How We Help You Prepare for the Cost of Medicare

At Choice Benefits, we focus on helping you approach your healthcare future with clarity and confidence. The cost of Medicare extends beyond monthly premiums—it includes deductibles, coinsurance, and other expenses that can vary over time. This guide outlines key steps to plan, budget, and protect yourself from financial surprises related to healthcare costs.

Understanding the Core Medicare Cost Components

Premiums, Deductibles, Coinsurance & Out-of-Pocket Costs

Before creating a plan, it’s important to understand what each cost means:

• Premiums: Regular monthly payments for coverage (such as Part A, Part B, Part D, or a Medicare Advantage plan).
  

• Deductibles: The amount paid before coverage begins.
  

• Coinsurance / Copayments: The share of costs you pay after meeting your deductible.
  

• Out-of-Pocket Costs: Original Medicare does not have an annual spending limit unless you enroll in a supplemental or Medicare Advantage plan.
  

Cost Trends and Why Planning Matters

Medicare premiums and deductibles have risen in recent years due to inflation and healthcare cost growth. Higher-income individuals may also pay additional monthly amounts (known as Income-Related Monthly Adjustment Amounts, or IRMAA).

In short: Medicare coverage works best with proactive financial planning.

Step 1: Estimate Your Current and Future Medicare Costs

a. Calculate Your Current Costs

• Add up premiums for Parts A, B, and D (or Medicare Advantage if applicable).
  

• Estimate deductibles and coinsurance based on your usual healthcare use.
  

• Review your prescription medications to understand Part D coverage and cost-sharing.
  

b. Plan for Future Increases

• Assume medical inflation will affect future costs.
  

• Be aware that IRMAA surcharges depend on your income from two years earlier.
  

• Maintain an emergency reserve for healthcare expenses not fully covered by Medicare.
  

Step 2: Select a Coverage Approach

Original Medicare with a Medigap Policy

• Allows flexibility in choosing doctors who accept Medicare.
  

• Medigap policies help pay some costs not covered by Original Medicare.
  

• Typically involves higher premiums but more predictable out-of-pocket expenses.
  

Medicare Advantage Plans

• Combine Parts A and B, and often include drug coverage.
  

• May have lower premiums but require using plan networks and may involve cost-sharing.
  

• Include an annual out-of-pocket maximum for covered services.
  
  

Enrollment Timing and Penalties

Late enrollment in certain parts of Medicare can result in higher long-term costs. If you have employer coverage, it may affect your initial enrollment period.

Income-Related Premium Adjustments (IRMAA)
Your Medicare premiums may increase if your income exceeds certain levels. Certain life events may allow a review of your IRMAA determination.

Step 3: Budgeting and Managing Medicare Costs

Create a Dedicated Healthcare Fund
Include Medicare-related costs in your retirement budget and review annually.

Explore Assistance Programs
If your income or assets are limited, you may qualify for programs that help with premiums, deductibles, or prescription drug costs.

Review Annually During the Medicare Annual Enrollment Period
Compare plans each year, as coverage and provider networks can change.

Tax and Income Planning
Consider timing of income, charitable distributions, or retirement withdrawals to manage IRMAA exposure.

Preventive Care and Efficient Use of Services
Use preventive services available under Medicare and ensure providers accept Medicare assignment to avoid unexpected costs.

Step 4: Monitor and Adjust

Annual Review
Mark your calendar for the Medicare Annual Enrollment Period (October 15–December 7) to review plan changes.
Mid-year, evaluate any health or income changes that could affect your costs.

Track Key Metrics
Monitor premiums, out-of-pocket expenses, and notices about IRMAA or plan changes.

Step 5: Common Mistakes to Avoid

• Skipping required enrollment, which may lead to penalties.
  

• Assuming Medicare covers all costs—it does not include all services.
  

• Overlooking income-related surcharges.
  

• Failing to review plans annually to stay aligned with your needs.
  

By following this approach, you can manage Medicare costs with clarity and confidence.