How Much Does Medicare Cost in 2017?
The cost of health care is a big question mark for soon-to-be retirees. Perhaps you’ve been on a trusty employer plan for the last few decades or have come to know and love a private insurance plan that fits your needs and budget.
But now you’ve got to switch to Medicare. And although you’ve always been able to pay your premiums, the cost of Medicare is an unknown number among a sea of unknowns associated with health care in retirement (or retirement in general, for that matter).
Although I can’t grant you any magical, one-size-fits-all answer, I can give you some solid estimations based on my experience working as a local Medicare expert to help you compare what Medicare costs with your current plan.
I always like to start with some good news…
Medicare Part A (Inpatient Care) Is Free
Have you paid into Social Security for at least 10 years (40 quarters)? Then your premiums for Part A are paid for!
Unfortunately, though, it can’t all be free…
The Associated Part B (Outpatient Care) Monthly Premium Is $134.00
This figure is adjusted for high income, but that is not a concern for most people. $134.00 will be your monthly premium unless your income exceeds $85,000 per year or more as an individual or $170,000 filing jointly with your spouse.
This is where there is a fork in the road. From this point, the cost of Medicare is heavily affected by which path you take. You can boil down all the madness into two basic choices (“Swamped with mail? Here’s what it all means”): Medicare Advantage or Original (traditional) Medicare.
The Traditional Medicare Route
If you take this path, I always suggest picking up a Medicare Supplement Plan. It might seem unnecessary (“Do I Really Need a Medicare Supplement?”) to some, but without the extra coverage, there is no limit to your out-of-pocket spending.
A Supplement’s price range is anywhere from $50-150, but a standard, middle of the road Plan G usually costs about $110 per month. This is the typical plan I recommend to my clients.
Then, since a Supplement does not cover those sky-high prescription drug costs, the vast majority of retirees purchase a Part D Drug Plan. Although the prices span anywhere from $14.60 to $157.40 per month, the average cost for a drug plan is $35.63 as of 2017. The out-of-pocket costs associated with Part D vary greatly depending on your medications. Just keep in mind that there will likely be copays and coinsurance regardless of which plan you choose.
The Medicare Advantage Route
The other choice is the less beaten path. From my experience, most people feel very cozy in the stability of a Medicare Supplement. However, an Advantage Plan often appeals to the more cost-conscious, risk-taking retirees. Offered as an alternative to Traditional Medicare, Advantage plans range from $0-179 per month with most settling in around $70. To make them even more attractive, a Drug Plan is almost always included as a part of the package.
Caution: Check For Possible Out-of-pocket Costs
At first glance, it looks like choosing a Medicare Advantage is a no-brainer, but there is a reason it appeals to risk-takers. With a Medicare Supplement (only available with Original Medicare), the maximum out-of-pocket is only $183 annually for Plan G (not including prescription drug costs). However, in an Advantage Plan, the coverage is a bit spottier. You pay less in monthly premiums, but copays, coinsurance, and deductibles are much higher. The potential out-of-pocket for an advantage plan can be as a high as $3500-6000 per year or more! Some years you will save money because of the cheaper premium, but one year of bad health can turn that around really quickly.
The Costs At a Glance For a 65-Year-Old
Free Part A
$134 per month Part B
$110 per month for Medicare Supplement Insurance
$35.63 for Part D Drug Plan
= $279.63 monthly
(with LOW out-of-pocket spending limit)
Free Part A
$134 per month Part B
$70 per month for an Advantage Plan (Part D included)
= $204 monthly
(with HIGH out-of-pocket spending limit)
Interested In A More Personalized Analysis?
So there you have it! This should give you a good idea of what Medicare costs for the average 65-year old. But—as I said before—the cost of Medicare is different for every person. If you are interested in more personalized figures, call us at 937-492-8800 for a free consultation. We will assess your financial and health situation to find an overall plan that meets your needs, concerns, and pocketbook. Ensuring you a successful and secure transition into retirement is our number one priority.
There will always be some unknowns when it comes to health care costs in retirement, but sitting down with a professional in order to assess your situation can diminish even the biggest question marks and settle your deepest concerns.
Disclaimer: Numbers are based on Sidney, Ohio.
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