Medicare Starter Kit
Premiums: There's no premium for Part A if you paid enough in Medicare taxes while working. Part B requires a monthly premium — at the standard rate of $104.90 a month in 2015. Part D drug plans charge additional premiums, and so do most Medicare Advantage plans.
You pay higher premiums for Parts B and D if your modified adjusted gross income on your latest tax return is above $85,000 if you're single, or $170,000 if you're married and filing joint returns. (For details see "Medicare Premiums: Rules for Higher-Income Beneficiaries." )
Deductibles: You pay annual deductibles for Part B ($147 in 2015) and Part D (up to $320 in 2015) before coverage kicks in. Part A has a deductible ($1,260 in 2015) for hospital stays. Some Part D and Medicare Advantage plans reduce or waive deductibles.
Copays: In traditional Medicare (Parts A and B), you pay 20 percent of the Medicare-approved amounts for most Part B services. In Part A, after meeting the deductible you pay nothing more for up to 60 days in the hospital in any one benefit period. but additional days may require daily copays. In Part D and Medicare Advantage plans, you pay the copays required by your plan.
Part D drug coverage is uniquely designed. Depending on the cost of the drugs you use, you may move through four different phases of coverage during each calendar year:
- Annual deductible: This is an amount you may pay out of pocket for your drugs before coverage kicks in. Many Part D plans charge no deductible or less than the maximum amount set by law — $320 in 2015.
and what your plan has paid — reaches a certain amount ($2,960 in 2015) from the beginning of the year or, if you joined the program partway through the year, from when your coverage began.
This cycle of phases — deductible, initial coverage, doughnut hole and catastrophic coverage — repeats itself every calendar year. So if you are in the doughnut hole at the end of December, full coverage begins again Jan. 1 or, if your plan has an annual deductible, as soon as you've met it. If your drug costs are not high, you may not reach the doughnut hole at all.
For detailed information on how the Medicare prescription drug program works, see the AARP Bulletin's consumer guide "Medicare Part D & You."