Those preparing for retirement are likely getting their finances in order and trying to figure out their monthly budget for the years to come. Whenever you calculate all the numbers, you will want to consider the cost of Medicare and additional Medicare plans. Medicare has monthly costs, and if you want additional healthcare coverage, such as Medigap Plan G, you will want to consider those costs, as well. If you are retiring this year, keep reading to learn more about the cost of Medicare plans in 2022.
The cost of Original Medicare
Original Medicare is the health coverage that the federal government provides. Although you have paid Medicare taxes, you are still required to pay monthly premiums.
If you paid payroll taxes for ten years in the U.S. (40 quarters), Part A (inpatient care) will be $0 for you. If you have less than 40 quarters but have between 30-39 quarters, you will pay a monthly premium of $274 in 2022. If you have less than 30 quarters, you will pay the total cost, which is $499 in 2022.
The Part A deductible in 2022 is $1,556 per 60-day benefit period. After you pay the Part A deductible, your inpatient stay will be covered in full for up to 60 days. After 60 days, you will pay a daily copayment.
All Medicare beneficiaries are responsible for the Part B (outpatient care) premium regardless of their work history. In 2022, the standard monthly Part B premium is $170.10. However, if you are in a high-income bracket, you will pay more monthly for Part B. You can appeal your higher premium through the Social Security office if you qualify for a life-changing event, such as becoming a widow or retiring.
In 2022, the annual Part B deductible is $233. After you pay the Part B deductible, you are responsible for a 20% coinsurance for your Medicare-approved outpatient services. A 20% coinsurance can be expensive if you receive a costly service, such as outpatient surgery or kidney dialysis. Many beneficiaries purchase either a Medigap plan or a Medicare Advantage plan from a private insurance carrier for cost-sharing help.
What are the costs of Medigap plans?
A Medigap plan, also known as a Medicare Supplement, is secondary coverage to help cover the “gaps” in Medicare. You are still responsible for your Original Medicare premiums whenever you enroll in a Medigap plan.
There are ten standardized Medicare Supplements, and the two most popular are Medigap Plan G, and Plan N. Medigap Plan G can price anywhere from $90-$170+. Plan N can run anywhere from $50-$100+.
If you are curious about other beneficiaries’ experiences with Plan G, you can read real-life Plan G reviews here: boomerbenefits.com/medicare-plan-g-reviews/
With this information, it’s essential to understand that Medigap premiums are based on multiple factors.
When you apply for a Medigap plan, your premium will depend on your age, gender, tobacco use, zip code, insurance carrier, and type of plan. Premiums vary from person to person and carrier to carrier, so you will want to shop plans among multiple carriers to ensure you enroll in the most cost-effective plan.
Medicare Advantage plan costs
Medicare Advantage plans are very different from Medigap plans. Whenever you enroll in an Advantage plan, you will get your Part A, Part B, and Part D benefits from the private insurance carrier you purchased your plan from. However, you would still be responsible for your Medicare premiums.
Advantage plans vary from zip code to zip code, but you can find many plans to be as low as $0. You will want to keep in mind, though, that Advantage plans with low premiums typically have more out-of-pocket costs annually. There are plans out there with monthly premiums, and these can range anywhere from $10-$80.
The private insurance carrier will set your monthly premium amount, along with your cost-sharing and out-of-pocket maximum. You can find this information in the plan’s Summary of Benefits packet.
The cost of a prescription drug plan
Original Medicare does not cover the cost of prescription medications. When you enroll in Medicare, you will also want to enroll in a Part D plan through a private insurance carrier to have drug coverage.
Since private insurance carriers sell Part D plans, the premium will vary. However, the national average Part D premium is $41 in 2022. But, you can find plans as low as $7 monthly. Like Part B, if you are in a high-income bracket, you will pay more monthly for your Part D plan.
It’s better to plan for your Medicare costs now than to be blindsided by your first Medicare bill when your Medicare plans become active. There are hundreds of different Medicare plans in 2022, so you might find it beneficial to work with a Medicare broker to find the most cost-effective plan in your area!