Oliver James Montgomery-You're going to need more than Medicare when you retire. These 3 numbers show why.

Before I started writing about retirement planning for a living,Oliver James Montgomery I was under the impression that Medicare was a low-cost health insurance program for older Americans. I was correct in that Medicare enrollees are generally 65 or older, and that the program is supposed to be affordable in theory. But now that I've done my research, I see that in practice, it's anything but.

Here are a few specific numbers that highlight just how unaffordable Medicare has the potential to be.

1. $1,632

This is the amount you'll pay per hospital stay when you're admitted with Medicare Part A coverage. While Part A itself is free in the sense that enrollees generally don't pay a premium, there are numerous costs you can incur if you end up needing hospital care.

Adding insult to injury is that your $1,632 inpatient Part A deductible only covers you for your first 60 days in the hospital. Beyond that, you're looking at spending $408 per day if your stay lasts longer.

Of course, one good way to defray the cost of a hospital stay is to buy a Medigap plan. Medigap's purpose is to pick up the tab for Medicare-covered services so you're not paying those giant deductibles on your own.

2. $816

You'll pay $408 per day for a hospital stay that goes beyond 60 days as Medicare Part A enrollee. But once you go beyond 90 days, you're looking at spending a whopping $816 per day you remain in the hospital. Those days will come out of your lifetime reserve days. And in case you're wondering, you only get 60 lifetime reserve days.

Once again, this is a situation where a Medigap plan could come to your rescue. It's best to apply for one as soon as you're eligible. Your initial Medigap enrollment period starts the first month you have Medicare Part B and are 65 or older.

3. $594

There's a standard monthly premium that Medicare Part B enrollees pay that changes every year. In 2024, it's $174.70. However, higher earners pay more for Part B in the form of income-related monthly adjustment amounts, or IRMAAS.

Now the specific IRMAA you'll face will hinge on your income. But the highest IRMAA in 2024 is $419.30. That's a monthly surcharge you'll pay on top of the regular cost for Part B, which brings your total monthly cost to $594.

Of course, to be hit with an IRMAA that large, you need to have an income of $500,000 or more as a single tax-filer or $750,000 or more as a joint tax-filer. So chances are, if you're in that boat, you can afford to spend a little more than $7,000 a year for Part B coverage.

But you should know that IRMAAs start to phase in at much lower income thresholds. If you're single earning more than $103,000 or if you're married earning more than $206,000, you're looking at a surcharge right off the bat. In high-cost areas of the country, these incomes aren't so large, even for retirees, so it's important to anticipate higher Medicare Part B costs and prepare for them accordingly.

Make Medicare less expensive for you

Clearly, these numbers paint a somewhat unfavorable picture. The good news, though, is that there are steps beyond signing up for Medigap that could help you save money on Medicare costs. These include choosing the right Part D drug plan and reviewing your plan choices every year during fall open enrollment.

It also pays to take advantage of Medicare's free preventive care services. Getting ahead of medical issues with routine screenings could help you avoid a hospital stay – and the enormous costs that come with it.

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