Many people mistakenly believe that Medicare is free for retirees and people with disabilities. After all, during all of the years that we work we paid Medicare taxes, right? So, why isn’t it free? In this MedicareWire is a Medicare insurance consulting agency. We founded MedicareWire after seeing and hearing how confusing and frustrating it is to find, understand, and choose a plan. Our services are free to the consumer. article, we’ll explain how much Medicare costs and what you can do to prepare.1Medicare.gov, ”Medicare costs at a glance”, Accessed January 11, 2022
- Medicare is an 80/20 cost-sharing system. Medicare pays about 80% of all Services or supplies that are needed for the diagnosis or treatment of your medical condition and meet accepted standards of medical practice. health care services and the A person who has health care insurance through the Medicare or Medicaid programs. pays the rest.
- Medicare covers medically necessary services, which do not include routine dental, vision, hearing, or prescriptions. For these services, the beneficiary pays out of pocket or buys additional coverage.
- If the beneficiary or their spouse worked the necessary 10 years they will receive premium-free Medicare Part A is hospital coverage for Medicare beneficiaries. It covers inpatient care in hospitals and skilled nursing facilities. It also covers limited home healthcare services and hospice care. coverage.
- All beneficiaries pay a The Medicare Part B premium is the monthly charge paid by beneficiaries for their outpatient medical care, services, and supplies. A beneficiary's premium may be uplifted by an IRMAA surcharge if their income is above.... Most people pay the standard rate set by CMS, which adjusts annually. If your income is above the standard threshold you will pay an Income Related Monthly Adjustment Amount (Income Related Month Adjustment Amount (IRMAA) is a Medicare Part B and Medicare Part D premium surcharge that is levied on high-income earners. The surcharge amount is based on a beneficiary's adjusted gross income.).
- Beneficiaries may enroll in a private health plan, called Medicare Advantage, that offers additional services that Original Medicare is private fee-for-service health insurance for people on Medicare. It has two parts. Part A is hospital coverage. Part B is medical coverage. does not cover.
- To help cover some of the An amount patients pay for their share of the cost of medical service or supply, like a doctor’s visit, hospital inpatient visit, or prescription drug. (e.g., A deductible is an amount a beneficiary must pay for their health care expenses before the health insurance policy begins to pay its share., A copayment, also known as a copay, is a set dollar amount you are required to pay for a medical service., and Coinsurance is a percentage of the total you are required to pay for a medical service. ), beneficiaries may purchase a Medigap policy.
Is Medicare Free at Age 65?
You might be surprised how many people Google that question. So, it must be on a lot of people’s minds when their 65th birthday is approaching.
The short answer to the question is, no, Medicare is not free at age 65 or at any other age. It is not free for anyone. However, some people may qualify for additional government assistance depending on their financial, health, or institutional situation.2SSA.gov, ”Medicare Benefits”, Accessed January 11, 2022
How Much Does Medicare Cost Per Month?
In order to understand how much Medicare costs, it’s first important to understand that Medicare is not a single thing. In other words, Medicare health insurance is not one-size-fits-all coverage.1Medicare.gov, ”Medicare costs at a glance”, Accessed January 11, 2022
Original Medicare (A & B)
Medicare Part A and Medicare Part B is medical coverage for people with Original Medicare benefits. It covers doctor visits, preventative care, tests, durable medical equipment, and supplies. Medicare Part B pays 80 percent of most medically necessary healthcare services., often called Original Medicare, are your hospital insurance and medical insurance, respectively. Part A covers inpatient costs when you are hospitalized. Part B covers medical care, which includes doctor visits, specialists, tests, diagnostics, and medical equipment.2SSA.gov, ”Medicare Benefits”, Accessed January 11, 2022
Your Medicare taxes contributed towards your Medicare Part A coverage only. If you or your spouse did not work enough to fully fund your account, you will pay a monthly premium for hospital coverage. How much you pay is based on the number of years you worked. To receive premium-free Part A coverage for inpatient care you need to have paid Medicare taxes for 40 quarters (10 years).1Medicare.gov, ”Medicare costs at a glance”, Accessed January 11, 2022
The Medicare taxes you paid do not help pay for your Part B medical coverage. When you enroll to receive Part B benefits you will pay a monthly premium for this coverage. If you are receiving Social Security benefits, the Social Security Administration will take your Part B premium directly out of your monthly payment. Otherwise, you can pay the premium through your online account.4Medicare.gov, ”Part B costs”, Accessed January 11, 2022
Medicare Advantage (Part C)
Medicare Part C is Medicare's private health plan option. Also known as Medicare Advantage, Medicare Part C plans are a type of Medicare health plan offered by companies that contract with Medicare to provide all..., more commonly known as Medicare Advantage, is a private health insurance option to Original Medicare. Some Medicare Advantage plans may appear to be free, because they have a zero-dollar premium, but they are not. If you join a Medicare Advantage plan you must continue paying your Part B premium. If the Part B premium is not enough to cover the cost of the plan’s benefits, then it will have an additional premium.5Medicare.gov, ”Costs for Medicare Advantage Plans”, Accessed January 11, 2022
Medicare Prescription Drug Plans (Part D)
Medicare Part D is Medicare’s prescription drug program. Medicare Part D plans are stand-alone prescription drug plans that you can enroll in to add prescription coverage to your Original Medicare benefits or a Medicare Advantage plan (if it does not include Part D).6Medicare.gov, ”How to get prescription drug coverage”, Accessed January 11, 2022 Monthly A premium is an amount that an insurance policyholder must pay for coverage. Premiums are typically paid on a monthly basis. In the federal Medicare program, there are four different types of premiums. for these plans start at around $20.
Does Medicare Cover All Health Care Expenses?
Above we walked through monthly costs (i.e., the premiums). But that’s just the cost to have coverage, which does not include what you pay when you see your doctor or use other health care services.1Medicare.gov, ”Medicare costs at a glance”, Accessed January 11, 2022
From the beginning, the Medicare health insurance program was designed to be an 80/20 system, where your Medicare coverage pays about 80 percent of your major medical costs and you pay the remaining 20 percent. It remains that way today, including Medicare Advantage (MA), also known as Medicare Part C, are health plans from private insurance companies that are available to people eligible for Original Medicare (Medicare Part A and Medicare Part B)..7CMS.gov, ”The 80/20 Rule: Providing Value and Rebates to Millions of Consumers”, Accessed January 11, 2022
Your 20 percent share is collected through deductibles, copayments, and coinsurance when you see your doctors, use the emergency room, have a hospital stay, have lab tests done, etc. With Original Medicare, these costs are standardized and well-defined. With Medicare Advantage, each plan is allowed to set its own deductibles, copays, and coinsurance. The big difference is that Medicare Advantage plans have an annual out-of-pocket maximum (MOOP), which protects members from excessive Out-of-Pocket Costs for Medicare are the remaining costs that are not covered by the beneficiary's health insurance plan. These costs can come from the beneficiary's monthly premiums, deductibles, coinsurance, and copayments..1Medicare.gov, ”Medicare costs at a glance”, Accessed January 11, 2022
To control your out-of-pocket costs in Original Medicare you purchase a Medigap plan from a private insurance company. Also known as Medicare Supplements are additional insurance policies that Medicare beneficiaries can purchase to cover the gaps in their Original Medicare (Medicare Part A and Medicare Part B) health insurance coverage., a Medigap policy will help cover some of the deductibles and coinsurance costs. The largest of these costs is the A benefit period is a method used in Original Medicare to measure a beneficiaries use of hospital and skilled nursing facility (SNF) services. With each new benefit period, the beneficiary is charged a new benefit... deductible and coinsurance for Inpatient care refers to care provided in a hospital or other inpatient facility. Inpatients are admitted and stay at least one night depending on their condition. and skilled nursing facility care. Most supplemental policies cover these Part A costs.8Medicare.gov, ”How to compare Medigap policies”, Accessed January 11, 2022
It is also important to understand that Original Medicare only covers Medicare-approved major medical costs from approved healthcare providers9Medicare.gov, ”How Original Medicare works”, Accessed January 11, 2022. That means any health care service that is not related to primary care, such as routine dental, vision, and hearing, is not covered. You must pay for these health services out-of-pocket or purchase additional coverage.10Medicare.gov, ”What’s not covered by Part A & Part B?”, Accessed January 11, 2022
Fortunately, many Medicare Advantage plans now offer many of the additional health services people want. Some plans even include beneficial extras such as non-emergency transportation, telehealth services, certain home-care services, and other Outpatient Care is medical care that does not require an overnight stay at the hospital. Medicare Part B provides coverage for Outpatient Care..11Medicare.gov, ”Medicare Advantage Plans cover all Medicare services”, Accessed January 11, 2022
Is Medicare Free If You Have Disability?
Social Security Disability Insurance (SSDI) allows people who are unable to work, due to certain disabilities, to get Social Security benefits before their normal retirement age. In most cases, on the 25th month after SSDI benefits start, Medicare benefits also begin. If you have End-Stage Renal Disease (ESRD), also known as kidney failure, is a condition that causes you to need dialysis or a kidney transplant. People with ESRD are eligible for Medicare coverage regardless of age. (ESRD) your Medicare benefits start as soon as your SSDI begins.12CMS.gov, ”Top 5 things you need to know about Medicare Enrollment”, Accessed January 11, 2022
As with all Social Security and Medicare beneficiaries, Medicare health insurance is not free. People with SSDI pay for their benefits the same way as everyone else. They can choose Original Medicare or Medicare Advantage. Medicare Part D plans are an option Medicare beneficiaries can use to get prescription drug coverage. Part D plans provide cost-sharing on covered medications in four different phases: deductible, initial coverage, coverage gap, and catastrophic. Each... are also available.12CMS.gov, ”Top 5 things you need to know about Medicare Enrollment”, Accessed January 11, 2022
One big difference is that some states do not have the same protections in place when it comes to Medicare supplements. And, many states that require insurance carriers to sell policies to people under the age of 65 do not require equal rates, so carriers raise rates exorbitantly to make them unaffordable.13KFF.org, ”Medigap Enrollment and Consumer Protections Vary Across States”, Accessed January 11, 2022
What If You Can’t Afford Your Medicare?
There are a number of federal and state options to assist people who can’t afford the cost of their Medicare insurance. If you feel you are in this situation, your first step should be to call your local state Medicaid is a public health insurance program that provides health care coverage to low-income families and individuals in the United States. office.14Medicare.gov, ”Medicaid”, Accessed January 11, 2022
People who qualify for both Medicare and Medicaid, so-called Dual-eligible beneficiaries are those who receive both Medicare and Medicaid benefits. It includes beneficiaries enrolled in Medicare Part A and/or Part B while receiving full Medicaid and/or financial assistance through a Medicare Savings Program.... individuals, have a range of options available to them, including monthly premium assistance and assistance with copayments. One great option if you are dual-eligible, where available, is a Special Needs Plan. These health plans are designed for people with special financial, health, and institutional needs. Plans may also help with home health needs.14Medicare.gov, ”Medicaid”, Accessed January 11, 2022
Low-income individuals may also qualify for the Social Security Administration’s Social Security's Low-Income Subsidy (LIS) program helps Medicare beneficiaries pay for their Medicare Part D prescription drugs by paying some of the costs. Also known as "Extra Help", beneficiaries who qualify for LIS receive premium... program. This program helps people afford their prescription drug coverage.15SSA.gov, ”Extra Help with Medicare Prescription Drug Plan Costs”, Accessed January 11, 2022
We’ll cover more options in Part 10 of this series.
What About Retirees and People with VA Benefits?
Many retirees and veterans qualify for healthcare benefits that assist with Medicare premiums or offset healthcare costs. For example, veterans who qualify for the Veteran Administration’s (VA) health benefits may choose to use a VA facility to receive care. When they do, the VA bills Medicare directly and the VA pays the remainder. In some cases, the veteran may pay a small copay.16VA.gov, ”VA health care and other insurance”, Accessed January 11, 2022
The Railroad Retirement Board handles Medicare benefits for its retirees. If you earned railroad benefits, call the RRB for details.17RRB.gov, ”Medicare for Railroad Workers and Their Families”, Accessed January 11, 2022
Most state, federal, and union retirees also have additional retirement benefits that assist with Medicare premiums and doctor visits. Call your benefits administrator for details.
Is There Any Free Medicare?
The Centers for Medicare & Medicaid Services mandates that most preventive services be provided to beneficiaries at no cost18CMS.gov, ”Background: The Affordable Care Act’s New Rules on Preventive Care”, Accessed January 11, 2022. Medicare Part B (medical insurance) covers:19Medicare.gov, ”Preventive & screening services”, Accessed January 11, 2022
- Abdominal aortic aneurysm screening
- Alcohol misuse screenings & counseling
- Bone mass measurements (bone density)
- Cardiovascular disease screenings
- Cardiovascular disease (behavioral therapy)
- Cervical & vaginal cancer screening
- Colorectal cancer screenings
- Depression screenings
- Diabetes screenings
- Diabetes self-management training
- Flu shots
- Glaucoma tests
- Hepatitis B shots
- Hepatitis B Virus (HBV) infection screening
- Hepatitis C screening test
- HIV screening
- Lung cancer screening
- Mammograms (screening)
- Nutrition therapy services
- Obesity screenings & counseling
- One-time “Welcome to Medicare” preventive visit
- Pneumococcal shots
- Prostate cancer screenings
- Sexually transmitted infections screening & counseling
- COVID-19 vaccines
- Flu shots
- Hepatitis B shots
- Pneumococcal shots
- Tobacco use cessation counseling
- Yearly “Wellness” visit
Hospice is a special way of caring for people who are terminally ill. Hospice care involves a team-oriented approach that addresses the medical, physical, social, emotional, and spiritual needs of the patient. care is covered under Medicare Part A benefits and has minimal costs20Medicare.gov, ”Hospice care”, Accessed January 11, 2022.
How To Prepare for the Cost of Medicare
With a general belief that Medicare is free in retirement, most Americans don’t plan ahead for the true cost of their healthcare in retirement. So, what can you do now?
The most important step is to make an accurate assessment of your health and financial situation. They are tightly linked in our retirement years.
Many people mistakenly take a cursory look at Medicare Advantage plans and believe that they cost less and deliver more care. For some people this is true. For others, it isn’t. It all depends on your health.5Medicare.gov, ”Costs for Medicare Advantage Plans”, Accessed January 11, 2022
Healthy people generally get their annual wellness exam and keep up with their routine dental, vision, and hearing care. They may even have a prescription or two to handle minor health issues. For these people, Medicare Advantage plans work great. Premiums are low and they rarely make a doctor visit copayment.11Medicare.gov, ”Medicare Advantage Plans cover all Medicare services”, Accessed January 11, 2022
For many people with chronic health issues, Medicare Advantage plans actually cost them more than Original Medicare without supplemental insurance. The reason this is true has to do with the copayment structure of most Medicare Advantage plans.21KFF.org, ”A Dozen Facts About Medicare Advantage in 2020”, Accessed January 11, 2022
Need help deciding? We have licensed Medicare insurance agents available at 1-855-728-0510 (TTY 711) who can answer your questions and help you figure out which type of Medicare coverage is right for you.
Are You Ready to Enroll?
For some people, Medicare Part A and Part B enrollment happen automatically through Social Security. However, it isn’t safe to assume that your enrollment will be automatic. You don’t want to miss your initial enrollment period. Visit or call your local Social Security office to verify your eligibility and enrollment and options. You may also visit Medicare.gov to get started.
- 1Medicare.gov, ”Medicare costs at a glance”, Accessed January 11, 2022
- 2SSA.gov, ”Medicare Benefits”, Accessed January 11, 2022
- 3Medicare.gov, ”What’s Medicare Supplement Insurance (Medigap)?”, Accessed January 11, 2022
- 4Medicare.gov, ”Part B costs”, Accessed January 11, 2022
- 5Medicare.gov, ”Costs for Medicare Advantage Plans”, Accessed January 11, 2022
- 6Medicare.gov, ”How to get prescription drug coverage”, Accessed January 11, 2022
- 7CMS.gov, ”The 80/20 Rule: Providing Value and Rebates to Millions of Consumers”, Accessed January 11, 2022
- 8Medicare.gov, ”How to compare Medigap policies”, Accessed January 11, 2022
- 9Medicare.gov, ”How Original Medicare works”, Accessed January 11, 2022
- 10Medicare.gov, ”What’s not covered by Part A & Part B?”, Accessed January 11, 2022
- 11Medicare.gov, ”Medicare Advantage Plans cover all Medicare services”, Accessed January 11, 2022
- 12CMS.gov, ”Top 5 things you need to know about Medicare Enrollment”, Accessed January 11, 2022
- 13KFF.org, ”Medigap Enrollment and Consumer Protections Vary Across States”, Accessed January 11, 2022
- 14Medicare.gov, ”Medicaid”, Accessed January 11, 2022
- 15SSA.gov, ”Extra Help with Medicare Prescription Drug Plan Costs”, Accessed January 11, 2022
- 16VA.gov, ”VA health care and other insurance”, Accessed January 11, 2022
- 17RRB.gov, ”Medicare for Railroad Workers and Their Families”, Accessed January 11, 2022
- 18CMS.gov, ”Background: The Affordable Care Act’s New Rules on Preventive Care”, Accessed January 11, 2022
- 19Medicare.gov, ”Preventive & screening services”, Accessed January 11, 2022
- 20Medicare.gov, ”Hospice care”, Accessed January 11, 2022
- 21KFF.org, ”A Dozen Facts About Medicare Advantage in 2020”, Accessed January 11, 2022