $1,408. However, if you have worked at least 10 years by the time you are eligible for Medicare, there is no premium for Part A because of the taxes you paid while working.
If you do wind up having to pay a premium for Medicare Part A, the cost will depend on the number of quarters you have worked:
- If you paid Medicare taxes for less than 30 quarters — $458 per month
- If you paid Medicare taxes for 30-39 quarters — $252 per month
Once you have Part A, there is coinsurance for the services it covers. How much that coinsurance is depends on number of days spent in the hospital:
- Days 1-60: $0 coinsurance for each benefit period
- Days 61-90: $352 coinsurance per day of each benefit period
- Days 91 and beyond: $704 coinsurance per each “lifetime reserve day” after day 90 for each benefit period (you have up to 60 days in your lifetime)
- Beyond lifetime reserve days: you are responsible for all costs
Costs of Medicare Part B
Medicare Part B’s deductible is$198 in 2020. After you meet your deductible, you will pay 20% of the Medicare-approved amount for most doctor services, outpatient therapy, and durable medical equipment. Depending on which state you live in, doctors are allowed to charge “excess charges” above what Medicare pays for.
The premium of Medicare Part B is $144.60 in 2020. But it could be higher depending on your income.
If you do have to pay for your Part A premium and miss your initial enrollment period, (if not automatically enrolled) you will have to pay an additional 10% premium for twice the number of years you should have had Medicare Part A.
Part B has a late penalty too. By missing its enrollment window, you will pay an extra 10% premium for every 12-month period you should have had Part B.
If your premium for Part B is $144.60, you’ll pay an additional $14.46 each month for the rest of your life.
A popular Medicare insurance plan has a late penalty too. If you do not have creditable prescription drug coverage and choose to sign up for a Part D plan later, you’ll pay an additional 1% per consecutive month that you went without coverage (rounded to the nearest 10 cents). The national base premium is $32.74 per month in 2020. That’s an additional $3.90 per month if you went without coverage for one year.
Medicare Supplements don’t have a late penalty, per se. However, the best time to sign up for one is during your initial enrollment period (when your Part B plan is effective) because it is usually the only time you can sign up with no health questions asked. That means you can sign up with a pre-existing condition and it will not affect your premium or ability to get a plan.