Yes, Medicare costs money — but the amount depends on which parts you use
Medicare is not free. You pay premiums (monthly fees), deductibles (the amount you pay before coverage kicks in), and copayments or coinsurance (your share of the cost when you use care). How much you pay depends on which parts of Medicare you sign up for, your income, and the specific services you use.
Most people pay a premium for Part B (doctor visits and outpatient care) and Part D (prescription drugs). Part A (hospital care) is usually free if you or your spouse paid Medicare taxes for at least 10 years while working. Part C (Medicare Advantage) replaces Parts A and B with a private plan and has its own costs. Part A and Part B together are called Original Medicare.
Key Takeaways
- Part A (hospital insurance) is usually free, but you pay a deductible when you are admitted to the hospital.
- Part B (medical insurance) costs a monthly premium that increases if you sign up late or have higher income.
- Part D (prescription drug coverage) requires a monthly premium and has a deductible, gap, and out-of-pocket maximum.
- Medicare Advantage (Part C) often has lower or zero premiums but may have higher copayments and limited provider networks.
- Supplemental insurance (Medigap) helps cover costs that Original Medicare does not, but it is a separate monthly payment.
What Part A costs and when you pay it
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, you do not pay a monthly premium for Part A.
You do pay a deductible when you are admitted to the hospital. The deductible amount changes each year. In 2024, the Part A deductible is $1,632 per hospital stay. After you meet the deductible, Medicare covers all costs for the first 60 days of a hospital stay. Days 61 through 90 require a daily copayment. Beyond 90 days, you pay a higher daily amount, and Medicare's coverage becomes limited.
If you did not work long enough to may have access to for free Part A, you can still buy it. The monthly premium varies based on how many years you or your spouse worked and paid Medicare taxes.
What Part B costs and income-based increases
Part B covers doctor visits, outpatient care, medical equipment, and preventive services. Almost everyone who has Medicare pays a monthly premium for Part B. The standard premium changes each year. In 2024, the standard Part B premium is $164.90 per month, though your actual premium may be higher or lower depending on your income.
If your income is above a certain threshold, you pay a higher premium called an Income-Related Monthly Adjustment Amount (IRMAA). The income thresholds are based on your modified adjusted gross income from two years prior. For example, 2024 premiums are based on 2022 income. If you are married and file jointly, the threshold is higher than for single filers.
Beyond the premium, you also pay a Part B deductible (currently $240 per year) and then 20 percent coinsurance for most services after that. Some preventive services have no cost.
What Part D prescription drug coverage costs
Part D is optional coverage for prescription drugs. If you do not sign up when you first become may be able to access and later decide you want it, you may pay a penalty for each month you went without coverage.
Part D plans are offered by private insurance companies approved by Medicare. Each plan has its own monthly premium, which varies widely — from roughly $5 to $100 per month depending on the plan and the drugs it covers. You also pay a yearly deductible (which can be up to $545 in 2024, though many plans have lower or no deductibles) and copayments or coinsurance for each prescription.
Part D has a coverage gap, sometimes called the "donut hole." Once you and your plan have spent a certain amount on drugs, you enter the gap and pay a higher share of the cost until you reach an out-of-pocket maximum. After that, catastrophic coverage kicks in and you pay a small copayment for the rest of the year.
Medicare Advantage (Part C) costs and trade-offs
Medicare Advantage is an alternative to Original Medicare (Parts A and B). Private insurance companies offer these plans, and they must cover everything Original Medicare covers, but they often do so through a network of doctors and hospitals. Many Medicare Advantage plans have a zero or low monthly premium, which can make them seem cheaper than Original Medicare.
However, Medicare Advantage plans typically have higher copayments and coinsurance than Original Medicare. You may also face prior authorization requirements (the plan must approve a service before you get it) and may be limited to in-network providers. Some plans include prescription drug coverage (Part D) built in, while others do not.
Medicare Advantage plans can change their benefits, costs, and networks each year, so you should review your plan annually during the open enrollment period.
Supplemental insurance (Medigap) and what it covers
Supplemental insurance, called Medigap, is a separate policy sold by private insurance companies. It helps pay the costs that Original Medicare does not cover — deductibles, copayments, and coinsurance. It does not cover prescription drugs (that is Part D), dental, vision, or hearing aids.
Medigap plans are standardized by the federal government, so a Plan G from one company covers the same things as a Plan G from another company. The monthly premium varies by company, age, and location. Medigap premiums can range from roughly $100 to $300 or more per month, depending on the plan and where you live.
You cannot use both Medigap and Medicare Advantage at the same time. If you have Original Medicare, you can add Medigap. If you have Medicare Advantage, you do not need Medigap because the plan already includes some cost-sharing protections.
How income affects what you pay
Your income determines whether you pay higher premiums for Part B and Part D. Medicare uses your modified adjusted gross income (MAGI) from two years before the current year. If your income is above the threshold for your filing status, you pay IRMAA on top of the standard premium.
If your income drops significantly — because you retire, lose a job, or experience another life event — you can request that Medicare recalculate your premium based on your current income instead of the two-year-old figure. You will need to report the change and provide documentation.
Some people with limited income and resources may be able to get help paying Medicare premiums and cost-sharing through Medicaid or other state programs. Your state's Medicaid office or a local Area Agency on Aging can tell you whether you may be may be able to access.
Frequently Asked Questions
Do I have to pay for Part A if I never worked?
If you did not pay Medicare taxes for at least 10 years, you do not get free Part A. You can buy Part A with a monthly premium, which is higher than the standard premium. Your spouse's work history may also may have access to you for free Part A if you are married.
What happens if I do not sign up for Part D when I am first may be able to access?
You may owe a late enrollment penalty for each month you go without Part D coverage. The penalty is added to your monthly premium and stays with you for as long as you have Part D. The penalty amount is based on the national average premium at the time you sign up.
Can I change my Medicare plan if I do not like it?
Yes, during the annual open enrollment period (October 15 to December 7), you can switch between Original Medicare and Medicare Advantage, change your Medigap plan, or change your Part D plan. Some life events (like moving or losing employer coverage) allow you to change plans outside the open enrollment window.
Does Medicare cover dental, vision, or hearing?
Original Medicare does not cover routine dental, vision, or hearing care. Some Medicare Advantage plans include limited dental or vision benefits, but you should check the specific plan. Medigap does not cover these services either. You would need to pay out of pocket or buy a separate plan.
What is the out-of-pocket maximum for Medicare?
Original Medicare does not have an annual out-of-pocket maximum, which means your costs can be unlimited. Medicare Advantage plans do have an out-of-pocket maximum, after which the plan covers 100 percent of in-network services for the rest of the year. The maximum varies by plan.