Yes, most people pay for Medicare, even though it is a federal program

Medicare is not free. Most people who are 65 or older pay a monthly premium for Part B (doctor visits and outpatient care), and many also pay premiums for Part D (prescription drugs) or a Medigap or Medicare Advantage plan. You also pay deductibles, copayments, and coinsurance when you use services. The amount you pay depends on which parts of Medicare you have, your income, and how much medical care you use.

If you worked for at least 10 years and paid Medicare taxes, you do not pay a premium for Part A (hospital insurance). But you still pay a deductible if you are admitted to the hospital. If you did not work long enough to may have access to for premium-free Part A, you can buy it, though the monthly cost is high.

Key Takeaways

  • Part A (hospital) is free for most people 65 and older, but you pay a deductible when you use it; Part B (doctor visits) costs a monthly premium that increases if you delay signing up.
  • Your Part B premium is based on your income from two years ago, so a major life change (retirement, marriage, loss of income) may lower what you owe.
  • Part D (prescription drugs) has a monthly premium that varies by plan, and you pay more if you do not sign up when you first become may be able to access.
  • Medigap and Medicare Advantage plans have their own premiums and cost-sharing, and choosing between them depends on your doctors, prescriptions, and expected medical use.
  • You can change your plan during the annual enrollment period (October 15 to December 7) or if you have a may have access to life event.

Part A costs: hospital insurance with a deductible

Part A covers hospital stays, skilled nursing facility care, hospice, and some home health services. If you or your spouse paid Medicare taxes for at least 10 years while working, you do not pay a monthly premium for Part A. You only pay when you use it.

When you are admitted to a hospital, you pay a deductible for each benefit period. A benefit period starts when you enter the hospital and ends 60 days after you leave. If you go back to the hospital more than 60 days later, a new benefit period begins and you pay a new deductible. The deductible amount changes each year; it was $1,632 in 2024, but check Medicare.gov for the current year's amount.

After you pay the deductible, Medicare covers all hospital costs for days 1 through 60. For days 61 through 90, you pay a daily coinsurance amount. If you stay longer than 90 days, you can use "lifetime reserve days" (60 total days over your lifetime) and pay a higher daily coinsurance, or you pay the full cost yourself.

Part B costs: doctor visits and outpatient care

Part B covers doctor visits, lab tests, imaging, outpatient surgery, and durable medical equipment. Almost everyone pays a monthly premium for Part B. In 2024, the standard premium was $164.90 per month, but the amount changes each year and is higher if your income is above a certain threshold.

Your Part B premium is based on your income from two years before you enroll. If you retired, got married, lost a spouse, or had another major income change, you can ask Social Security to recalculate your premium. This is called a life-changing event, and you have 60 days from the event to request a change. Social Security will not automatically adjust your premium — you must contact them.

After you pay your premium, you also pay a yearly deductible (in 2024, this was $240) before Medicare starts to pay. Once you meet the deductible, you typically pay 20 percent of the cost for most services, and Medicare pays 80 percent. Some services, like preventive care, have no copayment.

Part D costs: prescription drug coverage

Part D covers prescription drugs at pharmacies. You choose a Part D plan from private insurance companies, and each plan has a different monthly premium, formulary (list of covered drugs), and pharmacy network. Premiums range widely — from under $10 per month to over $100 — depending on the plan and the drugs you take.

If you do not sign up for Part D when you first become may be able to access at 65, you pay a penalty for as long as you have Medicare. The penalty is about 1 percent of the national average Part D premium for each month you were not enrolled. If you go without coverage for two years, your penalty is roughly double. The penalty is added to your monthly premium and does not go away.

Once you are enrolled, you pay a deductible (which varies by plan), then copayments or coinsurance for each prescription. Some plans have a coverage gap called the "donut hole," where you pay a higher share of drug costs after you and your plan have spent a certain amount. After you reach the out-of-pocket maximum for the year, Medicare covers most of the cost.

Medigap and Medicare Advantage: two different ways to cover gaps

Medigap (also called Supplement Insurance) is a policy sold by private insurance companies that pays some or all of the costs Medicare does not cover — deductibles, copayments, and coinsurance. You keep your original Medicare (Parts A and B) and add a Medigap plan. Medigap premiums vary by plan type and insurance company; they can range from $100 to $300 or more per month. You also still pay a Part D premium if you want drug coverage.

Medicare Advantage (Part C) is an alternative to original Medicare. A private insurance company runs the plan and covers everything Part A and Part B cover, usually with lower or no premiums. However, Medicare Advantage plans often have higher copayments and coinsurance, and they usually require you to use doctors and hospitals in their network. Most Medicare Advantage plans include Part D drug coverage.

Choosing between Medigap and Medicare Advantage depends on your doctors, your prescriptions, how often you use medical care, and your budget. If you see specialists or travel, Medigap may cost less overall. If you use few services and want a low monthly premium, Medicare Advantage may be better. You can switch between them during the annual enrollment period.

Income-related premiums: higher costs if you earn more

If your income is above a certain threshold, you pay a higher Part B premium and a higher Part D premium. These are called Income-Related Monthly Adjustment Amounts (IRMAA). The income limit changes each year, and income is measured from your tax return from two years before.

For example, if you file taxes as a single person and your 2022 income was above $91,000, your 2024 Part B premium was higher than the standard amount. If your income was above $111,000, it was even higher. The more you earn above the threshold, the more you pay, up to a maximum.

If your income drops because you retire, lose a job, or have another major change, you can ask Social Security to recalculate your IRMAA. You have 60 days from the event to request this. Without a request, Social Security will not change your premium automatically.

How to estimate your total Medicare costs

Your total Medicare cost in a given year depends on which parts you have, which plan you choose, how much medical care you use, and your income. A person with original Medicare and Medigap might pay $200 to $400 per month in premiums alone, plus deductibles and copayments when they use services. A person with Medicare Advantage might pay $0 to $150 per month in premiums but face higher copayments at the doctor.

Medicare.gov has a plan finder tool where you can enter your prescriptions and doctors to see which plans cover them and what your costs would be. You can also call 1-800-MEDICARE to speak with someone who can walk you through the options. Many Area Agencies on Aging offer free counseling on Medicare choices; you can find yours at eldercare.acl.gov.

Frequently Asked Questions

Do I have to pay for Medicare if I am still working?

If you are 65 or older and still working, you can delay signing up for Part B without a penalty if your employer has 20 or more employees and covers you under their health plan. However, you should still sign up for Part A (hospital) when you turn 65, even if you do not use it yet. Once you leave your job or lose employer coverage, you have a limited time to sign up for Part B without a penalty.

Can I get help paying my Medicare premiums?

Yes. If your income is low, you may be able to get help through Medicaid or through programs like the Medicare Savings Program, which pays some or all of your Part B premium. Each state runs these programs differently, so contact your state Medicaid office or call 1-800-MEDICARE to learn what you may be able to access.

What happens if I do not pay my Medicare premium?

If you do not pay your Part B or Part D premium, Medicare can stop your coverage. You will have a grace period to pay, but if you do not, you will lose coverage and may face a penalty when you sign up again. If you are having trouble paying, contact Medicare or your state Medicaid office to discuss options.

Does Medicare cover dental, vision, or hearing?

Original Medicare does not cover routine dental, vision, or hearing care. However, some Medicare Advantage plans include these benefits. If these services matter to you, compare Medicare Advantage plans in your area, or look into standalone dental and vision plans you can buy separately.

Can I change my Medicare plan if I realize I chose the wrong one?

Yes, during the annual enrollment period from October 15 to December 7, you can switch plans. If you have a may have access to life event — such as losing employer coverage, moving, getting married, or having a major drop in income — you can change plans outside the enrollment period. Contact Medicare within 60 days of the event to request a change.