Most people pay something for Medicare, but the amount depends on your work history and income

Medicare is not free. You pay for it through payroll taxes while you work, and then through monthly premiums, deductibles, and copayments once you are enrolled. The exact cost depends on three things: whether you worked long enough to may have access to for premium-free Part A, which parts you choose, and your income.

If you worked at least 10 years (40 quarters) and paid Medicare taxes, you do not pay a monthly premium for Part A (hospital insurance). If you did not work that long, you can still enroll, but you will pay a monthly premium — the amount varies based on how many quarters you did work. Part B (doctor visits) always has a monthly premium, which changes each year. Part D (prescription drugs) has a premium that varies by plan. Part C (Medicare Advantage) sometimes has no premium but usually does.

Key Takeaways

  • Part A (hospital) is free if you or your spouse worked at least 10 years and paid Medicare taxes; otherwise you pay a monthly premium.
  • Part B (doctor visits) always costs a monthly premium, which is higher if your income is above a certain threshold.
  • Part D (prescription drugs) requires a separate monthly premium that varies by plan and pharmacy.
  • You also pay deductibles and copayments when you use services, even if your premiums are covered.
  • Income-related monthly adjustment amounts (IRMAA) can raise your Part B and Part D costs if your income exceeds certain limits.

Part A: Hospital insurance costs

Part A covers hospital stays, skilled nursing facility care, hospice, and some home health services. If you have 40 quarters of Medicare tax history — roughly 10 years of work — you pay no monthly premium for Part A. Your employer and you split the Medicare tax (1.45% each) while you work, and that counts toward your coverage.

If you have fewer than 40 quarters, you can still enroll in Part A, but you will pay a monthly premium. The premium amount depends on how many quarters you have: someone with 30 quarters pays less than someone with zero. You also pay a deductible when you are admitted to the hospital — this amount changes yearly and is separate from your premium.

If you are not yet 65 and have been on Social Security Disability Insurance (SSDI) for 24 months, or if you have end-stage renal disease or ALS, you may be able to enroll in Part A regardless of age or work history.

Part B: Doctor and outpatient care costs

Part B covers doctor visits, outpatient care, medical equipment, and preventive services. Everyone who enrolls in Part B pays a monthly premium. For 2024, the standard premium is $164.90 per month, but this amount increases each year. If you enroll late (after your initial enrollment window), you may pay a permanent penalty on top of the standard premium.

Your Part B premium may be higher if your income is above certain thresholds. This is called an income-related monthly adjustment amount (IRMAA). Medicare looks at your tax return from two years before you enroll. If your modified adjusted gross income exceeds the threshold for your filing status, you pay more. The higher your income, the higher the surcharge — it can add $70 to $560 per month to your Part B cost, depending on income level.

You also pay a deductible for Part B services (currently $240 per year) and then 20% of the cost of most services after that. Preventive services like annual wellness visits and cancer screenings are covered at no cost.

Part D: Prescription drug coverage costs

Part D is optional, but if you do not enroll when you first become may be able to access and go without coverage, you pay a permanent penalty when you do join. The monthly premium varies widely depending on which plan you choose — some plans cost $5 per month, others cost $100 or more. The same IRMAA rules explore: higher income means a higher premium.

You also pay out-of-pocket costs for medications. Most plans have a deductible (usually $100 to $500), then you pay a copayment or coinsurance until you reach a certain spending threshold. After that, you enter the "donut hole" — a coverage gap where you pay a higher percentage of drug costs. Once your total spending reaches a certain amount, catastrophic coverage kicks in and you pay only a small copayment for the rest of the year.

Drug costs and plan premiums change every year, so the plan that was cheapest last year may not be the cheapest this year. You can change plans during the annual enrollment period (October 15 to December 7) without penalty.

Part C: Medicare Advantage plan costs

Part C (Medicare Advantage) is an alternative to Original Medicare (Parts A and B). Some Part C plans have no monthly premium, but you still pay the Part B premium to Medicare. Other plans charge an additional premium on top of Part B. You also pay deductibles and copayments when you use services, and these can be higher or lower than Original Medicare depending on the plan.

Part C plans often include Part D (drug coverage) bundled in, so you do not pay a separate drug premium. However, you are limited to using doctors and hospitals in the plan's network, except in emergencies. If you want to add standalone Part D to a Part C plan, you can, but you will pay two premiums.

Income-related costs and how they are calculated

If your income is above a certain level, you pay higher premiums for Part B and Part D. These thresholds change yearly. For 2024, if you file taxes as single and your modified adjusted gross income is above $97,000, you pay an IRMAA surcharge. If you are married filing jointly, the threshold is $194,000. The surcharge increases in brackets as your income rises.

Medicare uses your tax return from two years before you enroll. If your income changes significantly — you retire, sell a house, or have a major life event — you can request a recalculation. You must contact Social Security and provide documentation of the change. If you do not request a recalculation, you will pay the higher amount for the entire year.

Costs you pay out of pocket when you use services

Even if your premiums are low or free, you pay when you actually use Medicare services. Part A has a hospital deductible (currently $1,632 per benefit period) that you pay once per hospital stay. Part B has an annual deductible ($240 in 2024) and then you pay 20% of approved charges. Skilled nursing facilities, home health, and hospice have their own cost-sharing rules.

Original Medicare does not have an out-of-pocket maximum, which means your costs can be very high if you have a serious illness or injury. Many people buy a Medigap policy (supplemental insurance) to cover some of these costs. Medigap premiums vary by plan and location but typically range from $100 to $300 per month.

Frequently Asked Questions

Can I get Medicare for free?

Part A can be free if you or your spouse worked at least 10 years and paid Medicare taxes. Part B, Part D, and any supplemental coverage always cost money. Even with free Part A, you pay deductibles and copayments when you use services.

What happens if I do not pay my Medicare premium?

If you do not pay your Part B or Part D premium, Medicare will send you notices. If you do not pay after a certain period, your coverage can be terminated. You can request reinstatement, but there may be a waiting period. If you have financial hardship, contact Medicare to discuss payment options or possible premium reductions.

Does my income affect what I pay for Medicare?

Yes. If your income is above certain thresholds, you pay higher premiums for Part B and Part D through IRMAA surcharges. Medicare looks at your tax return from two years before you enroll. If your income drops significantly due to retirement or a life event, you can request a recalculation.

Is there a limit to how much I pay out of pocket for Medicare?

Original Medicare (Parts A and B) does not have an annual out-of-pocket maximum. Medicare Advantage plans do have limits, which vary by plan. If you are concerned about high costs, a Medigap policy can help cover some expenses, though you pay a separate premium for it.

Do I have to pay for preventive services?

No. Medicare Part B covers many preventive services at no cost, including annual wellness visits, cancer screenings, and vaccinations. You do not pay a copayment or deductible for these covered preventive services, though you still pay your Part B premium.