Out of Pocket Costs
Neither Part A nor Part B pays for all of a covered person’s medical costs. The program contains premiums, deductibles and co-pays, which the covered individual must pay out-of-pocket. Some people may qualify to have other governmental programs (such as Medicaid) pay premiums and some or all of the costs associated with Medicare.
Some people elect to purchase a type of supplemental coverage, called a Medigap plan, to help fill the holes in Original Medicare (Part A and Part B). These Medigap insurance policies are standardized by CMS, but are sold and administered by private companies. There is currently no CMS approved supplemental coverage available to fill the Donut Hole, a coverage gap built into Medicare’s Part D benefit.
Most Medicare enrollees do not pay a monthly Part A premium, because they (or a spouse) have had 40 or more quarters in which they paid Federal Insurance Contributions Act taxes. Medicare-eligible persons who do not have 40 or more quarters of Medicare-covered employment may purchase Part A for a monthly premium of:
- $234.00 per month (2014) for those with 30-39 quarters of Medicare-covered employment, or
- $426.00 per month (in 2014) for those with less than 30 quarters of Medicare-covered employment and who are not otherwise eligible for premium-free Part A coverage.
All Medicare Part B enrollees pay an insurance premium for this coverage; the standard Part B premium for 2014 is $104.90 per month. A new income-based premium scheme has been in effect for 2009, wherein Part B premiums are higher for beneficiaries with incomes exceeding $85,000 for individuals or $170,000 for married couples. Depending on the extent to which beneficiary earnings exceed the base income, these higher Part B premiums are $146.90, $209.80, $272.70, or $335.70 for 2014, with the highest premium paid by individuals earning more than $214,000, or married couples earning more than $428,000.
Medicare Part B premiums are commonly deducted automatically from beneficiaries’ monthly Social Security checks.
Part C and D plans may or may not charge premiums, at the programs’ discretion. Part C plans may also choose to rebate a portion of the Part B premium to the member.
Deductible and Coinsurance
Part A — For each benefit period, a beneficiary will pay:
- Part A deductible of $1,216 (in 2014) for a hospital stay of 1-60 days.
- $304 per day co-pay (in 2014) for days 61-90 of a hospital stay.
- $608 per day co-pay (in 2014) for days 91-150 of a hospital stay, as part of their limited Lifetime reserve days.
- All costs for each day beyond 150 days. 
- Coinsurance for a Skilled Nursing Facility is $152.50 per day (in 2014) for days 21 through 100 for each benefit period.
- Blood deductible of the first 3 pints of blood needed in a calendar year, unless replaced.
Part B — After a beneficiary meets the yearly deductible of $147.00 (in 2014), they will be required to pay a co-insurance of 20% of the Medicare-approved amount for all services covered by Part B. They are also required to pay an excess charge of 15% for services rendered by non-participating Medicare providers.
- Mark Merlis, “The Value of Extra Benefits Offered by Medicare Advantage Plans in 2006,” The Kaiser Family Foundation, January 2008
- Lauren A. McCormick, Russel T. Burge. Diffusion of Medicare’s RBRVS and related physician payment policies – resource-based relative value scale – Medicare Payment Systems: Moving Toward the Future Health Care Financing Review. Winter, 1994.