Cost of Medicare

There are certain costs involved with Medicare that you must be aware of. These costs include premiums, deductibles, copayment/coinsurance, and other out-of-pocket costs.

Medicare Premiums

Premiums are a monthly payment you are charged for continued coverage.

Medicare Deductibles

Deductibles are a yearly payment you must make before your coverage begins. The higher your deductible, the less your premiums will be, and vice versa.

Copayments

Copayments are a percentage contribution the policyholder must make when they receive a covered benefit. For example, you go to the doctor and the bill comes to $200. If your copayment rate is 20%, you will pay $40 out-of-pocket, and Medicare covers the rest.

Coinsurance

Coinsurance is a flat, non-percentage contribution. Say, for example, you have Part D and pick up a preferred generic prescription. You will have a coinsurance fee between $1 and $3.

The Costs of Original Medicare

You will more than likely not be required to pay a monthly premium for Part A. You are eligible for premium-free Part A if you have worked at least 10 years paying Social Security taxes in the U.S., or if your spouse receives premium-free Part A.

Under Part A, you will be required to pay a deductible. As of 2021, the deductible is $1,484 per benefit period.

The Cost of Part D

Specific costs for Part D will vary based on a few factors. Your premium, for example, will be different depending on the provider you choose (the maximum, however, is $445 as of 2021). Then, your copayments and coinsurance fees will depend on the drug itself.

There are 5 categories, or tiers, that determine the out-of-pocket cost of your prescription:

  • Tier 1: $1 to $3 Coinsurance, Covers Preferred Generic Prescription Drugs
  • Tier 2: $7 to $11 Coinsurance, Covers Generic Drugs
  • Tier 3: $38 to $42 Coinsurance, Covers Preferred Brand Name Drugs
  • Tier 4: 45% to 50% Copayment, Covers Non-Preferred Drugs
  • Tier 5: 25% to 33% Copayment, Covers Specialty Drugs

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