A Closer Look at Medicare Out-Of-Pocket Costs

Nothing in life is completely free, and that’s true for Medicare.

In this guide, we’ll take a detailed look at the out-of-pocket costs for Medicare beneficiaries and show you a few ways you may be able to get coverage for some of these costs.

*All costs listed are for 2021 unless otherwise noted.

Medicare premiums

Premiums exist for each part of Medicare. Premiums are typically paid monthly, but in some cases, they may be paid quarterly or yearly.

Part A

Most people receive “premium-free Part A” thanks to paying a sufficient amount of Medicare taxes during their working years.

• If you only paid between 30 and 39 quarters worth of Medicare taxes (7.5 to 9.75 years) you will be required to pay a premium of $259 per month.
  
  
• If you paid fewer than 30 quarters worth of Medicare taxes, your monthly Part A premium could be as high as $471.

Part B

The standard Medicare Part B premium is $148.50 per month. However, the Part B premium is based on your reported taxable income from two years prior.

The table below shows what Part B beneficiaries will pay for their premiums in 2021, based off their 2019 reported income.

Part C (Medicare Advantage)

Medicare Advantage plans are sold by private insurance companies, so premium costs can differ according to plan type, provider and location.

In 2021, the average monthly premium for a Medicare Advantage plan that includes prescription drug coverage is $33.57 per month.¹

Some Medicare Advantage plans may offer $0 premiums.

Or call 1-800-557-6059 1-800-557-6059 TTY Users: 711 to speak with a licensed insurance agent. We accept calls 24/7!

Part D (prescription drug coverage)

Medicare Part D plans are also sold by private insurance companies, so plan premiums may vary across the board. The average monthly Part D premium in 2021 is $41.64.¹

Part D premiums also come with an income-based tier system that uses your reported income from two years prior, similar to how Medicare Part B premiums are calculated.

Part D premiums for 2021 will be based on reported taxable income from 2019, and the breakdown is as follows:

You can compare Part D plans available where you live and enroll in a Medicare prescription drug plan online in as little as 10 minutes when you visit MyRxPlans.com.²

Medicare deductibles

A Medicare deductible is the amount you must pay for health care services (excluding premiums) before your coverage begins to kick in.

Part A

Part A requires beneficiaries to meet a $1,484 deductible for each benefit period before coverage takes effect.

A benefit period begins the day you are admitted to a hospital or other long-term care facility for inpatient care, and it ends 60 days after being discharged from the facility (if you have not been readmitted during that time).

The Part A deductible can reset more than one time during a calendar year if you were to experience multiple inpatient stays.

Part B

Medicare Part B requires an annual deductible of $203.

Medicare Advantage

Deductibles for Medicare Advantage plans will differ by plan. Plans that offer prescription drug coverage may have a separate deductible for drug coverage and another deductible for the plan’s other benefits.

Not all Medicare Advantage plans include a deductible.

Part D

Deductibles vary according to plan. However, Part D deductibles are not allowed to exceed $455 in 2021, and many Part D plans do not have a deductible at all.

The average Part D deductible in 2021 is $342.97.¹

Medicare coinsurance and copayments

Once you meet your deductible, you may have to pay coinsurance or copayments when you receive care. A coinsurance is a percentage of the total bill, while a copayment is a flat fee.

Part A

For an extended stay in a hospital or mental health facility, a copayment of $371 per day is required for days 61-90 of your stay, and $742 per “lifetime reserve day” thereafter.

You have 60 lifetime reserve days to use. Once these reserve days are exhausted, you will be responsible for all costs.

At a skilled nursing facility, a copayment of $185.50 per day is required for days 21-100 of an inpatient stay, and you are responsible for all costs thereafter.

During hospice care, copayments of no more than $5 are required for drugs and other products used for pain relief or symptom control. A 5 percent coinsurance payment is also required for inpatient respite care.

For durable medical equipment used for home health care, a 20 percent coinsurance payment is required.

Part B

After the Part B deductible is met, you will typically be required to pay up to 20 percent of the Medicare-approved amount for covered services or products.

Medicare Advantage

Coinsurance and copayments will vary according to each plan.

Part D

As with Medicare Advantage plans, coinsurance and copayments will vary according to each Part D plan.

Additional out-of-pocket Medicare costs

Medicare beneficiaries aren’t always done paying out-of-pocket costs after premiums, deductibles and coinsurance or copayments are paid.

Some additional out-of-pocket expenses that can be incurred with Medicare include:

• Part B excess charges
  If you receive services or products that are covered under Part B from a provider that does not accept Medicare assignment, you may be charged up to 15 percent more than the Medicare-approved cost for those services.
  
  
• Foreign emergency care
  Medicare does not typically provide coverage for emergency care received outside of the U.S., except for certain limited situations.
  
  
• First three pints of blood
  The first three pints of blood used for a transfusion are not covered by Medicare.
  
  
• Additional services or products
  While Medicare covers a wide range of services and products, it does not cover everything. Beneficiaries can still find themselves paying out of pocket for care that isn’t covered by Medicare.

It’s also worth noting that Original Medicare does not include an annual out-of-pocket spending limit, which means beneficiaries could potentially pay a limitless amount of costs in a year.   

Managing out-of-pocket Medicare costs

Fortunately, there are some ways you may be able to get coverage for some of your out-of-pocket Medicare costs.

• Apply for a Medicare Supplement Insurance plan
  These plans, also known as “Medigap,” provide coverage for some of Medicare’s out-of-pocket costs, such as deductibles, coinsurance and copayments. Some Medigap plans even include annual out-of-pocket spending limits.
  
  
• Sign up for a Medicare Advantage plan
  Some Medicare Advantage plans may offer a number of additional benefits not covered by Original Medicare, such as coverage for prescription drugs, dental, hearing, vision and even things like gym or wellness program memberships such as SilverSneakers.
  
  The increased coordination of care and the focus on preventive health offered by many Medicare Advantage plans can also help reduce out-of-pocket spending and keep beneficiaries healthier.
  
  
• Stay in network and see doctors who accept Medicare
  Some Medicare Advantage plans and Medicare Part D Prescription Drug plans may include networks of participating providers, and plan members can save a considerable amount of money simply by staying inside the network for care.
  
  If you are enrolled in Original Medicare, avoiding health care providers who do not accept Medicare assignment can help you save up to 15 percent on excess charges.

Read additional medicare costs guides to learn more about Medicare costs and how they will affect you.

If you have any additional Medicare questions or are interested in a Medicare Advantage plan that could help you save on some Medicare out-of-pocket costs, you can call to speak with a licensed insurance today.

Or call 1-800-557-6059 1-800-557-6059 TTY Users: 711 to speak with a licensed insurance agent. We accept calls 24/7!

¹ MedicareAdvantage.com's The Best States for Medicare in 2021 report. (Oct. 27, 2020).

² 10-minute claim is based solely on the time to complete the e-application if you have your Medicare card and other pertinent information available when you apply. The time to shop for plans, compare rates, and estimate drug costs is not factored into the claim. Application time could be longer. Actual time to enroll will depend on the consumer and their plan comparison needs.