The Top 6 Things Medicare Beneficiaries Pay For Out-Of-Pocket & How You Can Save More Next Year

Did you know that out-of-pocket costs top the list of considerations when picking a Medicare plan? In fact, based on a report by eHealth, around 29% of Medicare beneficiaries say finding a plan with affordable out-of-pocket costs is the most important thing to them, while 27% say affordable premiums are most important, and 26% cite coverage for their preferred doctors and hospitals. So, if you’re like most Medicare beneficiaries, and are living on a fixed income, you’re looking to save as much money as possible. Before the Medicare AEP is over (December 7), make sure to review the following top 6 out-of-pocket costs you can expect next year, so you can choose the plan that will save you the most money. 

1. Premiums

You will have a monthly Medicare premium to pay:

illustration of an invoice being handed to another hand tats holding money

  • Part B premiums for 2022 have not been released yet, but for 2021, they were $148.50/month, and you can expect next year to be slightly more. 
  • There generally is no monthly premium for Part A if you worked 40 quarters or 10 years. If you worked less than that, you can expect to pay a monthly premium ($471 per month for 2021).

2. Deductibles & Coinsurance

Deductibles are the amount  you will pay out-of-pocket before your coverage begins and Medicare starts paying for your medical services. For each benefit period, you will need to meet a Part A deductible (for 2021 it was $1,484); you will also need to meet a Medicare Part B deductible each year, which was $203 in 2021. 

You will also be responsible for Medicare coinsurance:

  • Part A: After 60 days in a hospital, Medicare charges a coinsurance per day for days 61-90. After 20 days in a skilled nursing facility, you will have to pay coinsurance each day for days 21-100. After 100 days, you pay all costs out-of-pocket.
  • Part B will only cover 80% of your medical expenses, after you meet your deductible. This leaves you to account for the other 20% out-of-pocket. 

3. Prescription Coverage

illustration of a white prescription bottle with a blue cross in the middle and blue circle around it
Prescriptions can cost a lot of money if you have chronic conditions, but you can save if you compare plans.

If you have a Part D plan, your monthly premiums will be based on which plan you purchased, and your prescription drug coverage costs will depend on which formulary your medication is in. Different prescription drug plans will place medications on different tiers, so your drugs might cost more or less depending on which plan you choose. 

4. Late-enrollment Penalties

You are supposed to enroll in Medicare when you turn 65, and if you miss the deadline to enroll,  you will face a late enrollment penalty. You can expect to pay:

  • Part A: You will pay 10% of your monthly premium for twice the number of years you were eligible but did not enroll in Medicare.
  • Part B: You will pay 10% of your monthly premium multiplied by the number of years you went without Medicare after you were initially eligible.

5. Non-covered Services

You need to budget for common medical needs that Medicare does not cover, such as routine eye care, dental care, and hearing aids. 

6. Medicare Supplement Plan

Many Medicare beneficiaries  purchase a Medicare Supplement Plan because it covers the Part B coinsurance (the 20% of medical expenses you owe out-of-pocket), amongst other services. These plans are relatively affordable, saving you money on your out-of-pockets expenses for a low monthly premium. There are 10 different plans to choose from, so you can pick the one that meets your specific medical needs and budget. 

The Medicare Annual Enrollment Period is a very important time when you can look for a plan that better suits your needs, and save some money. The AEP is coming to an end, so now is the time to think about your budget, review the out-of-pocket costs mentioned, and find ways you can cut down on costs, such as by purchasing a Medicare Supplement Plan. If you need help comparing plans, EZ can help – we will provide you with an agent who will compare plans in your area for free. No obligation. To get free instant quotes for plans that cover your current doctors, simply enter your zip code in the bar on the side, or to speak to a local licensed agent, call 888-753-7207.

Medicare Vs Medicaid: Know The Difference

Medicare and Medicaid. These two words are so much alike that many people get them confused. They are both government-sponsored health insurance programs, but that is where the similarities end. One of these programs is for adults 65 and older, while the other is for low-income individuals. It is important to understand the difference between the two, so when it is time to enroll in Medicare, you do not miss the opportunity and end up facing a penalty.

red medical bag in a blue circle
Medicare Part A and B will help pay for medical services including hospital insurance and medical insurance.

What is Medicare?

Medicare is a federally-funded program run by the federal government. It is funded by taxpayer dollars as well as by premiums that are paid by beneficiaries. It covers all adults 65 or older; unlike Medicaid, Medicare eligibility is not determined by your income. When you turn 65, you are eligible for Medicare coverage that is broken down into 2 parts: Part A and Part B. 

  • Part A is hospital insurance that covers inpatient medical services and supplies. You can receive premium-free Part A as long as you or your spouse worked and paid Medicare taxes for at least 10 years. 
  • Part B is medical insurance and covers outpatient medical services and supplies. It has monthly premiums that you must pay in order to receive coverage. 

When You Can Enroll

You can enroll in Medicare during the 7 month window around your 65th birthday, which includes the 3 months before your birth month, the month of your birth date, and the 3 months after your birth month. If you miss your Initial Enrollment Period, you can enroll during the General Enrollment Period (January through March), but you will have to pay a penalty fee. Your monthly premium may go up 10% for each 12-month period you could’ve had Part B, but didn’t sign up. In most cases, you’ll have to pay this penalty for as long as you have Part B.

The only exception to the Part B late penalty fee is if you or your spouse is still working and you have group coverage through your employer or union. Then you can qualify to enroll in Medicare Part B during an 8-month Special Enrollment Period after losing your employer-based coverage. 

Medicare Supplement Plans illustration of money bills and a gold coin

Medicare Part B generally covers 80% of your medical expenses, meaning you will have to pay the other 20% coinsurance out of pocket. Depending on your situation, these expenses can add up to  a lot of money throughout the year. In order to help with these expenses, you can choose to purchase a Medicare Supplement Plan when you enroll in Medicare. These plans will pay the 20% coinsurance that Original Medicare does not pay, as well as other healthcare expenses, like deductibles and copays. 

What Is Medicaid?

black and white picture of a pregnant woman's belly with a little girl laying her head against the belly.
Medicaid qualifications are dependent on family status, pregnancy, and more.

Medicaid is a health insurance program that is jointly funded by states and the federal government. It is voluntary and is offered based on income, generally to low-income individuals or families. Medicaid qualifications are broadly based on:

  • Income
  • Disability
  • Pregnancy
  • Age
  • Household size
  • Family status

Medicaid covers major medical expenses and is required to cover certain care. Medicaid beneficiaries pay premiums, deductibles, copays and coinsurance. 

Medicare and Medicaid may sound the same, but when it comes to coverage and eligibility, they are not the same at all. When you are approaching age 65, it is important to know how to enroll in Medicare, because the longer you push it off, the more you will pay. In order to get properly insured, contact an EZ.Insure agent. We will provide you with expert Medicare help, and even compare Medicare Supplement Plans for free. We want to make the transition from regular health insurance to Medicare as smooth as possible. In order to do this, we will go over your needs and compare all Medicare Supplement Plans to find a plan that will save you hundreds of dollars each year. 

To compare quotes within minutes, simply enter your zip code in the bar above, or to speak directly with an agent, call 888-753-7207.