How Much More Do You Pay Without Medicare?

In today’s high-cost healthcare environment, going without health insurance is a risky venture. In fact, most people will spend more out of pocket in an average year with no insurance than they’ll pay in premiums on the right health insurance plan.

Of course, the US has the strongest healthcare system in the world, and we can’t complain too much when we consider how long it takes people to train for a career in the medical profession (read more on that here): it’s even a sign of a healthy market in some ways.

But, still, most of us can’t afford to pay any more than we have to on out of pocket medical expenses. How much more does healthcare cost in the US absent insurance? Purely private insurance varies too much to give a meaningful answer to that question, but here we want to give you an idea of how much Medicare Parts A B C and D can save you.

Medicare Parts A & B

Medicare A and B together form what is called “original Medicare.” Part A is hospital insurance, which covers things like inpatient care at hospitals, skilled nursing services, and home health and hospice care. Part B is medical insurance, covering doctor’s visits, lab costs, outpatient care, ambulance services, and certain pieces of necessary medical equipment.

Now, Part A is normally premium-free and you automatically get it when you apply for your Social Security benefits. If you paid Medicare taxes for less than 30 quarters (7.5 years) or if you have a high income, you could pay up to $422 a month however.

But your deductible for inpatient hospital visits with Part A is (per 2018) $1,340, and you get 60 hospital days covered for life, which is sufficient for most people. Consider, then, that the average cost per day in a US hospital is around $2,000. You save $660 or more per day: over $4,000 for a week as an inpatient.

As for Part B, it’s optional and the standard premium is $134 per month (but it goes up for higher incomes.) The deductible is set at $183 (for 2018), and the copay is 20%. This typically covers physician services as either an inpatient or outpatient. Thus, you can save hundreds or even thousands of dollars in a year, though you might not save much on very low-cost, routine doctor’s visits (for that, you might need a “Medigap” plan.)

Medicare Parts C & D

Medicare “Part C” is not really a “part” at all but is a whole different Medicare arrangement where you buy coverage through a private insurer. It’s more popularly known as “Medicare Advantage” (MA).

MA puts an absolute cap on your out of pocket expenses for Original Medicare, plus adds Medicare Part D, which covers prescription drugs. Some plans will also include dental and/or vision insurance.

Capping your Parts A & B may or may not save you extra, but it gives you peace of mind. And it’s nice to roll your dental/vision plan into your health insurance plan, but of course, there are many reasonable purely private dental/vision insurance plans. Thus, the biggest advantage of Medicare Advantage is, arguably, Part D – prescription drug coverage.

Part D can also be capped as to out of pocket, and what kind of deductible you have and copay, if any, varies greatly from plan to plan. Consider that Americans use $1,400 or so of prescription drugs per year, but insurance usually only leaves them paying for 14% of the tab. That adds up to $1,000 savings per year.


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