It seems like it’s in the news almost every day – health-care costs are soaring. Are you safe if you’re on Medicare? It’s a complex situation, and no one can know what’s in the future, but we’ll take a look at how you might keep your Medicare health-care costs under control.
Why are health-care costs rising so high?
A 2017 report by Kaiser Health News correctly noted that Medicare Part B premiums would rise in 2018. At the same time, Social Security benefit payments have continued to increase only slightly in recent years. The report questions whether Social Security will adequately keep pace with Part B premiums in the years to come.
You may have noticed health-care costs going up. There could be many reasons for the general climb in health-care costs such as health insurance premiums. Under the Affordable Care Act (the ACA, or Obamacare), the government gave insurance companies subsidies to help offset the costs of insuring people with health problems. Also, the ACA diluted the “risk pool” for insurance companies by requiring everyone to have health insurance – so young, healthy people still had to sign up. Since the ACA was passed, Congress has cut off the subsidies, so insurance companies have higher premiums to help cover their increased costs.
What are the health-care costs under Medicare?
Your health-care costs under Medicare depend partly on the Medicare coverage you have.
If you have Original Medicare (Part A and Part B), Part A (hospital insurance) usually covers your care as a hospital inpatient. A deductible and/or coinsurance payments may apply. You typically don’t pay a monthly Medicare Part A premium if you’ve worked at least 10 years (40 quarters) while paying Medicare taxes.
Part B (medical insurance) may cover doctor visits, preventive care, lab tests, and certain medical equipment and supplies. A deductible and/or coinsurance or copayments may apply. The coinsurance is 20% for most services. Also, most people enrolled in Part B pay a monthly premium.
If you sign up for a stand-alone Medicare Part D Prescription Drug Plan along with Original Medicare (Part A and/or Part B), the plan might help with your prescription drug costs. A deductible and coinsurance or copayments may apply. You usually also pay a plan premium.
If you buy a Medicare Supplement (Medigap) insurance plan to work with Original Medicare (Part A and Part B), the plan might pay your Medicare coinsurance or copayments and other out-of-pocket costs. Some Medicare Supplement insurance plans may pay your Part A and/or Part B deductible, or part of it.
If you enroll in a Medicare Advantage plan, there are certain ways it might affect your health-care costs. Medicare Advantage plans deliver your Part A and Part B benefits (besides hospice care, which Part A covers). These plans may have deductibles and copayments or coinsurance. Some Medicare Advantage plans have premiums as low as $0 (but you must continue paying your Medicare Part B premium, no matter what Medicare Advantage plan you have).
- Most Medicare Advantage plans include prescription drug coverage. Many plans also offer additional benefits, like routine dental services. When you consider all the benefits of a Medicare Advantage plan, and compare the costs (premium, deductible, coinsurance/copayment) with those of Original Medicare, you may be able to find a plan that saves you money on health-care costs.
- Be aware, though, that Medicare Advantage plans are offered through private, Medicare-approved insurance companies. Your out-of-pocket costs may vary among plans.
- Also note that every Medicare Advantage plan has a yearly out-of-pocket limit on what you spend on covered health-care costs. If your costs reach a certain amount, the plan typically covers your health-care costs for the rest of that year.
So how can I save on Medicare health-care costs?
Since everyone’s situation is different, there’s no one coverage solution that would help everyone save on Medicare health-care costs.
- A Medicare Supplement insurance plan might save you money. Every standardized plan available in most states generally covers your Part A coinsurance for up to a year after your Part A benefits are used up. Most standardized plans also pay your Part B coinsurance amounts, although some plans only pay part of this amount. However, because Medicare Supplement insurance plans charge monthly premiums, you may want to think about how often you have doctor visits and hospital stays. You might have to do some math to figure out if a Medicare Supplement insurance plan would save you money on your health-care costs.
- A Medicare Advantage plan might save you money – but again, this is something you’ll need to figure out. Compare the deductible amounts, as well as the coinsurance or copayments, with those of Part A and Part B. Add the plan premium, if it charges one. But remember that Medicare Advantage Prescription Drug plans might help cover your medications; that’s something else that could save you money. And if the plan includes benefits you want or need, such as routine vision care, that could also count toward potential savings.
Why not get both Medicare Supplement insurance and Medicare Advantage? Because this combination won’t work! The two types of coverage aren’t designed to work together, and a Medicare Supplement insurance plan won’t cover your Medicare Advantage out-of-pocket expenses.
Benefits, premiums and/or co-payments/co-insurance may change on January 1 of each year.
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