It’s easy to get wrapped up in the day-to-day costs of everyday living. Gas, groceries, your morning coffee. But it’s just as important to understand what you’re spending long-term, especially when it comes to health care. Unfortunately, for many entering Medicare eligibility (or even those who currently have it), there’s a lack of comprehension regarding Medicare costs – and how they can impact retirement savings.
You might be wondering, “What exactly does Medicare cover?” We’ve got a breakdown of the different types of costs Original Medicare covers (Part A and Part B) and what comes out of your own pocket, so you can prepare and plan ahead.
Premiums: Your premium is the monthly payment owed for your policy – and there are two separate premiums for Part A and Part B. Here is how it works for most:
- Part A: While there are exceptions, most people do not have to pay a premium for Part A.
- Part B: The standard Part B premium amount for most people is $121.80 per month. This might change depending on the gross income reported on your tax return.
Deductibles: This is the out-of-pocket amount paid before Original Medicare covers any expenses.
- Part A: For each benefit period, you’ll pay $1,288 for your Part A hospital inpatient deductible in 2016.
- Part B: You’ll pay $166 per benefit period for Part B in 2016.
Copays or coinsurance: Your copay is a fixed, flat amount of money paid for a specific service, while your Medicare insurance pays the rest of the cost. On the other hand, coinsurance is a percentage of the total cost that the insured will pay. For example, with Part B, once you’ve met your deductible (mentioned above), you’ll be responsible for 20% of the costs for the service you received.
Hospital Stays: Which is where we get into hospital stays. You’ll pay $0 from days 1-60 of your hospital stay (per benefit period). But after day 60, things change.
- Days 61-90 spent in the hospital: $322 is due per day of each benefit period in 2016.
- Days 91 and beyond: $644 per each “lifetime reserve day” (up to 60 days over your lifetime) in 2016.
- Beyond your lifetime reserve days, you’ll be expected to pay all costs.
Like we said before – you have to consider these Medicare costs in the larger picture of your financial situation. While Original Medicare comes with a variety of costs, a Medicare Supplement plan can help you pay for some of these costs – out-pocket-expenses in particular.
If you’re considering exploring your Medicare Supplement options, head to the EasyMedicareSolutions™ tool to determine which coverage plan suits your lifestyle and health care needs.