When discussing about Medicare, the topic about cost is inevitable. This is also where out-of-pocket expenses come in. The phrase out-of-pocket in the field of Medicare is defined to be any cost that one has to pay by himself. These expenses may include premiums (learn how to pay for your premiums), deductible and coinsurance, hospital stays, supplemental insurance, prescription drug coverage, late enrollment penalties, and other medical services that are not covered.
Out-of-Pocket Medicare Expenses
Premiums
Although the majority of retirees pay a standard amount of premium (Medicare Part B), some Medicare beneficiaries may pay more. Retirees who sign up for Medicare last year and Medicare beneficiaries who have not yet claimed Social Security will be charged $121.80 per month for Medicare Part B. High-income retirees bringing in more than $85,000 ($170,000 for couples) will also pay higher Part B premiums, ranging from $170.50 to $389.80 monthly depending on their income.
Deductible and coinsurance
Medicare Part B has a $166 deductible in 2016. After that, Medicare beneficiaries will have to pay 20 percent of the cost of most doctors’ services. There are some services Medicare beneficiaries are eligible for that are not subject to these cost-sharing requirements, such as a wellness visit once every 12 months and some preventative care services such as flu shots and cardiovascular disease screenings.
Hospital stays
If you are hospitalized, Medicare Part A has a $1,288 deductible. If you end up spending more than 60 days in the hospital it will cost you $322 per day for days 61 through 90 and $644 for up to 60 lifetime reserve days after that. Once your lifetime reserve days are used up, you will become responsible for your own hospital expenses.
Supplemental insurance
Some retirees buy supplemental insurance policies in order to cover some cost-sharing requirements of traditional Medicare and some additional services. A Medigap policy can help to make health care costs in retirement more predictable. Many plans will cover some of Medicare Part B’s out-of-pocket costs and longer hospital stays than traditional Medicare.
Prescription drug coverage
Seniors can choose among several plans for their Medicare Part D prescription drug coverage where each offers different prices and coverage. The average premium was $41.46 per month in 2016, and plans are allowed to charge deductibles of up to $360. Premiums are higher for people who go 63 or more days without prescription drug coverage after becoming eligible for Medicare and for high-income Medicare beneficiaries. To get the best value for your money, you will need to continue to compare Medicare plans each year in retirement because the prices and covered medications change annually.
Late-enrollment penalties
You can first sign up for Medicare during the seven-month initial enrollment period that begins three months before you turn 65. If you don’t sign up for Medicare during this initial enrollment period, you could be charged higher premiums for the rest of your life.
Some medical services aren’t covered
You will need to budget for commonly needed medical services that Medicare doesn’t cover, including eyeglasses, contact lenses, dental care and hearing aids.
By understanding the plan that you sign up for, you’d be able to make the most out of the benefits that Medicare can provide. Failing to do so will lead you to out-of-pocket expenses such as the ones mentioned above.