Medicare Premiums and Out-of-Pocket Costs for 2015

Medicare premiums, deductibles, copayments, and coinsurance amounts are all subject to change annually. If sifting through Medicare’s 150-plus page handbook to understand your costs is not your ideal way of spending an afternoon, you’re in luck—we’ve broken down the premiums and out-of-pocket costs you can expect this year. We’ll provide a general overview of each part of Medicare along with the associated costs for 2015.

Medicare Part A (Original Medicare)

Medicare Part A covers hospital stays, short-term nursing home care, hospice care, and limited skilled home health care.

Nearly all Medicare beneficiaries qualify for premium-free Part A coverage. Only those who have fewer than 40 work credits (based on their own or their spouse’s work history) will pay a premium for Medicare Part A. The premium for those who don’t qualify for premium-free Part A coverage ranges between $224 and $407 per month in 2015. Read more about how Social Security Administration work credits apply to Medicare Part A here.

Should you be hospitalized in 2015, here are the out-of-pocket expenses you can expect with Medicare Part A:

Deductible: Medicare recipients pay a deductible of $1,260 for each benefit period.
Coinsurance for hospitalization:
- For days 1-60, there is no coinsurance payment.
- For days 61-90 there is a $315/day coinsurance payment.
- For days 91 and beyond, there is a $630/day coinsurance payment.
- Each additional day in the hospital after day 90 within the same benefit period counts toward your 60-day lifetime reserve for hospitalization.
- Once you’ve reached your lifetime reserve of 60 days, you pay all costs.
- For days 21-100 in a skilled nursing facility, you pay a daily coinsurance amount of $157.50.

Medicare supplement (Medigap) plans, which are discussed in more detail below, can help cover some of the expenses not covered by Original Medicare, including coinsurances and deductibles. Most Medigap plans also cover an additional year (365 days) in the hospital during a person’s lifetime.

Medicare Part B (Original Medicare)

Medicare Part B covers outpatient health care costs, such as doctor visits, lab tests, surgeries, and durable medical equipment. In 2015, the premium for most people is $104.90; however, individuals with annual incomes above $85,000, and people who file jointly and have a combined income of above $170,000 will pay more. The annual deductible for Part B is $147.

Medicare Advantage (MA) plans

These plans become primary to Original Medicare (Parts A and B) and are sold through Medicare-approved private insurance carriers. The plans are managed network plans (like HMO, PPO), and some plans offer additional services like drug, dental, vision, and hearing coverage, as well as low or no monthly premiums. You must enroll in Parts A and B in order to enroll in an MA plan, and you cannot have a Medicare Part D drug plan or a Medicare supplement (Medigap) plan with most Medicare Advantage plans.

Because MA plans are administered through private insurance carriers, the premiums, deductibles, copayments, and coinsurance amounts all depend on the particular plan you select. Consult with an expert to find affordable Medicare Advantage plans.

Medicare Part D

Part D prescription drug plans are sold as standalone policies through Medicare-approved private insurance carriers. Part D plans can only be purchased with Original Medicare or with a private fee-for-service (PFFS) plan, a type of Medicare Advantage plan. You cannot have a Part D plan with most Medicare Advantage plans, so, if you opt for an MA plan, it’s important to make sure it has adequate drug coverage beforehand.

Premiums and out-of-pocket expenses for Part D vary based on the plan you choose. In 2015, those who reach the Medicare Part D coverage gap, often referred to as the “donut hole,” will pay 45% for covered brand-name drugs and 65% for covered generic drugs. The coverage gap starts after you and your plan have paid a combined $2,960 for covered drugs.

Medicare Supplement (Medigap) plans

As the name suggests, Medigap plans help fill in the gaps of Original Medicare (Parts A and B). Medicare supplement plans are issued by Medicare-approved private insurance carriers and help pay for costs not covered by Original Medicare, such as copayments, deductibles, and coinsurance amounts. Some plans may also cover you when you travel outside the U.S.

The 10 Medicare supplement plans are offered in a lettered format (A through N), and the availability of each plan varies by state. Although the plans are standardized, pricing and availability can vary depending on your location and the insurance carrier you choose. Pricing can be based on a few different models, as follows:

Attained-age-rated pricing: The premium is based on your age at the beginning of every policy period.
Community-rated pricing (no-age-rated): The premium is the same for all policyholders.
Issue-age-rated pricing: The premium is based on your age at the time you first enrolled in the policy.

Timing is critical when purchasing a Medigap plan. The open enrollment period begins six months before the first day of the month of your 65th birthday—but you must also be signed up for Medicare Part B in order to enroll in a Medigap plan during that time.

During your open enrollment period you can purchase a Medigap policy without underwriting. If you try to purchase a plan outside the open enrollment period, you are subject to the insurer’s underwriting process and could be denied coverage, or, if you do get coverage, it could be considerably more expensive. This is why it’s so important to plan well ahead of your 65th birthday. While prices for Medigap costs can vary dramatically, medicarerights.org reports that, nationwide, the average cost of a Medigap policy is $183 per month.

Get Expert Help

Navigating Medicare can seem daunting—from understanding the differences between Original Medicare and Medicare Advantage plans, to learning about the financial assistance programs that may be available to you. The experts at CA Medicare can help you understand all your options for coverage and help you with Medicare enrollment—call us today.

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