Boy, this is such a complex question, but I get asked this very pertinent question frequently. Want the quick and dirty? – It depends.
That’s not what you wanted to hear. I get it. Well, let me break down some of the variables for you so that you get what you paid for.
Most people don’t pay a premium for Medicare Part A. Your taxes actually DID do something! However, if you didn’t pay into Medicare for a full 40 quarters, you may pay up to $259 or $471 (2021 figure) per month depending on how long you paid in. Again, for most people, the answer here will be $0. If you receive full Medicaid benefits, this will also be $0, regardless of your work history.
Additionally, if you don’t have any kind of supplemental coverage, you will have a hospital deductible of $1484 (2021) which covers your first 60 days of hospitalization per benefit period. Addtional copays will apply for each day you are in the hospital after that.
Unfortunately, Part B - which covers many medical services outside of a hospital setting - is NOT free. For most people the cost for Part B is simple: $148.50 (2021). However, Social Security looks 2 years back at your income to determine if you should pay more. There are many pricing tiers that you can fall into, with the highest earners paying $504.90/month (2021). Also, just as with Part A, those who receive full Medicaid benefits will pay nothing for Part B.
Just as with with Part A, if you don’t have any kind of supplemental coverage, you’ll have a Part B deductible of $203 (2021) per year. Some supplemental plans still require you to meet this deductible. Additionally, you may be responsible for 20% of all Part B services with no maximum if you don’t have a supplemental plan.
Part C/Medigap Insurance (Supplemental Plans)
Now hold on to your hats, because this is where it gets interesting. Medicare Advantage (synonymous with Part C) and Medigap Insurance plans (like Plan G or F) are BOTH types of supplemental plans that give you more coverage than Original Medicare. Both types of plans require that you maintain Parts A and B. Part C plans may or may not have a monthly premium, however, in my local San Diego market, many Part C plans are available without a monthly premium. Even still, you may have copays for receiving medical services, (for example, $15 to see your primary care doctor).
Medigap Insurance plans ALWAYS have a separate monthly premium, and that premium depends largely on your age, your zip code, and your smoking status. But for an example, Plan G – which covers most Medicare services without a copay – may run you about $130-150/month as a 65 year old in Southern California. As you age, these premiums get higher and higher.
Part D - Prescription Drug Plans
To round out your Medicare coverage, you may select a Part D plan. If you elected a Part C plan, it very well may have Part D included with it. However, if you have a Medigap plan or no supplemental plan at all, you’ll need to purchase a standalone Part D plan. The costs vary widely, depending on your region and the amount of medications covered, but the national average premium in 2021 is $33.06 per month. You may also have copays for your medications, with higher copays for brand name medications.
A Word About Penalties
If you don’t enroll “in time”, you may have Medicare penalties. There are penalties for Parts A, B, and D of Medicare – and they can be substantial. They can even be lifelong. Medicare/Social Security will send you correspondence if this may apply to you. The easiest way to avoid penalties is enrolling into Medicare before you turn 65 or – if you have creditable employer health coverage and retire later – enrolling before the date that you lose that coverage. Hope you caught that the key word is "before".
To sum it all up, if you are the average retired American living in Southern California and choose a Medicare Advantage (Part C plan) and your household income has been stable at, say, $50,000 – you can get comprehensive health coverage for $148.50 a month (2021). This includes all parts of Medicare.
Using the same details as above, if you go the Medigap plan route and select Plan G with a prescription plan, you’ll pay more. You can reasonably expect to spend about $320 a month for comprehensive medical coverage. You may end up spending even more if you decide to pick up a dental insurance plan.
Keep in mind that these are VERY round numbers and should be used for illustrative purposes only. As you can see, there are many variables that come into play and an experienced agent specializing in Medicare can help you understand your own specific costs. This post is not written to help you understand why you would choose Part C over Medigap or vice versa, only to show how the costs differ.