Out-of-pocket costs are a big issue when it comes to choosing a Medicare plan. No plan pays for everything. Premiums, copays and deductibles are usually paid directly by members. Let’s take a look at how your plan options may impact what you’ll need to pay out of pocket for your healthcare.
How Original Medicare works
Original Medicare does not include coverage for prescription drugs or routine dental, vision and hearing care. If you choose Original Medicare, you can pay for those things out of pocket, or you can purchase a stand-alone prescription drug plan and a Medicare Supplement plan to beef up your coverage. These added plans help reduce your out-of-pocket costs, although you’ll pay a separate premium for each.
- Medicare Part A helps cover inpatient hospital care, skilled nursing facilities, and some home health services. Most people who paid Medicare taxes while working don’t have to pay a monthly premium for Part A.
- Medicare Part B helps cover medical services, including doctor’s visits and many preventive services. The standard Part B premium for 2023 is $164.90 or higher, depending on your income.
- Medicare Part D helps cover prescription drug costs. Costs for Part D depend on things like the plan you choose and what type of prescription drugs you require.
- Medicare Supplement Medicare Supplement (Medigap) plans may help pay out-of-pocket costs not paid for by Medicare Parts A and B, including copays, deductibles and coinsurance.*
How Medicare Advantage plans work
Medicare Advantage (MA) plans (also known as Medicare Part C) combine doctor, hospital and, in many cases, even drug coverage into one plan. Most MA plans also include coverage for routine dental, vision and hearing care, as well as other services. These plans are offered by private insurers who contract with the federal government. They are required by law to provide—at minimum—all the benefits of Original Medicare, with the exception of hospice care.
While you can’t add a Medicare Supplement plan to a Medicare Advantage plan, the added benefits MA plans provide help make up the difference when it comes to out-of-pocket costs. One great feature is the security of an annual limit on out-of-pocket costs, after which you pay nothing for covered services.
The trend is undeniable. According to the Kaiser Family Foundation, more than 28 million people were enrolled in a Medicare Advantage plan in 2022, accounting for 48% of the total Medicare population.1
By 2030, more than 51% of Medicare members are expected to choose Medicare Advantage plans, according to the Kaiser Family Foundation.2
*Costs for Medicare Supplement plans vary by the state you live in and the plan you choose. Medicare Supplement plans can only be paired with Original Medicare.