Costs of Medicare

Medicare is an insurance plan provided to American citizens which is funded and administered by the Federal Government. There are over 40 million American citizens who have utilized the insurance plan and this figure will be expected to almost double over the next 20 years.

Since the program is funded by the federal government, a portion of the Medicare costs that provide this plan is raised by income taxes. The employee and the employer both pay half the number of the Medicare costs which results to about 3% of an individual’s income, with the employee paying 1.5% and the employer matching that number. Individuals who are self employed end up paying the entire 3%, however they could claim half of the costs during their taxes.

Medicare is divided up into many portions. Benefits of Part A involve things such as stays at nursing homes and hospitals. The benefits of Part B consist of coverage on dialysis, ambulance trips and x-rays.

In order to obtain Medicare coverage, individuals will need to pay yearly and monthly premiums and deductibles. If an individual, or their spouse has paid Medicare taxes for a minimum of 40 quarters, annual or monthly premiums will not be needed in order to get the benefits of Part A. However, if the minimum is not met, payment will range between $200 and $425. The payment will be set depending on the number of quarters Medicare taxes have been paid. Even with no monthly premiums, individuals will still be required to pay deductibles for certain services. For instance, hospital stays of less than 60 days will have a deductible of a $1,000.

For individuals who receive Part A benefits without any premiums, Part B will come with a deductible. Typically these Medicare costs are about $100 a month, yet the amount could differ based on an individual’s income. The insured needs to pay an additional deductible to obtain further benefits. For example, the insured is typically responsible for about 20% of the overall Medicare costs associated with durable medical equipment.

In 1965, the Original Medicare was signed into law which outlined only benefits for Parts A and B. In 1997, a new portion was added to the plan which is known as the Medicare Advantage Plans or Part C. Medicare Part C utilizes private insurance companies for individuals who wish to receive certain Medicare benefits. Private insurance companies are given a great deal of flexibility in determining how to provide the benefits to beneficiaries. As a result, there are several variations in the price of the programs. It is essential to fully understand each program, and also to compare since the programs can differ dramatically.

In recent years, Prescription Drug Coverage was added to the Original Medicare plan. Typically the new addition is known as Medicare Part D. Part D provides beneficiaries with much needed coverage for prescription medications. However, all prescription drugs are not covered and costs can vary depending on the time of plan chosen.

When it comes to Medicare costs, it is highly recommended to compare different plans. Costs can vary greatly depending on the type of plan chosen, taxes paid during employment, and insurance company.