If you’re on Medicare and planning your annual budget, you’ll have to factor in higher out-of-pocket expenses. Some costs associated with each Medicare part, such as copays, deductibles, and premiums, are increased annually by the federal government.
These are the dollar amounts you can expect to spend in 2021 for Medicare parts A, B, C, D, and Medigap.
If you or your spouse have paid enough payroll tax to qualify for free Medicare Part A, you will not incur a monthly premium. Usually, this correlates to around 10 years of work.
Medicare Part B is the part of original Medicare that covers outpatient care, including wellness visits and preventive treatments, such as the flu vaccine. It also covers emergency room visits and services, even though emergency rooms are in hospitals. Part B pays for 80 percent of the Medicare-approved cost for these services.
Part B has a standard monthly premium that most beneficiaries are responsible for. In 2021, this monthly cost is $148.50. This is an increase of $3.90 over 2020.
You may pay less than the standard monthly premium if it is higherthan your Social Security cost of living adjustment.
In 2021, you will pay more than the standard monthly premium if your 2019 income exceeded $88,000 or if your combined income with your spouse exceeded $176,000. Your 2019 tax return is used to determine these added costs.
Medicare Part C is also known as Medicare Advantage. People who are eligible for original Medicare can purchase Part C plans from private insurers. These plans cover at least what original Medicare does, plus extra services, which vary by plan. These services can include prescription drugs, dental coverage, and vision care.
Part C costs and premiums vary significantly from plan to plan. Some plans offer a $0 monthly premium. Others provide more services but may cost hundreds of dollars monthly.
It’s important to shop around for Part C, making sure to look at the plans and providers that are available in your ZIP code. You can check out Medicare Advantage plans and their costs at Medicare.gov.
Keep in mind that you must pay the Part B premium monthly, even if you buy a Part C plan.
Here is a sample of premium costs for Medicare Part C in several U.S. cities:
|Plan name||Coverage area||Monthly premium|
|Kaiser Permanente Senior Advantage LA, Orange Co. (HMO)||Los Angeles, CA||$0|
|Kaiser Permanente Senior Advantage B Only South (HMO)||Los Angeles, CA||$396|
|WellCare Preferred |
|Aetna Medicare Value (PPO)||Chicago, IL||$0|
|AARP Medicare Advantage Choice (PPO)||Chicago, IL||$38|
Medicare Part D is an optional part of Medicare that covers 75 percent of the cost of prescription drugs. If you decide to go with original Medicare (parts A and B), you should strongly consider also signing up for Part D. Medicare Advantage subscribers cannot purchase Part D.
Part D premiums vary by plan. In 2021, you can expect to pay around $33.06 each month. If you made more than $88,000 in 2019 or your combined income with your spouse exceeded $176,000, you can expect to pay higher additional premiums.
Medigap is also known as Medicare supplemental insurance. It is sold by private insurers. Medigap helps cover some of the out-of-pocket costs you may incur, such as premiums, copays, and coinsurance.
As of January 1, 2020, Medigap plans could no longer cover the cost of the Part B monthly deductible for new beneficiaries. If you already have or had a Medigap plan, this new rule will not affect your current coverage.
You cannot purchase both Medigap and Medicare Advantage. You must choose one or the other.
The monthly range of Medigap plans varies by location and by the type of plan. Not every plan is available everywhere. A range of rates is shown in the table below:
|City||Monthly premium range|
|Los Angeles, CA||$34–$1,235|
In addition to monthly premiums, you can expect to pay additional, out-of-pocket costs.
Copays are the costs you may be required to pay at each doctor’s visit, or for prescription drugs. Copays can range from $0 and up.
A deductible is the out-of-pocket amount you must meet before your expenses are covered. Here is a rundown of the standard Medicare deductibles in 2021:
- Part A: $1,484 per benefit period
- Part B: $203 for the year
- Part D: varies by plan, but maxes out at $445 for the year
Coinsurance is the portion of each medical bill that you are responsible for.
For 2021, Part A coinsurance for hospital stays starts at day 61. From day 61 to 90, your coinsurance is $371 per day of each benefit period. From day 91 and up, your coinsurance is $742 per each lifetime reserve day (up to 60 days over the course of your lifetime). You are responsible for all costs after your lifetime reserve days have been used up.
For 2021, Part B coinsurance will remain at 20 percent of the Medicare-approved costs of most outpatient medical services.
- Medicare premium costs have gone up slightly for 2021.
- Even though these amounts are small, they can add up, taking a significant portion of your annual budget.
- Premium costs may vary based on the plan you are on.
- Other out-of-pocket costs you may incur include copays, deductibles, and coinsurance.
Medicare plan options and costs are subject to change each year.