What Do Medicare Plans Cost?
The most noticeable out-of-pocket cost for a Medicare plan may be the monthly premium, but it’s not the only one. When researching plan choices, it’s important to count all the costs. Even plans with no premium have some associated costs that the member must pay. This is called “cost sharing.”
Medicare plans use these cost-sharing methods:
- Premium – This is a monthly fee that you pay the plan provider to purchase the plan coverage. Original Medicare Part B also charges a premium. Part A is premium-free for most people. Medicare Advantage and prescription drug plans are offered by private insurance companies. Some of these plans charge a premium and some don’t.
- Deductible – This is a pre-set, fixed amount of your medical expenses that you alone pay, each calendar year, before the plan begins to pay. Original Medicare Part A and Part B each charge a deductible. As with premiums, some Medicare Advantage and prescription drug plans charge a deductible and some don’t.
- Copay – This is a set amount you pay for each doctor visit, clinical service or prescription at the time that you receive it. Original Medicare Parts A and B require copays, and so do many Medicare Advantage and prescription drug plans. Copays are typically $10 to $20.
- Coinsurance –This is the amount you pay on a percentage basis for the covered care and services that you receive. A typical coinsurance is 80/20. The plan pays 80% and you pay 20%. Original Medicare Parts A and B each charge coinsurance. Again, Medicare Advantage and prescription drug plans vary, and each plan provider determines its coinsurance terms, if any.
Original Medicare is a federal health insurance program. The same cost-sharing terms, as well as coverage, apply to all beneficiaries, regardless of where one lives. Medicare Advantage and prescription drug plans are offered regionally by private insurance companies. Cost-sharing and coverage vary from plan to plan and region to region. However, by law, every Medicare Advantage plan must offer all the same benefits that Original Medicare does. Many include added benefits as well, such as prescription drug coverage, often for no additional premium.
It’s important to note that Medicare Advantage plans are required to have a maximum annual out-of-pocket spending cap for in-network services—those services a beneficiary receives from providers within a plan’s contracted network. In 2011, the maximum cap allowed is $6700. That’s the most a Medicare Advantage plan member can pay out-of-pocket all year, regardless of the plan. Plans may, however, have a lower out-of-pocket limit. There is no cap on out-of-pocket spending with Original Medicare.
It can be confusing when comparing costs and weighing this against the coverage that different Medicare plans provide. It’s a good idea to research the plans you’re interested in thoroughly and to pay attention to total out-of-pocket costs. When you look at the complete picture, you can see that the monthly premium, if there is one, is just one consideration.
– This information was provided by Medicare Made Clear