Most Medicare beneficiaries pay premiums, deductibles, and copayments — Medicare is not free

Medicare is not free. You pay for it through payroll taxes while you work, and then through monthly premiums, annual deductibles, and copayments once you are enrolled. The amount you pay depends on which parts of Medicare you have, your income, and how much medical care you use.

If you worked long enough to may have access to for Medicare at 65, you have already paid into the system through Medicare taxes (1.45% of your wages, matched by your employer). That paid-in amount covers some of your Part A costs, but does not cover everything. You will still owe premiums for Part B and Part D, and you will pay out-of-pocket costs when you receive care.

Key Takeaways

  • Part A (hospital insurance) is free for most people who worked long enough, but you pay a deductible when you are admitted to the hospital.
  • Part B (doctor visits and outpatient care) costs a monthly premium that varies by income, starting around $175 per month in 2024.
  • Part D (prescription drugs) requires a monthly premium that changes each year and varies by plan.
  • You pay copayments or coinsurance for each doctor visit, test, or prescription, even after you have paid your premiums.
  • If your income is higher, you pay an extra surcharge on top of your Part B and Part D premiums.

Part A: Hospital insurance — usually free, but with a deductible

Part A covers hospital stays, skilled nursing facility care, hospice, and some home health services. If you or your spouse worked at least 10 years (40 quarters) and paid Medicare taxes, you do not pay a monthly premium for Part A. This is the only part of Medicare that is truly free for most people.

However, you do pay when you use it. In 2024, the Part A deductible is $1,632 per hospital stay. That means you pay the first $1,632 of hospital costs out of your own pocket. After that, Medicare covers most of the cost, though you may still owe copayments for longer stays. If you are admitted to the hospital again more than 60 days later, you owe another full deductible.

If you did not work long enough to may have access to for free Part A, you can buy it. The premium is around $505 per month in 2024, though the exact amount depends on how many quarters of work history you have.

Part B: Doctor visits and outpatient care — monthly premium plus copayments

Part B covers doctor visits, lab tests, X-rays, outpatient surgery, and other services outside the hospital. Everyone on Medicare pays a monthly premium for Part B. The standard premium was around $175 per month in 2024, but it changes each year and is higher if your income is above a certain threshold.

You also pay an annual deductible for Part B — $240 in 2024 — before Medicare starts to pay its share. After you meet the deductible, you typically pay 20% of the cost of covered services, and Medicare pays 80%. For example, if a doctor visit costs $100, you pay $20 and Medicare pays $80.

If your modified adjusted gross income (MAGI) from two years ago was above a certain level, you pay an extra surcharge called Income-Related Monthly Adjustment Amount (IRMAA). For 2024, this surcharge starts if your MAGI was above $97,000 (single) or $194,000 (married filing jointly). The higher your income, the more you pay.

Part D: Prescription drug coverage — monthly premium and copayments

Part D covers prescription medications. You choose a plan from private insurance companies, and each plan has its own monthly premium. Premiums vary widely — some plans cost $5 per month, others cost $100 or more. The premium changes every year, and the plans available to you change every year.

You also pay when you fill a prescription. Most plans use a formulary, which is a list of covered drugs organized by tier. Tier 1 drugs (usually generic) might cost $5 to $10 per prescription. Tier 2 drugs (brand-name) might cost $25 to $50. Tier 3 and higher tiers cost more. You pay these copayments until you reach your plan's out-of-pocket limit, which varies by plan.

Like Part B, Part D premiums are higher if your income is above the IRMAA threshold. You pay the same surcharge on top of your Part D premium as you do on Part B.

Medigap and Medicare Advantage: Different payment structures

Some beneficiaries buy Medigap (supplemental insurance) to cover the copayments and deductibles that Original Medicare leaves you responsible for. Medigap premiums range from around $100 to $300 per month, depending on the plan and your age. You pay the Medigap premium on top of your Part B premium.

Others choose Medicare Advantage (Part C), an alternative to Original Medicare offered by private insurance companies. With Medicare Advantage, you do not pay a separate Part B premium to the government — instead, you pay the plan's premium, which is often $0 but can be higher. However, Medicare Advantage plans usually have lower copayments and deductibles than Original Medicare, but you must use doctors and hospitals in the plan's network.

Both Medigap and Medicare Advantage are optional. If you stay with Original Medicare (Part A and Part B), you pay the premiums and out-of-pocket costs described above.

Income-based premiums: How IRMAA affects what you pay

If your income is higher, Medicare charges you more. The Income-Related Monthly Adjustment Amount is an extra fee added to your Part B and Part D premiums based on your income from two years ago. For example, if you are explore for Medicare in 2024, Medicare looks at your 2022 tax return.

The income thresholds and surcharge amounts change each year. In 2024, single beneficiaries with MAGI above $97,000 started paying a surcharge. Married beneficiaries filing jointly with MAGI above $194,000 started paying a surcharge. The surcharge increases in steps as your income rises.

If your income drops significantly — for example, because you retired or had a major life change — you can ask Medicare to recalculate your IRMAA using your current year's income instead of two years ago. You will need to file a form and provide documentation of the change.

What you pay if you have limited income

If your income is very low, you may be able to reduce or eliminate your Part B and Part D premiums through programs like Medicaid or the Medicare Savings Program. These are state-run programs that help low-income Medicare beneficiaries pay their premiums and out-of-pocket costs.

To find out whether you may have access to, contact your state Medicaid office or call 1-800-MEDICARE. Each state has different income limits and rules, so what qualifies you in one state may not in another. If you do may have access to, the program can pay your Part B premium directly to Medicare, and may also cover your deductibles and copayments.

Frequently Asked Questions

Do I have to pay for Medicare if I never worked?

If you did not work long enough to may have access to for free Part A, you can still enroll in Medicare at 65, but you will pay a premium for Part A (around $505 per month in 2024). You will also pay Part B and Part D premiums like everyone else. If your income is very low, Medicaid or the Medicare Savings Program may help you pay.

What happens if I don't pay my Medicare premium?

If you do not pay your Part B or Part D premium, Medicare will send you notices and eventually may disenroll you from that part of coverage. If you lose Part B, you may have to pay a penalty if you enroll again later. If you have financial hardship, contact Medicare to discuss payment options or whether you may have access to for information programs.

Can I get Medicare without paying anything?

Part A is free if you worked long enough, but you still pay deductibles and copayments when you use hospital services. Part B and Part D always have monthly premiums. The only way to reduce what you pay is through low-income information programs like Medicaid or the Medicare Savings Program.

Why does my premium change every year?

Medicare premiums and deductibles are adjusted each year based on inflation and changes in healthcare costs. The government announces new amounts in October for the following year. Your personal premium may also change if your income changes, which affects your IRMAA surcharge.

Do I pay the same amount as everyone else?

No. Your Part B and Part D premiums are the same as most people's, but if your income is higher, you pay an extra IRMAA surcharge. If your income is very low, you may pay less or nothing through information programs. The plan you choose for Part D also affects what you pay, since each plan has a different premium.