What You Need to Know About Medicare Costs

Updated on March 8, 2018
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Dreamworker has spent years studying and dealing successfully with a number of health issues.

When people approach the age when they start thinking about Medicare their first question always is going to be, “What is this going to cost me?”

This is a simple question with a complicated answer because what people end up paying depends on the plans they choose, their ages when they buy in, their income, and where they live.

Furthermore, few realize that Medicare and Medicare Advantage are two entirely different types of health insurance plans, the first one actually being administered by the government and the second only regulating it.

explain the basics of each type of coverage.

You should take the time to read them if you want to gain a better understanding of them.

Financial information about the costs involved in buying Medicare Health Insurance P lans.
Financial information about the costs involved in buying Medicare Health Insurance P lans. | Source

Medicare Advantage Costs

It is common for people who are just starting out with Medicare to become confused about all of the financial requirements, terminology and plan types so they usually start out by purchasing a Medicare Advantage Plan.

Some geographic locations offer many different plans, while others offer only a few. While they may look the same at first, they really are not because each one offers different costs, benefits, co-pays, and services.

Today’s average cost for a Medicare Advantage plan ranges from $0 to $300 per month, with the average being around $64. However, people still must pay their Part B premium, that in 2018, costs the average person $134 per month.

However, some individuals pay as much as $428.60 per month depending on income, geographic location, and marital status.

Medicare Advantage Benefits

By law, Medicare Advantage plans must provide all of the benefits of Medicare Parts A and B and also offer additional services.

  1. Prescription coverage is included in most plans, which means people don't have to pay extra for this service.
  2. Some plans offer coverage for dental, vision or hearing aids, but these are extremely small benefits that usually don't pay enough to make them worth having, and not all plans offer every one of them.
  3. Almost all plans offer a free gym membership.
  4. The biggest perk, of course, is that they save people the trouble of having to juggle a lot of information in order to buy coverage.

Financial Caveats of Medicare Advantage Plans

While signing up for a plan like this is very easy to do and for most people may seem reasonably priced, it is important to note that the monthly costs represent only one part of what people will have to pay if they need health services from one of these providers.

For example, ten years ago, when my husband and I signed up for an MA plan, our base cost was $6100 per year. However, we had to pay extra for office visits, medications, physical therapy, hospital stays and other services as well as deductibles.

So, while it looked like a good deal, we realized that if health problems showed up, we could be in trouble.

At that time, on the plan we had, we each had an annual out of pocket limit of $4,000, but this amount did not apply to prescription drugs.

Furthermore, we discovered that plans like ours did everything possible to squeeze more money out of us.

For example, you had to have a referral before you could see a specialist, which meant spending time and money to see your “gatekeeper” doctor before you could get to the physician you really needed to see.

Oftentimes the referral would “disappear”, and you wouldn’t know about it until you arrived at the office of the specialist. So, if you wanted to see him, you’d either have to pay out of pocket, which meant spending hundreds of dollars or go back to the gatekeeper to get another referral and then try again.

So, instead of paying for one office visit, you might have to pay for four of them!

In some instances, even after months of trying, we were not able to straighten out expensive bills for which we did not owe money because they kept passing us from one person or office to the next.

The point here is that while some plans may play fair, many do not. They lure you in with zero or cheap premiums and offers of free gym memberships, and then make getting the help you need difficult and expensive.

What this means is that the “good deal” you thought you had might turn out to be a very costly headache at a time when you least need to have more problems than you already do!

What you don't know about the costs of Medicare plans can damage your finances.
What you don't know about the costs of Medicare plans can damage your finances. | Source

Medicare, Medigap and Part D Costs

People who choose to purchase a combination of Medicare, Medigap, and Part D are going to appear to pay more than those who choose MA plans, but this isn’t always the case.

Much depends on their geographical location, and the Medigap and Part D plans they choose to purchase.

There are numerous companies that offer Medigap plans. Each offers the same exact plans, but their costs can vary from company to company. Clients get to choose from a menu of benefits, and this is what determines how much they pay.

The same is true of Part D plans. However, they are a bit trickier because there are so many companies that offer them, prices vary considerably, and the drugs each one covers can be quite different as well.

So, it not only costs more on the surface to buy into these plans, it takes a bit of work and research for people to decide exactly what they want or need.

  • What people pay for Medicare coverage will be the same as they pay when they choose a Medicare Advantage plan, usually $134 per month but possibly much more (as noted above).
  • For the very best Medigap plan with a large, credible company, a couple in their mid 70’s like my husband and myself will pay approximately $410 per month.
  • Part D plan prices average $34 per month per person but can be much higher depending on where you live, the medicines you need, and the plan you choose.

In 2018, my husband and I will pay $254 per month for our Part B coverage, $52.80 for our Part D plan and $410.74 for our Medigap plan. This adds up to $717.54 per month for the both of us, which according to eHealthInsurance is actually about $100 per month less than the average American pays for family plan coverage per month.

It likely is more expensive in most cases than a Medicare Advantage plan would be, but it is important to bear in mind that there is more than money that is important when it comes to protecting your health.

Medicare, Medigap and Part D Benefits

Here are some of the good points of owning these three plans:

You can get top notch medical care wherever you go in the US, as long as the doctors and medical facilities you use accept Medicare. This means that people never have to worry about how much they’ll have to pay if they get sick or need surgery when they’re away from home.

With the right plan combination, you never pay to see a doctor or specialist, use an Emergency room, have surgery, pay for rehab, or worry about paying for co-pays or deductibles.

You do have to pay for medications, but you can choose from a variety of plans that allow you to sign up for less and pay less in many instances. Some even offer free generics if you buy them through mail order services.

Last year our total costs for our Part D plan and medications were less than $1200!

Original Medicare Caveats

One thing people need to be careful about is choosing just Original Medicare for their coverage.

While it's an inexpensive health insurance to buy in itself, as a stand-alone it does not provide coverage for

  • co-pays,
  • deductibles or
  • drugs

and will cost you 20% of your total costs.

This may sound reasonable, but it is a sure way to head towards bankruptcy in many circumstances due to the high out of pocket costs for these items.

The fact that Medicare pays 80% sounds great, but if your hospital bill is $100,000, this means you'll have to come up with $20,000 in addition to your deductibles, which can be substantial. In 2018 they are more than $1200 per quarter for hospital stays and another $183 per year for Part B coverage.

Also, you'll pay a separate cost for your part D plan, which can be hundreds of dollars per year depending on the coverage you choose.

Another thing you should know is that Medicare, even when combined with Medigap and Part D policies, does not cover vision, dental or hearing services and in many cases will not pay for an ambulance.


There is no question that people who have good health love their Medicare Advantage policies, but the truth is that any policy would be good for them because they don’t actually need or use it to any great extent!

When we talk to them, they tell us we are foolish to be spending so much money on the plans we have, when we could get good coverage for practically nothing.

What they do not realize is that any company that is charging nothing and also returning your Part B premiums must make up the losses somewhere.

They do it with higher deductibles, hospital fees, charges for doctor visits, lab tests, physical therapy and the like.

I can remember going to physical therapy for six weeks, three times a week, at no charge when those on MA plans were paying $25 per visit. This was costing them $450 and me, nothing.

Most think they’re paying very little, which may be the case for some people, but for most, their plans are nickel and diming them to death.

Where the shoe really hurts is when people need heavy-duty help, such as for joint replacement, cancer or heart problems.

My husband had a triple neck fusion that cost $95,000. We paid not one cent for it.

Furthermore, people on MA plans often find that many doctors who deal with these types of health problems don’t take Medicare Advantage plans because they don’t’ pay!

So, while my husband and I do pay more than they do, when we have any type of health problem, we do not have to worry about getting treated or even paying for our care.

This year, the two of us will pay a total of $8,610 for all of our plans combined.

It’s a bit more than last year and will be a bit less than next year. However, what we will get for our investment will be worth the extra cost.

Those with good health won’t get the same financial benefits as those who are not well, but they will still have peace of mind, which in itself is a very potent health benefit.

Choose Carefully

For those who are trying to decide which plans to choose, all of this information can be overwhelming and perhaps even a bit frightening.

The reason for this is that one never knows what awaits him in the future.

Healthy people get into accidents, fall, and become victimized by all sorts of diseases and illnesses.

Assuming that because you are healthy today does not mean that the same will be true tomorrow.

Our Medicare plans have saved us more than half a million dollars in medical bills in the past ten years. Had we paid $8,000 annually for that period of time, (which we did not), today we’d still be $420,000 ahead financially.

We also would not have had to fool with referrals, worried about losing doctors or fearing that someone who graduated at the bottom of his medical school class would be the one to stick a knife into our bodies and maybe miss his mark!

Medical care is never going to be cheap, so if you’re going to have to spend money anyhow, why not hand out a smidge more, get good Medicare, Medigap, and Part D plans and really protect yourself!

You may not feel this is affordable right now, but one day you'll be happy that you sacrificed a few packs of beer or fancy restaurant meals in order to have the peace of mind of knowing that if you need an expensive surgery, it will cost you nothing.

Did it surprise you to learn how much Medicare Plans can cost?

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© 2018 Sondra Rochelle


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