Medicare costs you money in four ways

Medicare is not free. You pay a monthly premium (the base cost), a deductible (what you pay before coverage kicks in), copayments (a set amount per visit), and coinsurance (a percentage of the bill). The amount depends on which parts of Medicare you have and which plan you choose within each part.

Most people pay for Part A (hospital insurance) and Part B (doctor visits and outpatient care) separately. Many also choose Part D (prescription drugs) or a private plan called Part C (Medicare Advantage) that bundles coverage differently. Each has its own costs, and they add up differently depending on your income and when you signed up.

The amounts change every year. For 2024, costs are higher than 2023, and 2025 costs will be set by October. Your actual bill depends on which plan you pick, whether you have other insurance, and whether you may have access to for help paying premiums.

Key Takeaways

  • Part A (hospital) usually has no monthly premium if you or your spouse paid Medicare taxes for at least 10 years, but you pay a deductible when you are admitted to the hospital.
  • Part B (doctor visits) costs a monthly premium that is higher if your income was above a certain level two years ago, plus a yearly deductible and then 20% coinsurance for most services.
  • Part D (prescription drugs) costs a monthly premium that varies by plan, plus copayments or coinsurance at the pharmacy that change depending on the drug tier and your plan.
  • Part C (Medicare Advantage) replaces Parts A and B with a private plan that often has lower premiums but may have higher copayments and limits on which doctors you can see.
  • You can reduce what you pay if your income is low enough to may have access to for programs like Medicaid, Extra Help, or may have access to Medicare Beneficiary coverage.

Part A costs: hospital stays and skilled nursing

Part A covers hospital stays, skilled nursing facility care after a hospital stay, hospice, and some home health services. If you or your spouse paid Medicare taxes for at least 10 years, you pay no monthly premium for Part A. If you did not, you can buy Part A, and the premium ranges from roughly $280 to $560 per month depending on how many years you or your spouse paid in.

Even with no premium, you pay when you use the service. In 2024, the hospital deductible is $1,632 per stay. This means you pay the first $1,632 of hospital bills yourself. After that, Medicare covers most costs, though you pay a daily amount ($408 per day) if you stay longer than 60 days in the same hospital stay. Skilled nursing facility care has its own structure: Medicare covers the first 20 days fully, then you pay a daily coinsurance (around $204 per day in 2024) for days 21 through 100.

Part B costs: doctor visits and outpatient care

Part B covers doctor visits, lab tests, X-rays, ambulance services, and outpatient hospital care. Almost everyone pays a monthly premium. In 2024, the standard premium is $164.90 per month, but it is higher if your income was above $97,000 (single) or $194,000 (married) in 2022. Higher-income beneficiaries pay between $230 and $560 per month depending on how much their income exceeded the threshold.

You also pay a yearly deductible of $240 in 2024. Once you meet the deductible, you pay 20% of the Medicare-approved amount for most services. For example, if a doctor visit is approved at $150, Medicare pays $120 and you pay $30. Some services like preventive care (annual wellness visits, cancer screenings, vaccines) have no copayment or coinsurance after you meet the deductible.

Part B costs are taken from your Social Security check automatically unless you ask to pay by mail. If you did not sign up for Part B when you first became may be able to access at 65, you may pay a permanent penalty of 10% extra per year you delayed, unless you had other health insurance that covered the same services.

Part D costs: prescription drugs

Part D is optional coverage for prescription drugs. You choose a plan from private insurers, and each plan has its own monthly premium, deductible, and copayments. Premiums range from roughly $7 to $100 per month depending on the plan and the drugs you take. The deductible in 2024 can be up to $545, though many plans have no deductible.

Once you meet the deductible, you pay a copayment or coinsurance for each prescription. Plans divide drugs into tiers: generic drugs (lowest cost), preferred brand-name drugs, non-preferred brand-name drugs, and specialty drugs. Your copayment might be $5 for a generic, $50 for a preferred brand, and much more for specialty drugs. As you fill prescriptions throughout the year, your out-of-pocket costs add up, and the plan structure changes once you reach certain spending thresholds.

If you do not sign up for Part D when you first become may be able to access, you pay a penalty of about 1% of the national average premium per month for every month you go without coverage, for as long as you have Medicare. The penalty is permanent unless you have a may have access to reason for the delay.

Part C costs: Medicare Advantage plans

Part C, also called Medicare Advantage, is an alternative to Original Medicare (Parts A and B). A private insurance company runs the plan, and it must cover everything Part A and Part B cover, but it can do so with different costs and rules. Some Part C plans have no monthly premium beyond the Part B premium you already pay, while others charge $50 to $200 per month.

Part C plans often have lower premiums than Original Medicare, but they usually have higher copayments. A doctor visit might cost $30 to $50 per visit instead of 20% coinsurance. Many plans require you to use doctors and hospitals in their network, and you may need a referral to see a specialist. Some plans include Part D (drug coverage) and dental or vision benefits, which can lower your total costs if you use those services.

Part C plans have an out-of-pocket maximum, which means once you pay a certain amount in copayments and coinsurance in a year, the plan covers the rest. In 2024, the maximum is capped at $8,000 per person. Original Medicare has no out-of-pocket maximum, so your costs can be higher if you have serious health problems.

Income-based premium increases and how to avoid them

If your income was above certain thresholds two years ago, you pay more for Part B and Part D. Medicare uses your tax return from two years prior, so in 2024, they look at your 2022 income. The thresholds are $97,000 for single filers and $194,000 for married filing jointly. For every $1,000 (or fraction of $1,000) above the threshold, your premium goes up.

You can ask Medicare to reconsider if your income dropped since the tax return they used — for example, if you retired, lost a job, or had a major life change. You file a form called the Medicare Income-Related Monthly Adjustment Amount (IRMAA) appeal with Social Security. You will need to show proof of the change, such as a recent tax return, a letter from your employer, or a divorce decree. If Medicare agrees, your premium goes back down.

Programs that help pay your costs

If your income is low, you may not have to pay Part B or Part D premiums at all. Medicaid (a joint federal and state program) covers Medicare premiums and cost-sharing for people who meet income and asset limits. The limits vary by state, but generally you must have income below 100% to 135% of the federal poverty level. In 2024, that is roughly $1,500 per month for a single person, though it is higher in some states.

Extra Help is a federal program that pays Part D premiums and reduces copayments for people with limited income and resources. You can have up to $20,000 in savings (or $30,000 if married) and still may have access to. may have access to Medicare Beneficiary (QMB) coverage pays your Part B premium, deductible, and coinsurance if you meet income limits. These programs are separate from Medicare itself, and you must contact your state Medicaid office or Social Security to see if you may have access to.

Frequently Asked Questions

Why did my Part B premium go up so much this year?

Part B premiums increase every year based on expected Medicare costs. The increase is usually 5% to 10%, but it can be higher if healthcare costs rise faster than expected. If your income increased since two years ago, you may also be paying an income-related surcharge. Check your Social Security statement or call Social Security at 1-800-772-1213 to confirm your premium and ask whether an IRMAA appeal applies to you.

Do I have to pay for preventive care?

No. Part B covers preventive services like annual wellness visits, cancer screenings, vaccines, and blood pressure checks with no copayment or coinsurance after you meet your deductible. Some services, like the annual wellness visit, do not require you to meet the deductible first. Check your plan documents or call your plan to confirm which preventive services are covered.

What happens if I cannot afford my Medicare costs?

Contact your state Medicaid office to ask about Extra Help, QMB, or full Medicaid coverage. You can also call 1-800-MEDICARE to speak with someone who can tell you which programs you may be able to use. If you have a Part C plan with high copayments, you can switch to Original Medicare during the annual open enrollment period (October 15 to December 7) to potentially lower your costs.

Can I switch plans if my costs are too high?

Yes. If you have Original Medicare (Parts A and B), you can switch Part D plans every year during open enrollment. If you have a Part C plan, you can switch to a different Part C plan or back to Original Medicare during open enrollment. Changes take effect January 1. You can also switch if you have a may have access to life event, such as moving out of your plan's service area or losing other health insurance.

Do I pay taxes on Medicare?

No. Your Medicare premiums are not tax-deductible, and Medicare benefits are not taxable income. However, if your total income (including half of your Social Security benefits) exceeds certain thresholds, up to 85% of your Social Security benefits may be taxable. This is separate from Medicare and depends on your overall tax situation.