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What Medicare Costs (2009)

Part A:

Premiums:

Most people do not have to pay a premium for Part A because they (or their spouse) paid for it while they worked.  If you do have to pay Part A premiums, the longer you or your spouse worked and paid into Social Security, the lower your premiums will be.

Hospital Costs:

For a hospital stay, you will pay a deductible of $1,068. This is not an annual deductible. You pay this deductible once each "benefit period." (A benefit period begins when you go into a hospital or skilled nursing facility (SNF), and ends when you have been out of the hospital or SNF for 60 consecutive days.) Your payment changes as you stay in the hospital.

Skilled Nursing Facility Costs:

For a skilled nursing facility stay, there is no deductible. Medicare will only cover up to 100 days in a skilled nursing facility though, and only if you meet some very specific criteria. Medicare will NOT cover your stay if you only need help with personal care (also called custodial care), such as bathing, eating, or dressing yourself. Here is what Medicare will pay.

Home Health Care Costs:

There is no deductible or co-payment for home health care.  However, you do need to meet a set of very specific criteria in order for Medicare to cover your home health care.

Hospice Costs:

There is no deductible or co-payment for hospice care. You only pay a small share of the costs of medications and inpatient respite care under the Medicare hospice benefit.

Part B

Premiums:

There is a monthly premium for Part B coverage; it is $96.40 in 2009. Your Part B premium will be higher if your income is $85,000 or more if you're single, or $170,000 or more if you're married. The higher your income, the higher your premium. Your Part B premium is usually deducted from your Social Security check.

Deductible:

You will also pay an annual deductible of $135 in 2009. That means when you receive services covered by Part B, you will pay $135 before Medicare starts helping you pay.

Co-Insurance:

Once you have paid your deductible, you will then pay 20% of the cost approved by Medicare for most Medicare Part B services. (For outpatient mental health service, you will 50% of the costs.)

Accepting Assignment:

To keep your Part B costs down, make sure that your health-care providers take Medicare and "accept assignment." Doctors or other providers who accept assignment agree to accept the amount that Medicare will pay for a visit or service (called the Medicare-approved amount) as payment in full. So you would only pay the 20% co-insurance.

Providers who see people with Medicare, but do not accept assignment can charge you more. They can charge you up to 15% more than the Medicare-approved amount, which means that you would pay your usual 20% co-insurance plus up to an extra 15%. For example, if the Medicare-approved amount for a doctor visit was $100 but your doctor did not accept assignment, he could charge you up to $115 for your visit. You would pay $35 (20% of the $100 Medicare-approved amount, plus the extra $15 not covered by Medicare).

Providers can also "opt out" of the Medicare program. That means that they can charge you whatever they like for a service and will not bill Medicare. If you see a provider that has opted out of Medicare, you will have to pay the full cost of the service you receive; Medicare will not pay any part of the cost. Providers that opt out of Medicare should have you sign a contract saying that you understand that you will have to pay the full cost of the service.

Filling In The Gaps

Some people may have coverage from a current or former employer or union. This employer-sponsored coverage can help to pay for services and costs that Medicare does not cover.

Other people may purchase a Medicare supplemental insurance, known as a Medigap policy. There are 10 different standardized Medigap plans, labeled A-J (except in Massachusetts, Minnesota and Wisconsin). Each covers different services. The cost of a Medigap policy depends on the type of Medigap plan and the company you bought it from.

What If I Can't Afford These Costs?

There is help available if you have limited income and resources and cannot afford Parts A and B.

Part D

If you do not qualify for extra help with costs,

You will pay:

• Monthly premiums
• Yearly deductible (if any)
• Co-pay or co-insurance for each prescription

If you do qualify for extra help with costs because of your limited income,

You will pay:

• Low or no monthly premiums
• Low or no yearly deductible
• Low or no co-pay or co-insurance for each prescription

Learn more about Part D costs.

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