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Medicare Coverage and Costs

January 8, 2024

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People often have questions about Medicare as they approach age 65:

  • Does Medicare cover my prescription drugs?
  • Will my doctor accept my Medicare plan?
  • Does my Medicare plan cover dental, vision, and hearing?

These are questions we often hear, and we’re here to help get you these answers and more. Let’s start by reviewing the basics of Original Medicare, including coverage and out-of-pocket costs. Then we’ll cover some options to reduce your Medicare costs and add valuable benefits to your coverage.

How Original Medicare coverage works

Original Medicare has two parts – Part A and Part B.

Medicare Part A

Covers some of the costs of care provided by the following facilities and providers:

  • Inpatient hospital care
  • Hospice Care
  • Home Health Care
  • Skilled Nursing Facility Care

Medicare Part B

Covers medically necessary services and supplies, including:

  • Doctor’s visits
  • Diagnostic tests (x-rays, blood work, MRIs, etc.)
  • Therapy visits (physical, occupational)
  • Some cancer treatments like chemotherapy
  • Outpatient surgeries like arthroscopic surgeries
  • Outpatient mental health visits
  • Durable medical equipment like bottled oxygen

How much does Original Medicare cost?

When you use your Medicare insurance, you will have to pay for some of the costs out of pocket. But the out-of-pocket costs are different for Parts A and B.

For example, you’ll have to pay the Part A inpatient hospital deductible when you have a hospital stay. The deductible amount is $1,632 per benefit period in 2024. You’ll pay this inpatient hospital deductible each time you're admitted to the hospital, provided that you haven’t received hospital or skilled nursing facility services within the previous 60-day benefit period.

Meanwhile, Part B has three types of costs:

  • Part B deductible: $240 for 2024. You only pay this deductible once each year. After that, Medicare will pay 80% of the cost, and you’ll pay 20% for every Medicare-covered Part B service or procedure you receive.
  • Part B coinsurance: 20% of the cost for each service or procedure
  • Part B excess charges: Up to 15% of the Medicare-approved charge if your doctor does not accept the Medicare-approved amount for a service (known as Medicare assignment).

For the most part, your out-of-pocket costs could be quite low if you’re healthy and don’t need many health care services. And if you get the flu or need some therapy for a sprained ankle, your 20% coinsurance could total a few hundred dollars for the entire year. But your out-of-pocket costs could be very high if you suffer a major illness or need specialized surgery. Plus, Original Medicare does not cover prescriptions. So if you need medications, costs could be high.

One last point on costs: There’s no cap on your spending with Original Medicare. This means there’s no out-of-pocket maximum cap like you may have seen with your previous traditional, private health insurance plan. And this means your out-of-pocket costs could be extremely high if you require treatment for a chronic condition or illness.

How Medicare Advantage plans may help control costs

Many Medicare beneficiaries choose to enroll in Medicare Advantage plans to curb out-of-pocket costs and get prescription drug coverage. Medicare Advantage (also known as Medicare Part C) is a contract between the Centers for Medicare and Medicaid Services (CMS) and a private health insurance company.

Medicare Advantage plans must cover everything that Original Medicare covers. When you join a Medicare Advantage plan, you may still pay for certain expenses including:

  • Monthly plan premium (if any): Many plans have a low-cost or $0 monthly premium. (You must continue to pay your monthly Part B premium).
  • Annual deductible (if any)
  • Copayments and/or coinsurance

Still, these costs are often lower than what you’d pay under Part A or B. One big benefit of a Medicare Advantage plan is that it includes an annual out-of-pocket maximum - so you’ll know your costs are capped, no matter what services or treatments you might need during a year.

Medicare Advantage may provide additional benefits

Medicare Advantage can serve as a way to cover services that Original Medicare doesn’t. That’s because these plans often go beyond Original Medicare coverage offerings.

These additional benefits vary by your health plan, but they may include:

  • Dental coverage
  • Hearing coverage
  • Vision coverage
  • Prescription drug coverage
  • Access to fitness programs

An example of how it works

Let’s take vision coverage as an example. Original Medicare doesn’t cover basic vision services like eye exams and lenses. If you pay out of pocket, you can expect to pay (on average):

Based on these averages, you could pay a total of $465 for an exam, lenses, and frames. While benefits vary by state and insurance company, many Medicare Advantage plans have exams and lenses for $0.

Many companies could also give you a credit towards the purchase of frames. And though you probably don’t buy new glasses every year, it’s unlikely that prices for lenses and frames will decrease. Getting frames from a Medicare Advantage plan can save you quite a bit of cash, especially given the relatively low (or $0) plan premiums they charge.

You will find that other extra benefits work in the same way. The hearing or dental coverage available from Medicare Advantage plans may not be completely comprehensive or free, but it’s often less expensive than what you can get from an individual policy.

How Medicare Supplement plans may help control costs

Medicare Supplement insurance is another way to lower your Medicare out-of-pocket costs. These policies are offered by private insurance companies and work with Original Medicare, paying for some or all of the costs that you’d normally pay.

The costs you have to pay with Original Medicare are known as “gaps in coverage.” Medicare Supplements help to fill these gaps - hence the name “Medigap” plans.

You’ll pay a premium directly to your insurance company for Medigap coverage. And Medigap can help with some or all of:

  • Part A deductibles
  • Part B deductibles
  • Part B coinsurance
  • Part B excess charges

Medicare Supplement plans come in standardized plans, with each plan paying a slightly different portion of the Original Medicare gaps. The standardized plans are known by letter: A, B, C, D, F, G, K, L, M, and N. Plans F, G, and N are among the most popular with people on Medicare.

Medigap plans offer a lot of freedom when it comes to choosing a doctor. Your coverage is portable all over the country, so you can see any doctor who accepts Medicare patients. You don’t have to deal with a network, or get a referral from a primary care physician.

As an added bonus: Many Medigap plans also cover you outside the United States, so you can have emergency coverage while you’re traveling as part of your retirement routine.

What Medigap plans don’t cover

There are a number of items that Medicare Supplement insurance doesn’t cover.

For starters, they don’t cover prescription drugs, so you’ll need to enroll in a stand alone prescription drug plan to help cover costs. These are also available from private insurance companies.

Medigap plans also don’t cover vision, hearing, or dental. While it’s possible that some Medigap plans offer discounts on these items, none provide comprehensive coverage. Medigap plans also provide no coverage for staying in a nursing home or other facility for long-term care.

Instead, you’ll have to purchase individual coverage from an insurance company to cover these items. Or, you may be able to purchase coverage for some of these items from your Medigap insurer in a separate supplemental policy.

With either option, you’d pay an additional premium for the coverage, but buying standalone vision or dental coverage from another company might be the more expensive option.

How to enroll in a Medicare Advantage plan

If you want to switch Medicare plans, you can do so during the Medicare Annual Enrollment Period, which is from October 15 to December 7 each year.

You can also switch from one Medicare Advantage plan to another, or go back to Original Medicare during the Medicare Advantage Open Enrollment Period, which is from January 1 to March 31 each year.

Save time, learn more

Let us do the hard work for you so you can save time and find the right Medicare plan for your needs. Just call 1-800-596-1715 (TTY 711) weekdays from 8 a.m. to 8 p.m. EST to speak to our licensed insurance agents. They are professionally trained to help you understand your Medicare benefits or confirm if we offer a Medicare Advantage plan with additional benefits in your area.* Or, you can compare Medicare Advantage plans online using our website.

*Outside of the Medicare Annual Enrollment Period, members can enroll in a plan only if they meet certain criteria. 

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