Low-Cost Medicare Plans

Medicare is broken into parts (Part A, Part B, Part C/Medicare Advantage, and Part D) as well as Medicare Supplement Insurance. The different parts and policies have different costs.

Most people don’t pay a premium for Medicare Part A, but you still have to pay the deductibles and coinsurance costs when you receive care. CMS says the 2023 inpatient hospital deductible is $1,600 – this is how much you have to pay before coverage kicks in. After that, there is no copay for the first 60 days of inpatient hospital care. For the 61st to 90th day of inpatient hospital care, the daily coinsurance cost is $400.

The base monthly premium for Medicare Part B is $164.90 in 2023. Individuals who earn more than $97,000 a year and couples who earn more than $194,000 a year pay a higher premium due to the income-related monthly adjustment surcharge. The annual deductible is $226 in 2023. There’s also a 20% copay on most doctor services.

Since private insurance companies sell Medicare Advantage, Medicare Part D, and Medicare Supplement plans, the premium and out-of-pocket costs vary. CMS estimated the average basic monthly premium for Medicare Part D to be $31.50 for 2023, whereas the average monthly premium for Medicare Advantage is $18.

There are some zero-premium Medicare Advantage plans, but these plans still aren’t free.

If you buy a Medicare Advantage plan, you will still be responsible for the Medicare Part B premium. For example, if you pay $164.90 a month for Medicare Part B and enroll in a $0 Medicare Advantage plan, you still pay $164.90 a month for coverage ($164.90 + $0). If you enrolled in a Medicare Advantage plan with a $20 premium, you would pay $184.90 a month ($164.90 + $20).

Medicare Advantage enrollees are also responsible for out-of-pocket costs, including the deductible and copay.

Many health plans have an out-of-pocket maximum. This is the annual cap on what you can pay for covered services. Once you reach this cap, you won’t have to pay any more copays, coinsurance, or deductibles for covered services.

Original Medicare does NOT have an out-of-pocket maximum. If you are enrolled in Medicare Parts A and B, there is no limit to what you can pay in out-of-pocket costs. If you become seriously ill, costs can add up fast – which is why the cheapest premium isn’t always the most affordable option in the long run.

You can buy a Medicare Supplement Insurance plan (also called Medigap) to help with your out-of-pocket costs in Original Medicare. The cost of these plans varies, but the premiums can be expensive.

Another option is to buy a low-cost Medicare Advantage plan, which will have an annual out-of-pocket maximum. In 2023, the out-of-pocket maximum for covered services is $8,300.

In terms of premium, the cheapest Medicare plan would be either Original Medicare or a $0 premium Medicare Advantage plan.

However, Original Medicare does not include prescription drug coverage. You’ll need to buy a separate Medicare Part D plan if you want prescription coverage, which will raise your total premium costs.

Many (but not all!) Medicare Advantage plans include prescription drug coverage. These plans are sometimes called Medicare Advantage Prescription Drug plans.

You also need to consider your out-of-pocket costs, as these can add up to more than your premium costs. If you don’t consider your out-of-pocket costs, you may find you are paying for coverage you can’t afford to use.

To limit your total costs under Medicare, you need to find a plan that provides the care you need at the lowest cost. This will require some work, but it can pay off.

• Determine which services you are likely to need during the year. How often do you think you’ll go to the doctor? Will you need specialty care? Is there a good chance you’ll require inpatient hospital care?
• Compare plan costs for the services you’ll need. Add up the copays for hospital stays, primary doctor visits, and specialty doctor visits. If you want to see particular doctors, make sure they’re in the network – otherwise, you may pay higher out-of-network fees.
• Make a list of your prescriptions.
• Compare plan costs for the prescriptions you’ll need. What is the copay for each prescription?
• Add up all of your expected copays, deductibles, and premiums. Now you can compare your total costs under each plan.

Click here for more information about how to select a Medicare plan.

If you can’t afford Medicare, help may be available.

• Medicaid: You can enroll in Medicare and Medicaid at the same time. To apply for Medicaid, you need to go through your state Medicaid agency. If you qualify, Medicaid will provide secondary insurance coverage to reduce your costs. You can then enroll in a Dual Eligible Special Needs Plan (D-SNP) to simplify your coverage and costs.
• Medicare Savings Programs: There are four Medicare Savings Programs you may qualify for depending on your income and resources. As with Medicaid, you need to apply through your state.
• Extra Help: Medicare’s Extra Help is a low-income subsidy that can help with prescription drug costs. You can apply through the Social Security Administration by going to https://www.ssa.gov/medicare/part-d-extra-help.

If you’re unsure whether you meet the eligibility limits, go ahead and apply. You may find you qualify for some aid.