Budgeting for Medicare

Medicare Costs

As health care costs continue to rise and individual health needs change, your costs for Medicare will likely change from year to year. As a Medicare beneficiary, you may need to pay certain out-of-pocket costs, such as premiums, deductibles, copayments and coinsurance. These costs are generally standardized under Medicare Parts A and B. For Medicare Part D, your costs may vary by plan.

Knowing what these costs are projected to be every year can help you to plan ahead and eliminate out-of-pocket spending.

Budgeting for Medicare Expenses

The first step in budgeting your Medicare payments is determining your specific Medicare expenses. Your Medicare out-of-pocket costs will depend on whether you have Medicare Part A, Part B, or both. Moreover, these costs can change from year to year.

Saving for Medicare Part A

Medicare Part A covers inpatient hospital care, inpatient rehabilitation facilities, skilled nursing facilities, hospice care and limited home health services.

Your Medicare Part A expenses in 2019 will typically include:

  • Part A Premium: Most beneficiaries over 65 don’t pay a monthly premium for Medicare Part A coverage if they or their spouse paid Medicare taxes for at least 10 years (or 40 quarters) while working. If you don’t qualify for premium-free Part A, your monthly premium will be up to $437 in 2019. The exact amount will depend on how long you worked and paid Medicare taxes. If you need to pay a Part A premium and didn’t sign up when you were first eligible, you may have to pay a late enrollment penalty. The penalty is a 10% higher premium for twice the number of years you were eligible but didn’t enroll in Part A.
  • Part A Hospital Inpatient Deductible: $1,364 in 2019 for each benefit period.
  • Part A Coinsurance
    • Day 1-60: $0
    • Day 61-90: $341/day
    • Day 91+: $682/day per lifetime reserve day
  • Skilled Nursing Facility Coinsurance
    • Day 1-20: $0
    • Day 20-100: $167.50/day
    • Day 101 and beyond: You are responsible for all costs unless you have a separate insurance policy that covers these costs.

Saving for Medicare Part B

Medicare Part B covers ambulance services, inpatient and outpatient care, partial hospitalization, clinical research, and durable medical equipment.

Your Medicare Part B expenses in 2018 will typically include:

  • Part B Premium
    • You’ll pay the standard of $135.50 for your monthly premium if:
      • You enrolled in Part B for the first time in 2018.
      • You aren’t currently receiving retirement benefits from Social Security or the Railroad Retirement Board.
      • You’re a dual eligible (have both Medicare and Medicaid), and the Medicaid program pays for the cost of your premiums. If you qualify, your $135.50 premium is paid by the Medicaid program.
      • You’re billed directly for your Part B premium.
    • Your Part B premium could be higher than $135.50 if your income is higher than a certain amount.
    • If you waited to enroll in Part B, your premium could be 10% higher for every 12-month period that you were eligible for Part B but didn’t sign up. Your premium may also be higher if you make above a certain income level.
  • Part B Deductible: The annual deductible is $185 in 2017.
  • Part B Coinsurance: You pay 20% of the Medicare-approved amount for medical service, durable medical equipment, and outpatient therapy (i.e., physical therapy).

Saving for Medicare Part D

If you have Medicare prescription drug coverage, your Part D costs will depend on the plan you choose. Medicare prescription drug coverage is provided by private insurance companies contracted with Medicare. Your Medicare Part D costs can typically include:

  • Premium: Your monthly premium will vary depending on the plan you choose. Your monthly premium could include a late enrollment penalty if you didn’t sign up for Part D when you were first eligible and didn’t have creditable prescription drug coverage for 63 or more consecutive days.
  • Copayments/Coinsurance: Many Medicare plans providing prescription drug coverage put covered medications into different benefit tiers, with higher or lower copayments/coinsurance depending on the tier. How much you pay will depend on which prescription drugs you are taking and the tiers they fall under.
  • Annual Deductible: The annual deductible for a standard Medicare Part D Prescription Drug Plan is a maximum of $415 in 2019. Plans may have a lower deductible than that or even have a $0 deductible.

Saving for a Medicare Supplement

Medicare supplement plans are offered by private insurance companies in order to help you pay for out-of-pocket costs for services under Medicare Part A and Part B. If you have a Medicare supplement policy, the coverage is completely standardized by the Federal Government. However, the costs may vary by plan, even if the benefits are exactly the same.

How to Budget for Medicare Coverage & Other Costs

Once you know what your expected Medicare cost-sharing expenses will be, there are other factors that may affect your out-of-pocket costs. You should consider the following when budgeting for Medicare payments:

  • Individual health needs
  • Using Medicare-participating providers
  • Whether or not you have other insurance
  • Eligibility for financial assistance

Medicare cost-sharing requirements can change from year to year, so budgeting for Medicare payments should be adjusted annually. You should carefully read your plan’s EOC (Evidence of Coverage) and ANOC (Annual Notice of Change) documents every year in order to decide whether your current plan meets your health needs and if projected costs are still within your budget.

How a Medicare Supplement Can Help Save Money

Medicare doesn’t cover everything. You will still be required to pay your deductible, coinsurance, and copayments out of pocket for all Medicare-approved expenses.

Medicare will cover most of your medical services at Medicare providers. Your exposure will be a deductible for Medicare Part A, a deductible for Part B and possible 15% excess charges (though rare nowadays). Your biggest threat is the 20% coinsurance you’ll be responsible for on medical expenses after you meet your Part A and Part B deductibles.

A Medicare supplement policy is a private insurance plan that helps cover such things as the Medicare Part A deductible, Medicare Part B deductible, 20% coinsurance, and excess charges. Medicare supplement plans are completely standardized by Medicare and are offered as plan letters with each plan offering different coverage for the different areas of exposure.

While the most popular Medicare supplement plans are Plan F, Plan G, and Plan N, there are many plans available. Compare those plans and coverage here.


GoMedigap is an independent Medicare supplement insurance agency, representing over 30 of the top providers to ensure you have multiple options when it comes to choosing your supplement. If you’d like our professional team of experts to review your coverage options and provide guidance on which plan would work best with your individual health needs, please give us a call at (800) 310-2550.

Compare Your Medicare Supplement Rates Immediately!

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