Introduction to Medicare
Medicare Cost Basics
Medicare isn't free. It's important to pay attention to more than just monthly premiums.
The amount you pay depends on the coverage you choose and the health care services you receive. And don't forget to see if you qualify for help with your Medicare costs.
What is a premium?
A premium is a set amount (often monthly) you must pay for coverage. Depending on which type of coverage you choose, you may pay a premium to Medicare, to a private insurance company like UnitedHealthcare, or both.
Which costs might I share with Original Medicare or my plan?
"Cost sharing" is a term used to describe the way Original Medicare or your plan shares your health care costs with you. Here are the most common types of cost sharing:
Deductible:
This is a set amount that you pay out-of-pocket for covered services before Medicare, your Medicare Advantage plan, and/or your Prescription Drug plan start to pay. If you have a Medicare Supplement insurance plan, this is the amount your plan may help pay after Medicare pays, depending on the plan you choose.
1 You pay first, up to the deductible
2 Medicare and/or your plan begins to pay
Copayment (copay):
An amount you may be required to pay as your share for the cost of a covered service. For example, if you have prescription coverage, you might pay ($10) each time you fill a certain prescription. If you have a Medicare Supplement plan, copayments paid by the plan are either paid in full or a percentage of the copayment is paid, depending on the plan you choose.
1 You pay a fixed amount
2 Medicare Advantage or Prescription Drug plans: They will be billed for the rest
Coinsurance:
The amount you pay as your share for the cost of a covered service. For example, Medicare Part B pays about 80% of the cost of a covered medical service and you would pay the rest.
There are Medicare Supplement Insurance Plans with low to no coinsurance options. Depending on the plan you choose, you may get help paying the Part A and/or Part B coinsurance amounts.
Medicare Prescription Drug (Part D) plans:
The amount you pay for prescription drugs may change during the year depending on which drug payment stage you’re in. Members move through the stages in the order below.
Annual Deductible
For Part D plans with a deductible, you pay the full cost for drugs until you reach the deductible amount. Then you move to the Initial Coverage stage.
For Part D plans without a deductible, this stage doesn’t apply. Your coverage starts in the Initial Coverage stage.
- $590 is the maximum deductible amount Part D plans can charge in 2025.
Initial Coverage
In this stage, you pay a copay or coinsurance for your prescription drug and the plan pays the rest.
You stay in the Initial Coverage stage until your total drug costs reach $2,000 in 2025.
Catastrophic Coverage
When your out-of-pocket costs reach $2,000 in 2025, you enter the Catastrophic Coverage stage and stay there for the rest of the plan year.
What are Original Medicare (Parts A and B) costs?
Medicare Part A Costs
Premium:
Most people don't pay a premium for Medicare Part A. You won't pay a premium for Part A if you or your spouse worked and paid Medicare taxes for at least 10 years.
Deductible:
You're required to pay a deductible before Medicare Part A starts paying part of your costs.
Coinsurance:
For inpatient hospital and skilled nursing facility stays, you are responsible for any coinsurance after Medicare has paid its share.
Medicare Part B Costs:
Premium:
Your monthly premium for Medicare Part B depends on your monthly income.
Deductible:
You're required to pay a deductible before Medicare Part B starts paying part of your costs.
Coinsurance:
Once your deductible is met, Part B generally pays 80% of Medicare-approved costs and you're responsible for the rest.
What if I need help paying Medicare costs?
You may be eligible for financial assistance to cover your health care expenses. There are several programs that help pay Medicare costs. Many people who could qualify never sign up, so be sure to apply if you think you might qualify. Don't hesitate to apply. Income and resource limits vary by program.
Extra Help program:
Helps pay some or all Medicare Part D premiums, deductibles, copays and coinsurance for those who qualify.
Medicaid:
Provides health care coverage for individuals and families with limited incomes. It may also include some services not covered by Medicare, like prescription drugs, eye care or long-term care—at no or low cost. If you have both Medicaid and Medicare, you may be eligible for a Dual Special Needs Plan (D-SNP).
Medicare Savings Programs:
Help pay Original Medicare (Parts A and B) premiums, deductibles, and coinsurance. You automatically qualify for the Extra Help program (see above) if you qualify for a Medicare Savings Program.
Programs of All-Inclusive Care for the Elderly (PACE):
Combine medical, social and long-term care services for people over the age of 55 who qualify. This program is not available in all states.
Read Next:
Medicare Advantage Plans
UnitedHealthcare and AARP Medicare Plans
See all of the Medicare Advantage, Medicare Prescription Drug, and Medicare Supplement plans where you live.
Still have questions?
Give Us a Call
Meet with a Licensed Insurance Agent/Producer
View Important Disclosures Below
UnitedHealthcare Insurance Company pays royalty fees to AARP for the use of its intellectual property. These fees are used for the general purposes of AARP. AARP and its affiliates are not insurers. AARP does not employ or endorse agents, brokers or producers.
AARP® encourages you to consider your needs when selecting products and does not make product recommendations for individuals.
Please note that each insurer has sole financial responsibility for its products.
AARP® Medicare Supplement Insurance Plans
AARP endorses the AARP Medicare Supplement Insurance Plans, insured by UnitedHealthcare Insurance Company.
Insured by UnitedHealthcare Insurance Company, 185 Asylum Street, Hartford, CT 06103 (available in all states/territories except ND, NY) or UnitedHealthcare Insurance Company of America, 1600 McConnor Parkway, Floor 2, Schaumburg, IL 60173 (available in AR, AZ, IL, IN, MS, NC, ND, NJ, OH, PA, SC, TN, TX) or UnitedHealthcare Insurance Company of New York, 2950 Expressway Drive South, Suite 240, Islandia, NY 11749 (for NY residents). Policy Form No. GRP 79171 GPS-1 (G-36000-4).
In some states, plans may be available to persons under age 65 who are eligible for Medicare by reason of disability or End-Stage Renal Disease.
Not connected with or endorsed by the U.S. Government or the federal Medicare program.
This is a solicitation of insurance. A licensed insurance agent/producer may contact you.
You must be an AARP member to enroll in an AARP Medicare Supplement Plan.
THESE PLANS HAVE ELIGIBILITY REQUIREMENTS, EXCLUSIONS AND LIMITATIONS. FOR COSTS AND COMPLETE DETAILS (INCLUDING OUTLINES OF COVERAGE), CALL A LICENSED INSURANCE AGENT/PRODUCER AT THE TOLL-FREE NUMBER ABOVE.
Medicare Advantage plans and Medicare Prescription Drug plans
Plans are insured through UnitedHealthcare Insurance Company or one of its affiliated companies, a Medicare Advantage organization with a Medicare contract and a Medicare-approved Part D sponsor. Enrollment in these plans depends on the plan's contract renewal with Medicare. You do not need to be an AARP member to enroll in a Medicare Advantage plan or Medicare Prescription Drug plan.
This information is not a complete description of benefits. Contact the plan for more information.
WB26623ST (04-20)