Medicare Cost and Coverage 

Part B charges a monthly premium.  The amount you pay can vary depending on your taxable income from two years prior to the current year.  Part B premium is deducted from your monthly Social Security check, or you pay Medicare directly.

You must pay an annual deductible before Part B starts paying a share of your costs.

You typically pay a coinsurance of 20% of the Medicare-approved amount for Medicare covered services.  Medicare pays the remaining 80%.

Part B may charge a premium penalty if you don’t sign up when you are first eligible.  You could pay an additional 10% of the premium amount for each full 12-month period enrollment is delayed.  The penalty is charged every month for as long as you have Part B.

There are several costs you may pay:  a monthly premium, a deducible, copay and coinsurance.  These costs vary by plan and provider since each plan sets their own cost sharing amounts.  Stand-alone prescription drug plans charge a premium, and the amount will vary based on the plan.  Some plans may charge a deductible and others will not.  Medicare sets a maximum annual deductible amount each year.  Most plans require a copay each time you fill a prescription for a covered medication.  Copays also will vary between plans.  Certain medications or drug tiers may require a coinsurance payment each time you fill your prescription.

There are four cost stages to Part D coverage.  You pay a share of the cost of your medications in each stage up to a limit.  You may not reach all the stages and the cycle restarts each year.

·         Annual Deductible – You pay for your medications until you reach the plan deductible.  If your plan doesn’t have an annual deductible, your coverage starts with the first prescription you fill.

·         Initial Coverage – You pay a copay or coinsurance for your prescriptions and your plan pays the rest.  You stay in this stage until your total drug costs reach the limit set by Medicare each year.

·         Coverage Gap (Donut Hole) – You pay 25% of the cost for both brand-name and generic drugs during this stage.  You stay in this stage until you reach your total out-of-pocket costs established by Medicare each year.

·         Catastrophic Coverage – You pay a small copay or coinsurance amount for your prescriptions.  You stay in this stage for the remainder of the year.

It is important that you enroll in Part D coverage when you are first eligible.  If you fail to do so, you could pay an additional 1% of the average Part D plan premium for each month you delay enrollment.  The penalty is charged every month for as long as you are enrolled in Part D.

·         Part A hospital coinsurance

·         Part B coinsurance or copays

·         Cost of blood transfusions (first 3 pints)

·         Costs for 365 extra hospital days

·         Hospice care coinsurance

 Some Medigap plans also help pay for:

·         Part A deductible

·         Part A skilled nursing facility care      coinsurance.

·         Part B deductible (Not available to beneficiaries newly eligible for Medicare after January 2020)

·         Part B excess charges

·         Cost of foreign travel emergency care up to plan limits

Every insurance carrier must follow the standardized structure for Medigap plans set by Medicare. Regardless which insurance carrier you purchase your Medigap plan from, their plans feature the same coverage as all the other insurance carriers. The monthly premium will be the only difference.