How Much Does Medicare Cost in 2020?


If you’re looking ahead to your Medicare Open Enrollment Period and planning out your budget, it’s crucial to understand how much Medicare will cost you. This article will break it down from start to finish with all the variables in between.

Original Medicare Costs

First, you have to start by looking at expenses related to Original Medicare.

Original Medicare has four parts – A, B, C, and D. Each part of Medicare covers a different service related to health care.

Part A: Covers expenses related to hospital stays. Anyone enrolled in Medicare automatically qualifies for Part A. While the premium is usually free, there will be a deductible associated with each benefit period.

Part B: Covers expenses related to doctor visits. Part B is optional but recommended highly and often necessary. Part B carries a premium and deductible.

Part C: Covers expenses related to the hospital, doctor, and often prescription drugs. Part C is also known as Medicare Advantage and is an optional plan that can help reduce overall healthcare costs.

Part D: Covers expenses related to prescription drugs. Part D is optional but highly recommended if prescription medications are a regular part of your healthcare needs. Part D premiums will vary by plan.

To break this down further, here’s a snapshot of fees related to each part of Original Medicare.

Original Medicare Part 2020 Cost
Part A Premium Usually free*
Part A Deductible $1,408 deductible per benefit period
Part A Coinsurance per benefit period Days 1-60: $0 per day
Days 61-90: $352 per day
Days 91+: $704 per “lifetime reserve” day up to 60 days
After lifetime reserve: All costs
Part B Premium $144.60+
Part B Deductible $198
Part B Coinsurance per benefit period 20% after deductible
Part C Premium Varies by plan
Part D Premium Varies by plan

*To qualify for free Part A Medicare coverage, you must have worked and contributed payment toward social security benefits for a minimum of 30 quarters or 7.5 years.

Original Medicare Cost Changes

Medicare costs for 2020 are different from previous years. Both Part B and Part D will see surcharges on monthly premiums depending on your income level. Here’s what this looks like practically. Note that your tax return from two years prior is what determines your 2020 premium costs.

If your yearly income for 2018 was: Your 2020 Part B Premium will be:
Individual filing Married filing jointly Married filing separately
$87,000 or less $174,000 or less $87,000 or less $144.60
$87,001 to $109,000 $174,001 to $218,000 N/A $202.40
$109,001 to $136,000 $218,001 to $272,000 N/A $289.20
$136,001 to $163,000 $272,001 to $326,000 N/A $376.00
$163,001 to $499,999 $326,001 to $649,999 $87,001 to $412,999 $426.70
$500,000 + $750,000 + $413,000 + $491.60

 

If your yearly income for 2018 was: Your 2020 Part D Premium will be:
Individual filing Married filing jointly Married filing separately
$87,000 or less $174,000 or less $87,000 or less Plan premium only
$87,001 to $109,000 $174,001 to $218,000 N/A Plan premium + $12.20
$109,001 to $136,000 $218,001 to $272,000 N/A Plan premium + $31.50
$136,001 to $163,000 $272,001 to $326,000 N/A Plan premium + $50.70
$163,001 to $499,999 $326,001 to $649,999 $87,001 to $412,999 Plan premium + $70.00
$500,000 + $750,000 + $413,000 + Plan premium + $76.40

Medicare Advantage Costs

Medicare Parts A and B only cover half of most people’s medical needs. While you are covered for doctor and hospital visits, it does not include things like staying in a skilled nursing facility, drug coverage, dental, or eye exams. Because of this, many people opt for a Medicare Advantage plan, also known as Medicare Part C.

Medicare Advantage offers you the ability to combine Part A, Part B, and Part D into one plan purchased from a private insurance company. Many insurance companies also provide dental, fitness, and other benefits as an included bonus with Part C.

With Part C, you will pay a monthly premium but the total cost will vary depending on the company you purchase your plan through. Shop around and request a quote from several different companies to see who offers you the best rate and coverage options.

Here is a basic idea of cost breakdown between Original Medicare and Medicare Advantage:

ORIGINAL MEDICARE MEDICARE ADVANTAGE
Area of Coverage Part A

Part B

Part A

Part B

Part D

Vision Benefits*

Dental Benefits*

Hearing Benefits*

Max Out-of-Pocket Cost No maximum. Yearly limit.

After the limit is reached, members pay nothing.

Doctor and Hospital Visits Must be doctors and hospitals that accept Medicare. You may choose your doctor and hospital as long as they are in your plan’s network. Out-of-network doctors and hospitals might come with higher costs.
Plan Premiums Part A has no premium.

Part B has a premium starting at $144.60+/mo.

Part B has a premium starting at $144.60+/mo.

+

Medicare Advantage plan premiums can start as low as $0/mo.

Plan Deductibles Part A has a yearly deductible of approximately $1,408.

Part B has a yearly deductible of approximately $198.

Deductibles and copays vary.
Prescription Drug Coverage Must purchase Part D or standalone drug coverage. Varies by plan.

*Not all Medicare Advantage plans cover vision, dental, and hearing.

If you’re looking to save on the bottom line, choosing a Medicare Advantage plan can often save more than if you purchased Part A, B, and D separately. Medicare Advantage plans that include extras such as dental and vision also increase your cost savings.

Know Your Open Enrollment Period

How much does Medicare cost at age 65? Medicare has a specific enrollment timeframe, which allows you to sign up for any plan you desire with guaranteed acceptance. This period is known as your Open Enrollment Period and starts during the first three months before you turn 65, the month of your birthday, and three months after you turn 65.

If you are still working and choose to defer enrollment, your enrollment period will begin when you quit working and stop receiving medical benefits through your employer. If you delay and sign up after your specific enrollment period, you will face an enrollment penalty. If you enroll within the appropriate timeframe, you won’t incur this penalty.

Choose Wisely

Knowing how much your healthcare plan will cost is crucial when figuring out life on a fixed income. If you are ready to take the next step and apply for your Medicare coverage, getting a quote is simple. An experienced agent will help you make the best choice for your coverage needs.

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