Updated October 2018
Medicare costs change each year, whether you have original Medicare or a Medicare Advantage plan. For most seniors, Medicare costs are relatively low, much lower than you might pay for an individual health plan on the private marketplace. That’s the point of Medicare, to help seniors afford medical care, hospital coverage and prescription drugs as they age. Since 1965, the program has been serving a unique purpose in the lives of millions of Americans. For 2019, costs are rising as they normally do, with bigger changes for those in a higher income bracket, but some costs are actually going down, especially for Medicare Advantage and Medicare Part D enrollees. Whether you’re new to the program or you want more information on switching coverage, here are the costs that you can expect this year.
Medicare Part A
Under traditional Medicare, Part A covers hospital care. This portion alone counts as minimum essential coverage under the Affordable Care Act. Most recipients (about 99 percent) do not pay a premium for Part A coverage because this portion is funded through work-based taxes that you pay throughout your working life. If you’ve accumulated 40 quarter credits (and most people do), then you can enroll in Part A for free. Otherwise, the costs are as follows:
- For people who earn 30-39 quarter credits, the monthly premium is $240 in 2019.
- For those who earn fewer than 30 quarter credits, the monthly premium is $437 in 2019.
Even if you don’t pay a monthly premium for Part A, you’ll still be subject to the plan’s deductibles for hospital stays. In 2019, the Part A deductible is $1,364 per benefit period. After that, you’ll pay nothing in coinsurance for the first 60 days of your stay, $341 per day for days 61-90, and $682 per “lifetime reserve day” after day 90. You get 60 lifetime reserve days total. If you’ve met the reserve days, then you’ll be responsible for all of your costs.
Medicare Part B
Everyone pays a premium for Medicare Part B, which covers medical care, but the amount depends on your income and when you sign up for the program. If you meet one of the following conditions, then you’ll pay the standard amount ($135.50 a month in 2019) or more:
- You’re new to the Medicare Part B program this year
- You do not currently receive Social Security benefits
- You pay for your Part B premiums directly
- Medicaid covers your premiums
- Your income is higher than the standard threshold
A small percentage of enrollees (about 3.5 percent) will pay less than the standard amount thanks to the “hold harmless” provision of Social Security. . When the Social Security cost-of-living adjustment (COLA) doesn’t keep up with anticipated Medicare premium rate increases, then current beneficiaries are protected from paying more for coverage. This happened for the 2017 plan year. Anyone who was enrolled in 2016 year and receiving Social Security benefits paid the old rate, which averaged to about $109.
Higher-income enrollees pay more than the standard amount because they’re charged an “Income Related Monthly Adjustment Amount” (IRMAA) on top of the standard premium. For Medicare premium amounts, income is based on what you earned two years ago. So for 2019, your premiums will be determined by what you earned in 2017:
|If you earned (single tax filing):||If you earned (joint tax return):||You’ll pay:|
|Up to $85,000||Up to $170,000||$135.50 a month|
|Over $85,000 to $107,000||Over $170,000 to $214,000||$189.60 a month|
|Over $107,000 to $133,500||Over $214,000 to $267,000||$270.90 a month|
|Over $133,500 to $160,000||Over $267,000 to $320,000||$352.20 a month|
|Over $160,000 to $500,000||Over $320,000 to less than $750,000||$433.40 a month|
|$500,000 or higher||$750,000 or higher||$460.50 a month|
There’s also a surcharge for married enrollees who file separate tax returns. If you’re married-filing-separately, you’ll pay $433.40 a month for Part B if you earn between $85,000 and $415,000 a year. Above that threshold, you’ll pay $460.50 as a married person filing separate taxes.
Keep in mind that these amounts apply to original Medicare only. Medicare Advantage plans, which have to cover Part B services, have their own premium rates, which vary by plan.
In 2019, income thresholds will change for Medicare Part B, with new tiers for those in the highest income brackets. These amounts will be determined by your 2017 income, and the income limits will change as follows (the first two tiers remain the same):
- Up to $85,000 for single filers; up to $170,000 for joint filers
- Over $85,000 to $107,000 for single; over $170,000 to $214,000 for joint
- Over $107,000 to $133,500 for single; over $214,000 to $267,000 for joint
- Over $135,500 to $160,000 for single; over $267,000 to $320,000 for joint
- Over $160,000 to under $500,000 for single; over $320,000 to under $750,000 for joint
- $500,000 or more for single; $750,000 or more for joint
Also, it’s important to sign up for Medicare Part B when you’re first eligible unless you have a qualifying medical plan with work that you want to keep until you retire. If you wait to sign up for Part B after your initial eligibility window, then you may have a penalty fee assessed on top of your monthly premium. This penalty amounts to 10 percent for each 12-month period that you could have had coverage but chose not to. It lasts for as long as you have Part B coverage.
Regardless of your premium payment, the annual Part B deductible is the same for all beneficiaries. In 2019, your deductible is $185 for the year. After you meet the deductible, you’ll be responsible for 20 percent of Medicare-approved costs. This applies to most doctor services, outpatient therapy and durable medical equipment. New for 2019, there are no caps on coverage for physical therapy, occupational therapy and speech therapy.
Medicare Part C (Medicare Advantage)
Medicare Advantage offers a bevy of benefits to seniors who are looking for more comprehensive coverage. These plans must include at least the same benefits offered through Parts A and B, and many (but not all) plans cover prescription drugs. Because these plans are sold through private insurers instead of directly through the federal government, Medicare Advantage has different costs that vary by plan. As with any insurance plan, costs rise each year. If you want to learn more about this type of coverage, then check out our guide to Medicare Advantage.
Medicare Part D Costs
Different factors affect your Part D premium and plan costs since these plans are sold separately from original Medicare (Parts A and B). Part D covers prescription drug costs, and it was introduced in 2003 to help seniors afford medication. It’s a popular provision. How much you pay for Part D varies based on the type of coverage you choose, but there are standards in place to limit your out-of-pocket spending. Once again, higher-income enrollees will pay an income-based surcharge on top of their monthly premiums:
|If you earned (single tax filing):||If you earned (joint tax return):||You’ll pay:|
|Up to $85,000||Up to $170,000||The plan premium|
|Over $85,000 to $107,000||Over $170,000 to $214,000||$12.40 + plan premium|
|Over $107,000 to $133,500||Over $214,000 to $267,000||$31.90 + plan premium|
|Over $133,500 to $160,000||Over $267,000 to $320,000||$51.40 + plan premium|
|Over $160,000 to under $500,000||Over $320,000 to under $750,000||$70.90 + plan premium|
|$500,000 or more||$750,000 or more||$77.40 + plan premium|
Copayments, coinsurance rates, the specifics of drug costs and deductibles all vary by plan when it comes to Medicare Part D. Some plans charge no deductibles while others charge the full allowable amount. Likewise, out-of-pocket thresholds can also vary. In 2018:
- The standard deductible is $405.
- The standard initial coverage limit is $3,750.
- The standard catastrophic coverage limit (out-of-pocket threshold) is $5,000.
These amounts increase each year. The deductible will go up to $415 in 2019, the initial coverage threshold will increase to $3,820 and the out-of-pocket threshold will jump to $5,100.
The Part D Donut Hole
Most Part D enrollees will not reach the initial coverage limit, but for those with a lot of regular prescriptions or particularly expensive medications, it may be easier to hit that coverage limit. It’s a situation called the donut hole.
Once you reach the donut hole (spending $3,820 on prescriptions for the year in 2019), you’ll get a discount on prescriptions until you reach the other side, which is called the catastrophic coverage limit or out-of-pocket threshold. The Affordable Care Act introduced a way to close the coverage gap by giving people discounts on drugs. In 2018, the discount on generics in the donut hole is 56 percent while the discount on brand names is 65 percent.
These discounts were set to increase each year until 2020, at which point beneficiaries would pay 25 percent of the cost of your drugs, which is the normal rate already. In 2019, the donut hole will actually close one year earlier for brand name drugs. The gap for generics is set to close on time in 2020. In 2019, the discount for generics is 63 percent. Once you reach the catastrophic limit ($5,100 in 2019), you’ll pay about 5 percent of the cost of prescriptions for the remainder of the plan year. Your annual deductible, coinsurance payments, copayments, the discount that you get on brand-name drugs and what you pay while you’re in the donut hole all count toward that out-of-pocket threshold. Premiums, pharmacy dispensing fees and non-covered drugs do not count.
Medicare Part D imposes a penalty fee for late enrollment if you go for more than 63 consecutive days after your initial eligibility window without enrolling in either: Part D coverage, a Medicare Advantage plan with drug coverage, another Medicare plan with drug coverage, or a creditable prescription drug plan.
You don’t have to sign up for any portion of Medicare that you don’t want, but remember that certain portions charge penalty fees for late enrollment, so factor this in when determining when to sign up.