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You’ll want to take all of that into account when choosing a Medicare plan.

People become eligible for Medicare when they reach 65. Also, people who collect Social Security disability payments for a period and people with end-stage renal disease or ALS are eligible for Medicare.

Eligible Medicare beneficiaries choose between Original Medicare and Medicare Advantage. Original Medicare is Parts A and B. Medicare Advantage is Part C.

Key Takeaways

  • Medicare Part A is free to most Americans, as long as you paid at least 40 quarters of Medicare taxes.
  • Medicare Part B costs at least $164.90 monthly depending on your household income.
  • Medicare Advantage costs vary by plan and many insurance companies offer premium plans that could have a zero-dollar monthly premium.
  • Part D monthly premiums vary as well.

Original Medicare covers you for hospital and physician costs, but it doesn’t have prescription drug benefits. You can add on a Part D prescription drug plan to help with those costs.

Medicare Advantage, meanwhile, not only covers hospitals and physicians services, but also usually provides prescription drug benefits. Offered by private insurance companies, Medicare Advantage may also provide supplemental benefits, such as vision, dental and adult care. When comparing Medicare Advantage plans, check to see the plans’ additional benefits to see which one makes more sense for you.

Let’s look at the different Medicare premiums and deductibles for Medicare plans:

Medicare premium for 2023

Type of planWhat it coversAverage Medicare premiumsDeductible
Part AHospitals and skilled nursing facilitiesUsually $0$1,600
Part BPhysicians, outpatient care, medical supplies and preventive servicesAt least $164.90After you reach the deductible, you’re responsible for 20% of the costs.
Part CMedicare plans through private insurers; which can include supplemental benefits, including prescription drug coverageVariesVaries
Part DPrescription drug coverageVaries N/A

Source: Centers for Medicare and Medicaid Services

Some caveats to mention:

  • Part A — Most Americans are eligible for premium-free Part A coverage when they reach 65 or for people with qualifying disabilities such as ALS or end-stage renal disease. However, people who haven’t worked and paid Social Security taxes may have to pay premiums. Medicare provides premium-free Part A for Americans who paid at least 40 quarters of Social Security taxes. Those who paid taxes for fewer than 30 quarters must pay $506 monthly; people who paid taxes between 30 and 39 quarters must pay $278 monthly. 
  • Part B — People with incomes more than $97,000 or $194,000 for joint filers pay higher Part B premiums. Once you reach your deductible, you pay 20% of Part B costs. 
  • Part D — The amount you pay for Part D deductibles, copayments, and/or coinsurance varies by plan. Look for specific Medicare drug plan costs, and then call the plans you’re interested in to get more details. 

What is the Medicare Part B premium for 2023?

If your yearly income in 2021 (for what you pay in 2023) was:
File individual tax returnFile joint tax returnFile married & separate tax returnYou pay each month (in 2022)
$97,000 or less$194,000 or less$97,000 or less $164.90
Above $97,000 up to $123,000above $194,000 up to $246,000Not applicable $230.80 
Above $123,000 up to $153,000Above $246,000 up to $306,000 Not applicable$329.70 
Above $153,000 up to $183,000Above $306,000 up to $366,000 Not applicable$428.60 
Above $183,000 and less than $500,000Above $366,000 and less than $750,000Above $97,000 and less than $403,000$527.50
$500,000 or above$750,000 or above$403,000 or above$560.50

Source: Centers for Medicare and Medicaid Services

Medigap can help with Medicare costs

People with an Original Medicare plan can purchase a Medigap plan. These plans aren’t insurance. Instead, the 10 standard Medigap plans offered by private insurers help pay for co-pays, deductibles and coinsurance.

The cost of Medigap plans differs. High-deductible plans usually cost less than $100 monthly, but lower-deductible plans may cost more than $300 a month.

Medigap isn’t available for people with Medicare Advantage plans.

How to shop for a Medicare plan

What’s the right Medicare plan for you depends on multiple factors, including the plans offered in your state, which plans your providers accept, co-payments, deductibles, coinsurance, out-of-pocket costs, quality of plans and supplemental offerings. 

You’ll want to first make sure your providers accept the Medicare plan before joining. Otherwise, that provider could be considered out-of-network and you’ll have to pay more, or even all, of the costs. Keep in mind that health maintenance organization (HMO) plans usually don’t allow you to get out-of-network care. 

If you’re comparing Original Medicare (Medicare Part A and Part B) vs. Medicare Advantage, review all costs — not just copays. You want to especially look into out-of-pocket costs like  deductibles  and coinsurance costs. Coinsurance is the portion of the bill you will be responsible for after you reach your deductible.  

Also, dig into the information from multiple Medicare Advantage plans — Don’t just look at one or two plans. 

If you’re comparing Medicare Advantage plans, you’ll additionally want to consider a plan’s design. An HMO may be cheaper than a preferred provider organization (PPO) plan, but you may also have more restrictions with an HMO. HMOs require a primary care provider referral to see a specialist and you likely won’t be able to get covered for out-of-network care. 

A PPO gives you more flexibility, but that also could come with higher premiums. PPOs and HMOs often have similar deductibles and coinsurance.  

If you’re looking for a Medicare plan with supplemental benefits like dental and vision, a Medicare Advantage plan might be better for you. Medicare Advantage allows private insurance companies to offer expanded  supplemental benefits not found in Original Medicare plans. 

You’ll also want to think about how much health care you need. Ask yourself these questions: 

  • Do you have a health condition that requires regular doctor visits? 
  • Do you have multiple prescriptions? 
  • Do you expect to need more health care services in the coming years? 

By answering these questions, you can decide whether you should get a plan with a higher premium but lower deductibles or a plan with a lower premium and higher deductibles. 

High-deductible health plans typically come with lower premiums, but you’ll pay more when you need health care services up front. You’ll want to weigh premiums vs. out-of-pocket costs when you’re deciding on a plan. 

You can also use the  Medicare Plan Finder  tool. The tool assigns star ratings for each plan based on membership surveys, quality and performance. 

The costs of a Medicare plan are an important piece of finding the best plan for you, but make sure you’re also taking into account the plan’s network, quality and supplemental benefits. 

Sources:

Medicare.gov. “Costs.” Accessed August 2022.

Kaiser Family Foundation (KFF). “Medicare Part D: A First Look at Medicare Prescription Drug Plans in 2022.” Accessed August 2022.

Disclaimer: 

Insure.com is not affiliated with or endorsed by the government or Federal Medicare program. Plans are insured or covered by a Medicare Advantage organization with a Medicare contract and/or a Medicare approved Part D sponsor. Enrollment in the plan depends on the plan’s contract renewal with Medicare. We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE (TTY 1-877-486-2048), 24 hours a day/7 days a week, to get information on all of your options. Not all plans offer all of these benefits. Benefits and availability may vary by carrier and location. Limitations and exclusions may apply. Every year, Medicare evaluates plans based on a 5-star rating system. Part B Premium give-back is not available with all plans. Actual Part B premium reduction could be lower. Deductibles, copays and coinsurance may apply. 

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Les Masterson
Contributor

 
  

Les, a former managing editor, insurance, at QuinStreet, has more than 20 years of experience in journalism. In his career, he has covered everything from health insurance to presidential politics.

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