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Budgeting for Medicare Costs: 6 Tips to Help

Overhead view of a woman looking at receipts and using a calculator.

Between shocking grocery prices, rising utility bills, and everything just costing more in general, are you concerned about covering your living expenses and having enough money left to pay for your Medicare costs? Check out these six tips that will help you budget for Medicare.

1.  Know Your Predictable Medicare Expenses

There are some Medicare costs that you can count on paying every month.

For example, premiums are a predictable monthly expense. Most people pay $0 for Medicare Part A premiums, but Medicare Part B will have a $174.70 monthly premium in 2024 (or higher depending on your income).

Medicare Part D prescription drug coverage premiums vary plan to plan, but should cost you the same amount each month. And if you have any ongoing prescriptions, you can budget for those predictable costs, too.

In addition, if you have any standing doctor or specialist appointments that you can count on, you can plan on how much those might cost you, depending on your deductibles, copays and coinsurance.

2. Understand Possible Variable Expenses

Some Medicare expenses aren’t so predictable. If you get sick and need to visit the doctor or hospital, the resulting medical bills aren’t something that would be part of your usual monthly budget. Understanding the deductibles, copays and coinsurance you could owe for medical care can help you be prepared to cover these costs. Here are some numbers for you to keep in mind:

  • Part A hospital insurance has a $1,632 deductible in 2024 before Original Medicare starts to pay. You may have to pay this more than once a year if you’re admitted to the hospital multiple times.
  • Part A has daily copayments for inpatient hospital stays that last longer than 60 days. For example, days 61–90 have a $204 daily copayment in 2024.
  • Part B medical insurance has a $240 deductible in 2024.
  • After you’ve paid your deductible, Part B has 20% coinsurance for each Medicare-covered service or item.

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3. Know if You Have an Out-Of-Pocket Maximum

An out-of-pocket maximum is the annual limit on how much you must spend on your health care costs before your plan pays 100%. Knowing your out-of-pocket maximum can help you ensure your budget can weather a “worst-case scenario.” Here are some standards for Medicare:

  • Original Medicare Parts A and B don’t have out-of-pocket limits. However, if you supplement this coverage with a Medicare Supplement insurance plan, that plan could provide you an out-of-pocket maximum.
  • If you have Medicare Part C instead of Original Medicare, then you can count on an out-of-pocket maximum of $8,850 in 2024.

4. Find New Ways to Save Money

If you’re reading about these Medicare costs and feeling like your budget can’t sustain them, it might be time to revisit your expenses and find new ways to save money. Sometimes reallocating funds and making a few minor adjustments can make all the difference. Comb through your past few months’ bank statements and average out your monthly expenses. Then cut unnecessary costs and set spending limits to make your budget work.

Reworking your budget? Try these strategies to save money on groceries and household essentials!

5. Seek New Income Opportunities

Many retirees return to work in some capacity to earn some extra money and help stretch their retirement savings a bit further. Consider getting a part-time job or starting a side-hustle to help ensure your Medicare costs are covered. You could also consider if the predictable income stream of an annuity might be right for you.

6. Get Professional Help

Budgeting for Medicare can be challenging and stressful, but you don’t have to face it alone. An insurance agent who specializes in Medicare can help you find the best plans for your budget and health care needs. And a financial professional can help you take stock of your assets and create a budget that helps you meet all your obligations. Remember, financial advice isn’t only for the wealthy; everyone can benefit from a professional’s perspective!

Colonial Penn is here for you!

Colonial Penn has specialized in making life insurance simple and accessible by offering it directly to consumers since 1957. Click here to learn more.

Colonial Penn is a private company that is not Medicare, Medicaid or MaineCare and is not a governmental agency

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