How Much Does Medical Insurance Cost? What You Need to Know About Premiums

Before enrolling in health insurance, make sure you understand the cost of health insurance, so you’re prepared for additional expenses.

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Key takeaways:

• Most Medicare Part A enrollees do not pay monthly premiums, but you are responsible for certain out-of-pocket costs determined by the length of your hospital stay
• The cost of Medicare Part B you pay each month depends on your income, but the standard premium for 2020 is $144.60 per month. Medicare Part B also has out-of-pocket costs
• Medicare Part C plans are purchased from private insurance companies, and the monthly premium depends on the plan chosen and where you live. On average, monthly premiums for these plans range from $0 to a maximum of $200 or $300 per month
• If you choose a stand-alone Medicare Part D plan to reduce out-of-pocket costs for prescription drugs, the average Part D premium in 2020 is $32.74 per month
• Medicaid programs vary by state, with as many as 10 plan options in 47 states.
• Beginning January 1, 2020, Medicare Supplemental Plans C and F will no longer be available to those newly enrolled in Medicare

If you’re eligible for Medicare (or soon), you may be asking: How much does Medicare cost each month? Here’s need-to-know information to help you financially prepare for future medical bills.

Medicare Whether people 65 and older and younger people with disabilities are eligible for Medicare. However, despite being a form of health insurance, you usually pay less than your health insurance costs while you are working.

This article will discuss how much you can expect to pay for the different parts of health insurance depending on your coverage.

What types of medical insurance are there?

Medicare has four parts – Parts A, B, C, D. Parts and Part B are hospitalization and medical insurance, respectively. This is also known as original health insurance.

Medicare Part C, or Medicare Advantage, is the Medicare you buy from a private insurance company. Meanwhile, Medicare Part D is prescription drug coverage.

There is no fixed price for health insurance. How much each person pays for Medicare depends largely on whether they have Original Medicare or Medicare Part C.

Other factors that affect the cost of Medicare include your income and the Medicare taxes you pay.

How Much Does Medicare Part A Cost?

Medicare Part A, or hospital coverage, covers a variety of services such as:

• Inpatient Care
• Hospice
• home health care
• Skilled Nursing Facility Nursing

One benefit of Medicare Part A is that most enrollees don’t have to pay monthly premiums. You are eligible to enroll in Part A three months before you turn 65 until three months after you turn 65.

Whether you’re willing to pay extra for Part A each month usually depends on your work history. As long as you have worked in the United States for at least 10 years, which is equivalent to 40 quarters, you can get Part A for free.

If you have worked for less than 10 years, you will pay extra based on the number of quarters worked. E.g:

• If you worked 30 to 39 quarters in the U.S., your Part A allowance (2020) is $252 per month.
• If you work fewer than 30 quarters in the U.S., your Part A allowance (2020) is $458 per month.

Remember, other costs are also associated with Medicare Part A. You are responsible for certain out-of-pocket costs, depending on the length of your hospital stay. Here’s what you need to pay:

• $1,408 deductible per benefit period
• Day 1 to Day 60: $0 coinsurance per benefit period
• Days 61 to 90: $352 coinsurance per benefit period
• Day 91 and beyond: After 90 days of each benefit period, a total of $704 per Lifetime Reserve Day

You will be responsible for all expenses once you exceed the lifetime reserve day.

How Much Does Medicare Part B Cost?

Medicare Part B also has out-of-pocket costs. This part of health insurance covers preventive services such as routine checkups, doctor appointments, ambulance services, laboratories, testing, and other medically necessary services.

Your monthly payment for Medicare Part B is based on your income. However, as of 2020, the standard premium is $144.60 per month.

Remember, if you have a higher income level, you will need to pay higher insurance premiums. The Social Security Administration uses your adjusted gross income to determine your premiums. In most cases, though, many pay standard premiums.

You are eligible to pay standard premiums if you earn less than $87,000 a year as an individual tax filer and less than $174,000 a year if you file a joint tax return.

Medicare Part B has a $198 deductible, and after your deductible is met, you are only responsible for 20% of Medicare-approved Part B services, such as doctor appointments and outpatient treatment.

How Much Does Medicare Part C Cost?

You can purchase a Medicare Part C (Medicare Advantage) plan through a private insurance company authorized to sell Medicare plans.

Medicare Advantage is useful if you are seeking additional health benefits. Part C includes Medicare Parts A and B benefits, as well as other services such as:

• Vision
• dentistry
• hearing
• Prescription Drug Plan (Optional)
• Health benefits like free gym memberships
• Transportation to and from medical appointments

Because you’ll be purchasing Medicare Part C from a private insurance company, you may have to pay monthly premiums. It depends on the program selected and where you live.

On average, monthly premiums for Medicare Advantage plans range from $0 to a maximum of $200 or $300 per month. Additionally, Medicare Part C Advantage plans have annual deductibles and coinsurance.

Always compare different plans and estimate your cash outlay to determine which one is right for you.

How Much Does Medicare Part D Cost?

Medicare Part D prescription drug plans are included in some Medicare Advantage plans. However, if you are enrolled in Original Medicare, you can also purchase stand-alone coverage.

If you choose a standalone strategy to reduce your out-of-pocket purchases of prescription drugs, the average monthly premium for Medicare Part D (2020) is $32.74. That’s down from 2019 costs.

How much does Medicaid cost?

If you are enrolled in Original Medicare, you may also choose to enroll in a Medicaid supplemental insurance plan.

The purpose of these plans is to cover some expenses that Medicare does not cover. Also known as a Medicaid policy, this plan pays for most of your out-of-pocket costs, such as co-pays, coinsurance, and deductibles.

Medicaid coverage varies by state, with as many as 10 Medicaid plans to choose from in 47 states. It’s important to know that starting January 1, 2020, Medicaid plans sold to new Medicare enrollees will no longer pay the Part B deductible. As a result of this change, Plans C and F will no longer be available to those newly enrolled in Medicare.

However, if you had health insurance coverage before January 1, 2020, you can keep your plan or buy one of these discontinued plans. The best time to get Medicaid is six months before turning 65.

Find the right health insurance plan for you

To find the Medicare Advantage plan that’s right for you, or to compare Medicare and Medicare Part D plans, contact a licensed insurance agent who can help guide you through the enrollment process.