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Your interest in affordable health insurance doesn’t change when you turn 65, so no doubt you’re asking a variation of this question: What’s Medicare going to cost me? Since Medicare is broken into parts, it’s best to understand what your costs are under each part.

Medicare Costs

Part A hospital insurance has $0 monthly premium cost in most cases, but also includes a deductible to meet before coverage begins ($1,316 in 2018). This deductible is NOT annual. It is per benefit period, which means if you have multiple hospitalizations during a year, you might have to pay more than one deductible.

After your deductible, for inpatient hospitalizations you are responsible for a:

  • $0 coinsurance payment per day for days 1-60
  • $329 per day for days 61-90
  • $658 per day for days 91 and beyond

Every day beyond 91 is considered a lifetime reserve day. You get 60 of these lifetime reserve days, after which you are responsible for all your costs.

Medicare Costs

For most people, Part B medical insurance has a standard monthly premium cost of $134. The premium may be less ($109) if you have the monthly payment taken out of your Social Security check. However, it could be higher based on income as well.

You’re responsible for a Part B deductible ($183 in 2018), and after that deductible, for 20% of Medicare-approved amount for most doctor services, outpatient therapy and durable medical equipment.

Medicare Costs

Medicare Advantage (Part C) plans vary in costs. These plans wrap up coverage equal to Parts A and B, often include Part D prescription drug coverage, and may include other features, such as dental or vision benefits.1 Check specific plans available in your county for details.

Medicare Costs

Prescription Drug (Part D) plans vary in costs. Check specific plans for details.

However, if you have several prescription drugs, one cost issue to keep in mind with Part D is what is called the donut hole. This is a coverage gap between your Part D drug coverage threshold (the initial coverage limit Part D will pay for your drugs) and your Part D plan out-of-pocket spending limit (when catastrophic coverage kicks in and reduces your drug costs to a small copay).

For example, in 2018 the coverage threshold is $3,750 and the out-of-pocket spending limit is $5,000. This creates a “donut hole” of $1,250 where Medicare recipients are responsible for the costs of their drugs.

Donut Hole Discount

Medicare does offer some help in the donut hole in the form of discounts. In 2018, if you have a Part D Prescription Drug Plan, while you are in the donut hole …

  • You will receive a 65% discount on the price of brand-name drugs
  • You will pay a maximum 44% copay on generic drugs (a 56% discount essentially)
donut with down arrows
Annual Deductible $0 $405
Initial Coverage up to $3,750 75% 25%
Donut Hole or Coverage Gap up to $5,000 65% Name Brand
56% Generic
35% Name Brand
44% Generic
Catastrophic Coverage 95% 5%
Once you get to Catastrophic Coverage under Part D, you pay 5% of the drugs cost until the end of the year.

If you’re coming straight off many group or private health insurance plans, Medicare may seem like cheap health insurance to you. And in many ways, it’s a great deal. However, as with any insurance coverage, it still pays to really understand your out-of-pocket costs and when you will face them.

8:00 a.m. – 8:00 p.m. ET, M-F

1 This information is not a complete description of benefits. Contact the plan for more information. Limitations, copayments, and restrictions may apply. Benefits, premiums and/or copayments/coinsurance may change on January 1 of each year.

1 You must continue to pay your Medicare Part B premium.

Plans are insured through UnitedHealthcare Insurance Company or one of its affiliated companies, a Medicare Advantage organization with a Medicare contract. Enrollment in the plan depends on the plan’s contract renewal with Medicare.

Last Updated: 09.14.2018 12:01AM ET Y0066_171215_053353 Accepted


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