Medicare costs vary by the type of coverage you choose and what services you use

Medicare has two main cost pieces: premiums (what you pay monthly to have coverage) and out-of-pocket costs (what you pay when you actually use care). Most people on Medicare Part A pay no premium because they or their spouse paid Medicare taxes while working. Part B, which covers doctor visits and outpatient care, costs most people $164.90 per month in 2024, though this amount changes yearly and is higher if your income is above certain thresholds. Part D (prescription drug coverage) and Medigap or Medicare Advantage plans add their own premiums on top.

Beyond premiums, you pay deductibles before coverage kicks in, copayments for specific services, and coinsurance (a percentage of the cost). A Part B deductible is $240 per year. Hospital stays under Part A have a deductible of $1,556 per stay in 2024. The exact amounts you pay depend on which plan you choose and how much medical care you need that year.

Key Takeaways

  • Part A (hospital insurance) is free for most people; Part B (doctor visits) costs around $165 per month in 2024, with yearly increases tied to inflation.
  • You pay a Part B deductible of $240 per year, then 20 percent coinsurance for most services after that.
  • Part D (prescription drugs) premiums vary by plan and insurer, ranging from roughly $7 to $100+ per month depending on coverage level.
  • Medigap and Medicare Advantage plans have their own premiums and out-of-pocket limits, and choosing between them significantly affects your total yearly costs.
  • Income-related monthly adjustment amounts (IRMAA) can raise your Part B and Part D premiums if your income exceeds $97,000 for individuals or $194,000 for married couples filing jointly.

Part A and Part B premiums and deductibles

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 pay no monthly premium for Part A. If you did not work long enough, you can buy Part A coverage, but the premium ranges from $278 to $556 per month depending on how many years you or your spouse worked. When you use Part A, you pay a deductible of $1,556 per benefit period (a benefit period starts when you enter the hospital and ends 60 days after you leave).

Part B covers doctor visits, lab tests, imaging, outpatient surgery, and durable medical equipment. The standard Part B premium for 2024 is $164.90 per month, but you pay more if your modified adjusted gross income (MAGI) from two years prior was above $97,000 (individual) or $194,000 (married filing jointly). The Part B deductible is $240 per year. After you meet the deductible, you typically pay 20 percent coinsurance for most services, meaning Medicare pays 80 percent and you pay the remaining 20 percent.

Part D prescription drug coverage costs

Part D is optional coverage for prescription medications. You choose a plan from private insurers, and each plan has its own premium, deductible, and cost structure. Premiums in 2024 range from roughly $7 to $100+ per month depending on the plan and your location. Most plans have a deductible between $0 and $545 per year. After you meet the deductible, you pay a copayment or coinsurance for each prescription until you reach the initial coverage limit (the amount the plan will pay toward your drugs in a year).

Once you and your plan spend a combined $5,850 on covered drugs in 2024, you enter the "coverage gap" or "donut hole," where you pay a larger share of drug costs. This gap continues until your out-of-pocket spending reaches $7,050, at which point catastrophic coverage begins and you pay only a small copayment for the rest of the year. If you have low income, you may may have access to for Extra Help, a federal program that reduces Part D premiums and out-of-pocket costs.

Medigap versus Medicare Advantage: cost trade-offs

After enrolling in Part A and Part B, you have two paths for additional coverage. Medigap (supplemental insurance) covers some of the costs Medicare does not — deductibles, coinsurance, and copayments. Medigap premiums vary by plan letter (Plan A, Plan B, Plan C, and so on), your age, and your location, typically ranging from $100 to $300+ per month. With Medigap, you can see any doctor who accepts Medicare, and you have predictable out-of-pocket costs because the plan covers most gaps.

Medicare Advantage (Part C) is an alternative to Original Medicare run by private insurers. It usually has a lower or zero premium but includes a network of doctors and hospitals you must use (except in emergencies). Medicare Advantage plans have out-of-pocket maximums — in 2024, the limit is $8,050 for in-network care — meaning your costs are capped. However, you pay copayments and coinsurance for each service, and costs add up faster if you use a lot of care. Many Medicare Advantage plans include Part D drug coverage built in.

Income-related premium increases (IRMAA)

If your income is above certain thresholds, Medicare charges you a higher premium for Part B and Part D. This surcharge is called an Income-Related Monthly Adjustment Amount (IRMAA). For 2024, the thresholds are $97,000 for individuals and $194,000 for married couples filing jointly. Income is measured using your modified adjusted gross income (MAGI) from your tax return two years prior.

The surcharge increases in brackets. For example, if your MAGI is between $97,001 and $123,000 as an individual, you pay an extra $70.30 per month for Part B on top of the standard premium. Higher income brackets pay more. You can request a reconsideration if your income dropped due to retirement, death of a spouse, or loss of income-producing property, and Medicare may adjust your premium retroactively.

Costs you pay at the doctor or hospital

When you receive care, you pay out-of-pocket amounts based on your plan. With Original Medicare (Part A and B) and Medigap, you typically pay the deductible once per year, then 20 percent coinsurance for most services. With Medicare Advantage, you pay a copayment (a fixed amount like $25 for a doctor visit) or coinsurance (a percentage) for each service, and these costs count toward your annual out-of-pocket maximum.

Hospital stays, emergency room visits, and surgery have higher costs. A hospital stay under Part A costs you the deductible ($1,556 in 2024) plus coinsurance for days 61–90 of a benefit period ($389 per day in 2024) and even more for days 91 and beyond. If you have Medigap Plan A or Plan B, these hospital costs are covered. If you have Medicare Advantage, the copayment or coinsurance applies, but it counts toward your out-of-pocket maximum.

How to estimate your total yearly Medicare costs

To estimate what you will spend, list your expected costs: monthly premiums for Part B, Part D, and any supplemental plan; the annual deductibles; and the copayments or coinsurance for the services you expect to use. If you take multiple medications, use a plan comparison tool to see which Part D plan has the lowest total cost for your specific drugs. If you have chronic conditions requiring frequent doctor visits, calculate whether Medigap or Medicare Advantage saves you more money.

Keep in mind that costs change every January. Medicare announces new premiums, deductibles, and coverage limits in the fall, and you have a window in October and November to change your plan if you want to switch. If your income changes significantly, contact Social Security to report it, as it may lower your IRMAA surcharge.

Frequently Asked Questions

Do I have to pay for Part A?

Most people pay no premium for Part A if they or their spouse paid Medicare taxes for at least 10 years. If you did not work long enough, you can buy Part A for $278 to $556 per month. You still pay a deductible when you use hospital services.

Why is my Part B premium higher than the standard amount?

Your Part B premium is higher if your income from two years ago exceeded $97,000 (individual) or $194,000 (married filing jointly). Medicare adds a surcharge called IRMAA. You can request a reconsideration if your income dropped due to retirement or other life changes.

What is the difference between what I pay with Medigap and Medicare Advantage?

Medigap has a higher monthly premium but lower out-of-pocket costs per service because it covers deductibles and coinsurance. Medicare Advantage has a lower or zero premium but higher per-service costs (copayments) and a yearly out-of-pocket maximum. The choice depends on how much care you expect to use.

Can I get help paying for Part D if I have low income?

Yes. A program called Extra Help reduces Part D premiums and out-of-pocket costs for people with limited income and resources. You can explore through Social Security or your state Medicaid office.

When do Medicare costs change?

Premiums, deductibles, and coinsurance amounts change every January 1st. Medicare announces the new amounts in October, and you can change your plan during the Annual Enrollment Period from October 15 to December 7 if you want different coverage.