Does Original Medicare Advantage Pay The 20 Percent Premium Or Out-Of-Pocket In 2023

Understanding what Original Medicare covers and what it costs can be confusing. With changes coming in 2023, what can people expect to pay if they have traditional Medicare? This article examines the costs of Original Medicare, including Part B premiums, deductibles, and typical out-of-pocket spending. Read on to learn what to budget for Medicare in the coming year.

What is Original Medicare?

Original Medicare consists of Medicare Part A, which covers hospital services, and Medicare Part B, which covers doctor visits and outpatient care. Many people refer to Original Medicare as traditional Medicare or fee-for-service Medicare. With Original Medicare, beneficiaries can see any doctor or hospital that accepts Medicare.

Original Medicare covers many healthcare services, but it does not cover everything. For example, Original Medicare does not cover most dental, vision, or hearing care. It also does not cover prescription drugs. To get drug coverage, a beneficiary must enroll in a stand-alone Part D prescription drug plan or a Medicare Advantage Plan that includes drug coverage.

How Much Are 2023 Medicare Part B Premiums?

Most people who enroll in Medicare pay a premium for Part B coverage. For 2023, the standard Medicare Part B premium is $164.90 per month. This is a decrease of $5.20 from the 2022 premium of $170.10.

The Part B premium is based on income. Higher income beneficiaries pay more. Here are the Part B premium amounts for 2023 based on income:

Individuals with income up to $97,000: $164.90 per month
Individuals with income between $97,001 – $123,000: $230.10 per month
Individuals with income between $123,001 – $153,000: $316.70 per month
Individuals with income between $153,001 – $500,000: $399.80 per month
Individuals with income above $500,000: $490.00 per month

Married couples file joint tax returns to determine Part B premiums. The income thresholds are doubled for couples.

What Are the Medicare Part B Deductibles for 2023?

Along with the monthly premiums, Medicare Part B also has an annual deductible that must be paid before coverage begins.

The standard Medicare Part B deductible for 2023 is $226, a decrease of $7 from the 2022 deductible of $233. The Part B deductible covers outpatient services like doctor visits and durable medical equipment.

How Much Will Out-of-Pocket Spending Be?

Aside from premiums and deductibles, Original Medicare also includes cost sharing when services are used. This includes:

20% coinsurance for most covered services after meeting the Part B deductible
A deductible and daily copays for hospital stays under Part A

These higher costs quickly add up. On average, beneficiaries in traditional Medicare spend over $5,500 per year in out-of-pocket costs. Costs vary depending on health status and healthcare utilization, ranging from under $2,000 annually for healthy adults to over $14,000 for beneficiaries in poor health.

The Centers for Medicare & Medicaid Services (CMS) estimates the average Medicare drug beneficiary’s out-of-pocket spending in 2023 will be approximately:

$226 for the Part B deductible
$1,600 for Part B coinsurance
$300 for Part A hospital deductibles and copays
$1,500 for dental, hearing, vision and other services not covered
$485 for a Part D prescription drug plan

That adds up to nearly $4,400 in typical out-of-pocket costs for a Medicare beneficiary in 2023. However, costs can be much higher for those in poor health or with extensive healthcare needs.

How Does Traditional Medicare Compare to Medicare Advantage?

Instead of Original Medicare, some beneficiaries enroll in Medicare Advantage Plans. These plans, also called Part C or MA plans, are offered by private insurers. Medicare pays the plan a fixed fee per enrollee to provide Medicare benefits.

In 2023, the average Medicare Advantage premium is around $20 per month. Many plans charge no premium beyond the Part B premium. Medicare Advantage Plans have an annual out-of-pocket maximum that limits spending for Part A and Part B services. Once that limit is reached, the plan pays 100% of costs. The maximum out-of-pocket limit for 2023 is $8,300.

Medicare Advantage Plans may offer extra benefits like dental, vision and hearing coverage that Original Medicare does not provide. Most Medicare Advantage enrollees pay lower out-of-pocket costs overall.

What’s Covered by Original Medicare?

Now that we’ve looked at the costs, what do beneficiaries get for the premiums and cost sharing? Here are some key things covered under Original Medicare:

Inpatient hospital care: Coverage includes a semi-private room, meals, nursing services, and drugs as part of an inpatient stay. Days 1-60 have a $1,600 deductible in 2023.
Outpatient services: Original Medicare covers outpatient services including lab tests, surgery, doctor visits, mental healthcare, dialysis, and medical equipment. The Part B deductible applies.
Skilled nursing facility care: Original Medicare covers skilled nursing facility stays up to 100 days when medically necessary. A copay applies for days 21-100.
Home healthcare: Medically-necessary part-time skilled care, like nursing care and physical therapy, is covered at home for homebound beneficiaries.
Hospice: For terminally ill beneficiaries, hospice coverage includes nursing care, counseling, equipment, medication, and other services.
Preventive services: Original Medicare covers many preventive services at no charge, including screenings for cancer, diabetes, heart disease, and other conditions. An annual wellness visit is also fully covered.

As you can see, Original Medicare provides extensive coverage for medically-necessary healthcare services. However, significant out-of-pocket costs remain for which beneficiaries must budget.

Strategies to Reduce Medicare Costs

To reduce your out-of-pocket costs in Original Medicare, consider these options:

Purchase supplemental insurance (Medigap) to cover cost-sharing
Enroll in a Part D Plan for prescription drug coverage
Use healthcare providers who accept Medicare assignment
Take advantage of preventive services with no out-of-pocket costs
Compare costs between providers using Medicare tools
Enroll in a Medicare Advantage Plan with an out-of-pocket maximum
See if you qualify for financial assistance programs (Extra Help, Medicaid)

Key Takeaways

Understanding Medicare costs allows you to plan your healthcare budget wisely. Here are some key points to remember:

The standard Medicare Part B premium will be $164.90 per month in 2023 for most beneficiaries.
Higher income beneficiaries pay more for Part B coverage.
The Medicare Part B deductible drops to $226 in 2023.
Original Medicare cost sharing like coinsurance leads to thousands in out-of-pocket costs for many beneficiaries.
On average, total out-of-pocket spending is nearly $4,500 per year for beneficiaries with traditional Medicare.
Medicare Advantage Plans must limit out-of-pocket spending and may offer additional benefits.
Supplemental coverage and financial assistance programs can help manage Medicare costs.

Planning ahead and understanding your Medicare options allows you to get the most from your Medicare benefits. While Original Medicare costs are going down in 2023, it still represents a significant expense for most beneficiaries. Carefully consider premiums, deductibles, and other out-of-pocket costs when making your Medicare coverage selections.

FAQS

Does Original Medicare Advantage pay the 20 percent premium or out-of-pocket in 2023?

Original Medicare Advantage Plans are not designed to cover the entire 20 percent premium or out-of-pocket costs. Instead, Medicare Advantage Plans, also known as Medicare Part C plans, are administered by private insurance companies and can offer additional benefits beyond what is covered by traditional Medicare (Parts A and B). The costs and coverage vary by plan, so it’s important to carefully review the details of each specific plan.

What is a Medicare Advantage Plan?

A Medicare Advantage Plan, also known as Medicare Part C, is an alternative to the traditional Medicare program (Parts A and B). These plans are offered by private insurance companies approved by Medicare. They typically combine hospital insurance (Part A), medical insurance (Part B), and sometimes prescription drug coverage (Part D) into one plan.

How does a Medicare Part C or Advantage Plan differ from traditional Medicare and Medicare Advantage?

Medicare Advantage Plans, also known as Part C plans, are offered by private insurance companies and provide comprehensive coverage that includes hospital insurance (Part A), medical insurance (Part B), and sometimes prescription drug coverage (Part D). Traditional Medicare, on the other hand, consists of Parts A and B and does not typically include prescription drug coverage. Medicare Advantage Plans may have different costs and coverage details compared to traditional Medicare.

Do Medicare Advantage Plans cover prescription drugs?

Some Medicare Advantage Plans offer prescription drug coverage as part of their benefits package. These plans, known as Medicare Advantage Prescription Drug plans (MA-PD), combine the coverage for hospital insurance (Part A), medical insurance (Part B), and prescription drugs (Part D) into one plan. However, it’s important to review the specific details of each plan to understand what drugs are covered and at what cost.

Can I still use my Medicare Supplement with a Medicare Advantage Plan?

No, you cannot use a Medicare Supplement (also known as Medigap) with a Medicare Advantage Plan. Medigap Plans are designed to fill the gaps in coverage for traditional Medicare (Parts A and B) and cannot be used in conjunction with Medicare Advantage Plans.

Are Medicare Advantage Plans required to pay out-of-pocket expenses?

Yes, Medicare Advantage Plans are required to pay a certain portion of your out-of-pocket expenses. However, the specific amount can vary depending on the plan type and the services you receive. It’s important to review the costs and coverage details of each plan to understand what you will be responsible for paying.

Do Medicare Advantage Plans require an additional premium?

Some Medicare Advantage Plans may have an additional premium in addition to the premium you pay for Medicare Part B. The costs and premiums vary by plan, so it’s important to review the details of each plan to understand the costs involved.

Can I join a Medicare Advantage Plan if I already have Medicare Part A , Part B and Part D drug coverage?

Yes, if you have both Medicare Part A and Part B, you are eligible to join a Medicare Advantage Plan. Medicare Advantage Plans are an alternative to traditional Medicare (Parts A and B) and provide comprehensive coverage that includes hospital insurance (Part A), medical insurance (Part B), and sometimes prescription drug coverage (Part D).

What are the Medicare enrollment periods for Medicare Advantage Plans?

The Medicare enrollment periods for Medicare Advantage Plans include the Initial Enrollment Period (IEP), which is the seven-month period that starts three months before your 65th birthday month and ends three months after, and the Annual Enrollment Period (AEP), which runs from October 15th to December 7th each year. There are also Special Enrollment Periods (SEPs) that may apply in certain situations, such as moving out of your plan’s service area or qualifying for a Special Needs Plan (SNP).

Do Medicare Advantage Plans cover all the same services as traditional Medicare?

Medicare Advantage Plans are required to cover all Medicare-covered services that are deemed medically necessary. However, the costs and coverage details may vary by plan, so it’s important to review the specific details of each plan to understand what services are covered and at what cost.

What to Expect to Pay for Original Medicare in 2023