Medicare is not a free entitlement. Over the years, the out of pocket cost has increased. One of the myths is that at age 65, healthcare is free. This is not the case.
First, some basics. There are four parts to Medicare. Part A for hospitalization; Part B for medical insurance; Part C (which doesn’t apply to everyone) is medical insurance called Medicare Advantage plans; Part D is prescription insurance.
Part A is premium free because most people have paid the medicare tax. There can be a deductible of $1,100.
Part B covers outpatient services at 80%. There is a monthly premium, directly taken from the social security check of 115.40 with a modified adjusted cost by gross income. The government created 12 supplemental private plan options that cover the other 20% for the individual to purchase. The cost of a supplemental plan varies from state to state and plan to plan. The cost can be from $90-200. If an individual enrolls after age 65, there is a permanent penalty added of 1% per month which raises the premium.
Part C is the Medicare Advantage plans. These plans include prescription coverage and often have other benefits like vision and gym memberships. These plans are being trimmed down and may be eliminated in the future. The cost of the plans are usually close to $200 a month and higher.
Part D is prescription insurance with a monthly premium. The cost of these plans vary from state to state and can range from $20-150 a month. There is also a copay tier system. Seniors can pay substantial amounts of copay for a brand name medication when generics are unavailable. An example of this was Fosamax for bone loss. Until it went generic several years ago, it was a third tier co-pay, at a cost of $70. There is also a penalty for signing up late of 1% per month from age 65 added to the premium. Many people don’t get the prescription plan at 65 because they are not taking medications. If an illness occurs later, then premiums will be higher .
Let’s add the costs per month. Part A free Part B $115.40 Supplemental $120.00 (average) Part D $ 50.00 (average) copays $ 30.00 (average)
This amount can be much higher depending on the supplemental insurance, whether your part B premium has a penalty attached and the copays. I have had clients who pay over $300.00 a month in copays.
The point I am making is seniors on a fixed income may end up paying a substantial part of their monthly income on healthcare. Medicare is not a free entitlement.