Making Sense of Medicare, Part 2 – The Cost

Last week, in Part 1, I reviewed the 5 pieces to Medicare and the two main ways to get Medicare coverage.  This week, in Part 2, I will outline the cost for the two routes to get Medicare. With Medicare open enrollment around the corner (starting October 15th), now is a good time to review your coverage and consider any changes.

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The cost for each of the 5 pieces:

1. Part A – $0 (usually free if you have paid into Medicare)  

2. Part B – $165/month for most (can go as high as $560/month based on income) 

3. Part C – $0-$200/month + Part B premium (estimated based on the plan selected) 

4. Part D – $10-$85/month (depending on plan) + $0-$77 based on income 

5. Supplemental Coverage (“Medigap”) - $50-$300/month (depending on plan) 

There are two main ways to get Medicare:  

1. Original Medicare – This includes Part A and Part B. You can also add Part D and Supplemental Coverage for more comprehensive coverage. Based on the numbers listed below, this route could cost as little as $200/month total or as high as $1,000/month or more. I most often see retirees paying around $300-$400/month for comprehensive coverage that results in little to no out-of-pocket costs.  

2. Part C (also known as Medicare Advantage) – An “all in one” alternative to Original Medicare. This will range from $0-$700/month or more. I most often see retirees paying around $50-$200/month for these policies. While it is significantly cheaper than Original Medicare there are some drawbacks such as a limited choice of doctors and higher out-of-pocket costs. Be sure to review the plan carefully before going this route! The Center for Medicare & Medicaid Services puts out a great brochure on the benefits and costs of using an advantage plan.

Happy Planning,

Alex 

This blog post is not advice. Please read disclaimers.