One of the biggest misconceptions you'll hear in the context of Medicare is that the program doesn't cost enrollees a dime. That's just not even close to being true.
The reality is that Medicare costs are something all seniors should know to budget and plan for. But if you're clueless about the expenses you'll face under Medicare, here's an overview.
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1. Part A itself is usually free
Medicare Part A covers hospital care, and most enrollees do not pay a monthly premium for Part A. But you should know that if you wind up in the hospital needing care, you'll be charged a deductible for each stay.
You should also know that that deductible will only cover your first 60 days in the hospital. If your stay extends beyond that, you'll be looking at paying daily coinsurance.
2. Part B charges a premium, and signing up late could raise your costs
Unlike Medicare Part A, Part B, which covers diagnostics and outpatient services, charges enrollees a monthly premium. If you're signed up to get Social Security benefits, those Part B premiums will be deducted from your benefits automatically.
The standard monthly premium for Part B will be $174.70 in 2024. Right now, it costs $164.90 a month to have Part B coverage if you're paying the standard premium.
You should also be aware that if you're late enrolling in Medicare for the first time, you'll be assessed a surcharge on your Part B premiums. And that penalty will remain in effect permanently, driving up your costs for life.
Separately, higher earners are charged a surcharge for Part B coverage on top of the standard premium. This isn't a penalty so much as an income-related adjustment.
3. Part C could give you added benefits -- but there are drawbacks, too
Medicare Part C, also known as Medicare Advantage, is an alternative to original Medicare. With Part C, you generally get hospital, outpatient, and drug coverage all in one plan. And you may find that Medicare Advantage is less expensive for you than original Medicare.
But to be clear, there's no single Medicare Advantage plan. Rather, you choose a plan based on where you live, and as such, your costs will vary by plan.
In some cases, you can benefit from Medicare Advantage by getting access to added benefits beyond what original Medicare covers. But Medicare Advantage also limits you to a certain provider network, and straying from that network could prove costly.
4. Part D could be quite expensive, depending on your medications
The cost of Medicare Part D, which covers prescription drugs, hinges on the plan you choose. Your costs under your plan will also depend on the specific medications you take. You can shop around for a plan that offers the best coverage, given your specific drug regimen.
Like Part B, there can be penalties for going too long before enrolling in Medicare Part D. And higher earners are subject to surcharges based on their income.
Know what to expect
Clearly, all of this is just an overview of the costs Medicare enrollees tend to face. But if you're getting closer to signing up for Medicare, it's really important to read up on those costs and try to figure out what numbers you might be looking at. You don't want to risk having to skimp on healthcare because you can't afford your coverage under Medicare.
