How Much Does Medicare Cost?

Original Medicare is divided into Part A (Hospital Insurance) and Part B (Medical Insurance). Part A helps pay for inpatient hospital care, some skilled nursing care, home health care and hospice care. Part B helps pay for doctor services, outpatient hospital care, durable medical equipment, home health care not covered by Part A, and other services.

Medicare was never intended to pay 100% of medical bills. Its purpose is to help pay a portion of medical expenses. Medicare beneficiaries also pay a portion of their medical expenses, which includes deductibles, copayments, and services not covered by Medicare.

The amounts of deductibles and copayments change at the beginning of each year. The amounts listed below are for 2003.

Part A -- Monthly Premium

If you are eligible, Part A is free because you or your spouse paid Medicare taxes while you were working. You earn Social Security "credits" as you work and pay taxes. For each year that you work, you earn 4 credits.

You will receive Medicare Part A for free if you meet one of the following criteria:

• You are 65 or older, and you receive or are eligible to receive full benefits from Social Security or the Railroad Retirement Board.
• You are under 65, and you have received Social Security disability benefits for 24 months.
• You are under 65, and you have received Railroad Retirement disability benefits and you meet Social Security disability requirements.
• You or your spouse had Medicare-covered government employment.
• You are under 65 and have End-Stage Renal Disease.

If you do not qualify for premium-free Part A, you may be able to buy it. Contact the Social Security Administration at 1-800-772-1213 for more information.

Part A Deductibles and Copayments

Hospital Deductible:

• $840 per hospital benefit period (A hospital benefit period begins the first day you receive inpatient hospital treatment and continues until you have been out of the hospital or skilled nursing facility for 60 days in a row.)

Hospital Stay Copayment:

• Medicare pays in full (after the hospital deductible) for days 1-60
• Medicare pays all but $210 per day for days 61-90
• Medicare pays all but $420 per day for days 91-150
• You pay all costs for each day over 150 days.

Skilled Nursing Facility Copayment:

• You pay nothing for days 1-20
• You pay $105 per day for days 21-100
• Beneficiary pays all costs for each day beyond 100 days

Usually, a Medicare Supplement policy will pay for Part A deductibles and copayments.

Part B Monthly Premium

The Part B premium for 2003 is $58.70 per month. Everyone who has Part B pays a monthly premium.

The monthly premium is deducted from your Social Security, Railroad Retirement, or Civil Service Retirement check. Beneficiaries enrolled in Part B who do not receive a monthly retirement check are billed by Medicare every three months.

Part B Deductibles and Copayments

Annual Deductible:

• $100 per year

Copayments:

• Medicare helps pay 80% of the Medicare-approved amount. You usually pay 20% of the Medicare-approved amount.
• You pay all of the limiting charge when a provider does not accept assignment. (Doctors and other providers who accept assignment agree to accept the Medicare-approved amount for a service. Providers who do not accept assignment may charge you a 15% surcharge. You would be responsible for paying the surcharge (or limiting charge) as well as any copayments.) Therefore, you should always ask a provider to accept assignment.

Some Medicare Supplement policies help pay Part B deductibles and copayments.

Source: Indiana Senior Health Insurance Information Program (SHIIP)