Medicare has several parts and plans, and the cost of monthly premiums can add up. However, there are several ways a person may save money on healthcare costs.

According to the Kaiser Family Foundation (KFF), there were 67.7 million people enrolled in Medicare in 2020.

Also, a National Library of Medicine report showed that more than a quarter of people enrolled in Medicare spent 20%  of their income on premiums and other costs in 2017.

In this article, we describe Medicare plans, coverage, and premiums. We then look at ways a person can save money on healthcare costs, including premiums.

We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:

  • Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
  • Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
  • Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.

What is Medicare?

Medicare is a federally funded program that provides private health insurance to people aged 65 or older. Younger people with end stage renal disease, and with certain disabilities may also qualify for Medicare.

Medicare has several parts:

  • Original Medicare includes Part A, inpatient hospital insurance, and Part B, outpatient medical insurance.
  • Medicare Advantage (Part C) is an alternative, private insurance that offers the same coverage as Original Medicare.
  • Medicare Part D provides prescription drug coverage.

Premiums

Premiums vary across Medicare plans, especially for a person with Medicare Advantage (Part C) or a Part D plan. This online tool can help a person compare plans and costs.

Original Medicare (Part A and Part B)

According to Medicare, most people do not pay Part A premiums. However, if a person has to pay, the standard monthly premium in 2021 ranges from $259 to $471, the deductible is $1,484, and coinsurance ranges from $0 to $742.

A person must pay the premium for Part B, which is $148.50 each month in 2021. The premium may be higher, depending on a person’s income.

For 2021, the Part B deductible is $203 per year. After a person has paid the deductible, they generally pay 20% coinsurance of approved amounts.

Medicare Advantage (Part C)

Private companies provide Advantage plans, and the monthly premiums vary depending on which plan they have.

Medicare Part D

The Part D premiums also vary depending on the plan, and a person with a higher income level may pay a higher premium.