How Much Does Medicare Cost?

How much premium will you need to pay in Medicare

How much premium will you need to pay in Medicare?

The amount of premium you will pay while on Medicare will depend largely on which plan you decided to take and possibly the amount of money you make.

Original Medicare

If you chose Original Medicare, you have the option of pick up Medicare Part B which h provides financial assistance to pay for the cost of physician services. 

How much premium will you need to pay in Medicare?

The cost most individual will pay for Part B coverage in 2020 is $144.60. However, high income earners will need to pay more under the Income Related Monthly Adjustment Amount (IRMAA) which can be as high as $491.60 in 2020.

An individual enrolled in Medicare may also chose to enroll in a Medicare Part D prescription drug plan. These plans, issued by private insurance companies, vary widely in cost. Generally speaking, the higher the premium, the broader the coverage. In addition, like IRMAA with Plan B premiums, Part D premiums can be subject to “surcharges” for high income earners.

Medicare Part D plans also have deductibles and co-insurance amounts. There are not out-of-pocket limits on these plans. An important cost consideration when looking at a prescription drug plan is to know how the plans corridor deductible, known as the Medicare Part D donut hole, is designed. For more information on the Medicare Part D donut hole click here.

Need Help finding the Prescription drug plan right for you?

Find out more about our Medicare Roadmap and how we can narrow your choices down to the three best plans for your situation in your area.

Another option an individual enrolled in Original Medicare has is picking up a Medicare supplement, or Medigap, plan. These optional coverages provide benefits that Medicare alone does not. Medigap plans can also pay deductible and co-insurance amounts for Part A and B. These plans, also issued by private insurance companies, vary in cost by the plan type and the state the insured resides.  They can also be priced one of three ways:

Medigap plans, by law, are standardized by “letters” and pay the same benefits regardless of which company issues the policy. 

Medicare C – Medicare Advantage Plans

Medicare advantage plans have premiums policy holder must pay. Many times, the premiums are equal to the premium required for Medicare Part B. Since the individual enrolled in a Medicare Advantage Plan is no longer enrolled into Medicare, and instead has chosen to have a private health company manage their health care, the Part B premium is allocated to the insurance company issuing their policy. Medicare advantage premiums can be higher or lower depending on the company and coverage.

In addition, Medicare Advantage plan participants will pay deductibles and co-insurance amount. These plans have out-of-pocket limits that the issuing insurance company must state to the policy owner as well.

The maximum out-of-pocket limit is $6,700 for in-network services and $10,000 for out-of-network services. Medicare set the maximum, but some plans voluntarily establish lower limits. After reaching the limit, Medicare Advantage plans pay 100% of eligible expenses. 

Here are some facts to know about Medicare Advantage out-of-pocket limits.

·         This limit excludes monthly premiums and prescription medications. 

·         Health Maintenance Organization (HMO) and Preferred Provider Organization (PPO) plans have a limit on in-network care of $6,700. PPO plans also have a limit of $10,000 in- and out-of-network combined.  

·         Only Medicare-covered services count toward the out-of-pocket limit. 

·         Services not usually covered by Medicare, such as hearing, vision, and non-emergency transportation, and prescription medications are not counted in the limit.

·         Each plan determines its maximum out-of-pocket limit and the limit can change every year. 

Additional Medicare Costs

Medicare requires prompt enrollment when you are eligible. Failure to enroll when during your initial enrollment period could result in substantial penalties as well as no coverage which could cause catastrophic losses.

Medicare Part B – If you do not enroll in Medicare Part B during your initial enrollment period, you will have to wait until the next Medicare general enrollment period. This could leave you without coverage for an extended period of time. When you do enroll (Between January 1 and March 30 each year) your coverage will not take effect until the following July 1st and you will be subject to a 10% premium surcharge for each year you missed. The premium surcharge is a penalty assessed every year for the rest of your life.

Medicare Part D – If you do not enroll in Medicare Part D coverage when you are first eligible, You will be without coverage until the next General enrollment period which, for this part of Medicare, is between October 15 and December 7 each year. However, unlike Medicare Part B, your coverage starts.

If an individual signs up for Medicare Part B for the first time during it’s open enrollment, an individual can also pick up a Medicare D prescription drug plan up to 3 months after their Plan B enrollment.

For enrolling late into a Medicare Part D, the plan requires a life-time 12% annual surcharge be assessed.


Conclusion to keeping Medicare costs low.

If you are like most people, you will want to eliminate surprise healthcare costs in retirement when possible. Believe it or not, a well-structured Medicare insurance plan is very effective at managing health care costs in retirement. There are a few coverage gaps, such as long-term care, that need to be covered through other methods, but if you pick the correct Medicare path and have the right policies in place, you will have the health care coverage you need when you need it.

Learn More about our Medicare RoadMap here…

To give yourself the best chance at success, look at our Medicare Roadmap. It is an inexpensive and effective way to make sure you pick the right Medicare path for your unique situation. Where the right plan is highly effective at managing health care costs in retirement, the wrong plan can be costly.