Estimate Medicare Costs
Estimating your Medicare costs now is a smart way to plan for your future health care needs, and may help you find the plan that's right for you.
It's important to understand the many cost factors, which may vary from one plan to the next. Typical costs can include:
- Premium: A monthly fee you pay to a health plan for coverage.
- Copay: A fee you pay at the time you receive a covered health service. A copay is generally a pre-set, fixed dollar amount (for example, a $15 copay for an office visit).
- Coinsurance: Coinsurance is a charge you must pay for certain health services covered by your plan. Coinsurance is usually stated as a percentage of eligible expenses. For example, a plan might pay 75% and you would pay 25% for a covered service.
- Deductible: The pre-set, fixed amount you must pay for healthcare costs before the insurance company or Medicare begins to pay. Note: In many cases, a higher deductible means a lower premium payment for the same coverage.
- Maximum out-of-pocket costs: The maximum amount of money a plan member has to pay during a specific period.
Questions to consider when looking for a Medicare plan
- How often do you visit the doctor?
If you don't visit the doctor very often, you may decide to choose a plan with a lower monthly plan premium and a higher copay.
If you do visit the doctor regularly, you may decide to pay a higher monthly plan premium for a plan that offers a lower copay or a lower deductible.
- How many times you have been hospitalized or foresee being hospitalized?
If hospital visits are rare, you might consider a plan that offers a lower monthly plan premium in exchange for a higher deductible.
- What's the maximum amount you could afford to pay out-of-pocket in one year for premiums, copays, coinsurance and deductibles?
If you want to limit your out-of-pocket expenses or want catastrophic coverage for your prescription drug spending, you may want a plan that offers an annual out-of-pocket maximum.
- Would you rather pay a monthly premium instead of paying at each doctor visit?
If you prefer not to pay copays and coinsurance each time you visit the doctor, you might choose a plan with a monthly plan premium that has limited copays for office visits.
- Would you rather pay a higher monthly premium for predictable coverage, lower out-of-pocket expenses and a choice of doctors?
If these coverage options are important to you, you may want to consider plans with a higher monthly premium, plans without a provider network or plans with options to visit out-of-network providers.
Cost differences across Medicare plans
Main differences among the Medicare plans include:
- How much you pay in premiums, out-of-pocket costs and deductibles.
- How much choice you have to see your own doctors or hospitals.
- Whether you can go directly to a specialist without a referral.
- Whether you get prescription drug coverage.
- Whether you get additional benefits, such as routine vision or hearing coverage.
- Whether you're covered for non-emergency care when you travel.
Find out how these costs are handled before you choose a plan.
Consider your prescription drug costs
Even if you do not take prescription medications now, the possibility of needing them can increase each year. To help decide if you want prescription drug coverage, answer these questions:
- Do you have more than one or two prescriptions?
- How much do you currently spend on prescription drugs, including copays, coinsurance and/or non-covered drugs?
- Does the plan you are interested in include your medications on its list of covered prescription drugs (the formulary)?
- Would you like to be covered for future drug needs and avoid possible cost penalties, even if you might not need the coverage immediately?
Prescription drug coverage is available to all people with Medicare. How much you pay for coverage will depend on the type of plan you choose and when you sign up.
If you currently take prescription drugs
It may be a good idea to select a plan that offers drug coverage. Keep this information in mind when choosing a plan:
- Make sure that the coverage applies to your specific medications. To find out if your drugs are covered by a plan, review the plan's formulary (prescription drug list). Many plans have their formularies on their website.
- Check the plan benefits to find out your prescription drug copays. Drug copays vary from plan to plan.
- Check the plan benefits to see if there is a deductible for drug coverage. Some plans have deductibles specifically for prescription drugs.
If you do not take prescription drugs at this time but are eligible to enroll in Part D, you may want to consider enrolling now in order to be covered for the future.
The Part D late enrollment penalty
If you select a plan that does not cover prescription drugs, you may end up paying a Part D late enrollment penalty if you change to a plan that covers prescription drugs later.
Once you enroll in Part D, the accumulated penalty amount becomes a fee added to the total monthly premium you pay for the plan for as long as you're enrolled. Learn more about the Part D late enrollment penalty.
It's important to consider enrolling in a Part D plan as soon as you are eligible, regardless of your current prescription drug use.
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