Medicare costs you money in four ways: a monthly premium, an annual deductible, copayments when you use care, and coinsurance (a percentage of the bill). How much you pay depends on which parts of Medicare you choose and your income. Part A (hospital insurance) is usually free if you paid Medicare taxes while working. Part B (doctor visits) costs $164.90 per month in 2024, though the amount changes yearly. Part D (prescription drugs) and supplemental coverage add more. If your income is higher, you pay a surcharge on top of the standard premium.

Key Takeaways

  • Part A has no monthly premium for most people but includes a $1,632 hospital deductible per stay in 2024, which resets each time you're admitted.
  • Part B costs $164.90 monthly in 2024 and has a $240 annual deductible, after which Medicare pays 80% and you pay 20% for most services.
  • Part D (drug coverage) premiums vary by plan and insurer, typically ranging from $7 to $100+ per month, plus copays for each prescription.
  • If your income exceeds certain thresholds, you pay an Income-Related Monthly Adjustment Amount (IRMAA) on top of your Part B and Part D premiums.
  • Medigap (supplemental insurance) and Medicare Advantage plans offer different cost structures and coverage levels, so comparing them matters before you enroll.

Part A: Hospital Insurance Costs

Part A covers inpatient 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 pay no monthly premium. If you didn't work that long, you can buy Part A, but the premium ranges from $278 to $556 per month depending on your work history — amounts that change yearly.

The real cost of Part A comes when you use it. In 2024, you pay a $1,632 deductible for each hospital stay. After you meet that deductible, Medicare covers all costs for days 1 through 60. On days 61 through 90, you pay $408 per day. Beyond day 90, you enter "lifetime reserve days" — a limited pool of extra days Medicare will cover — and you pay $816 per day for those. Once you've used your lifetime reserve days, you pay all costs yourself. The deductible resets each time you're admitted to the hospital, even if admissions happen close together.

For skilled nursing facility care (not regular nursing home care), you pay nothing for days 1 through 20 after a may have access to hospital stay. Days 21 through 100 cost you $204 per day in 2024. After day 100, you pay everything.

Part B: Doctor and Outpatient Services

Part B covers doctor visits, outpatient care, lab tests, imaging, and durable medical equipment like wheelchairs or oxygen. The standard monthly premium is $164.90 in 2024. This amount increases each year and is announced in the fall for the following year. You pay this premium whether you use services or not.

Once you enroll in Part B, you also have an annual deductible of $240 in 2024. After you meet this deductible, Medicare pays 80% of the approved amount for most services, and you pay the remaining 20%. This 20% coinsurance continues for the rest of the year — there is no out-of-pocket maximum under Original Medicare, meaning your costs can grow if you need a lot of care.

Some services have different rules. Preventive care (like annual wellness visits, cancer screenings, and vaccines) is covered at 100% after you meet your deductible. Mental health visits follow the same 80/20 split as other services. If a doctor charges more than Medicare's approved amount, you may owe the difference — unless the doctor has agreed not to "balance bill" you.

Part D: Prescription Drug Coverage

Part D is optional but important if you take medications regularly. You choose a Part D plan from private insurers, and each plan has its own premium, deductible, and copay structure. Premiums typically range from $7 to $100+ per month, depending on the plan and the drugs it covers. Plans change their formularies (the list of drugs they cover) and costs each year, so the plan that worked last year may not be the cheapest this year.

Most Part D plans have an annual deductible, often between $0 and $545 in 2024. After you meet the deductible, you pay a copay or coinsurance for each prescription. Copays are usually lower for generic drugs and higher for brand-name drugs. Once your total out-of-pocket spending reaches $8,850 in 2024, you enter the "catastrophic coverage" phase and pay only a small copay for the rest of the year.

If you don't enroll in Part D when you first become may be able to access and you go without coverage for more than 63 days, you may pay a permanent penalty — an extra amount added to your premium for as long as you have Part D. The penalty is calculated based on how long you went without coverage.

Income-Related Surcharges (IRMAA)

If your income is above a certain level, you pay an extra charge called an Income-Related Monthly Adjustment Amount (IRMAA) on top of your Part B and Part D premiums. Medicare uses your modified adjusted gross income from two years prior to calculate this. In 2024, if you're single and your income exceeds $97,000, you start paying a surcharge. For married couples filing jointly, the threshold is $194,000.

The surcharge increases in steps as your income rises. A single person earning $120,000 might pay an extra $70 per month on Part B alone, while someone earning $180,000 might pay an extra $280 per month. Part D surcharges follow a similar structure. These amounts change yearly and vary based on your filing status and exact income.

If your income drops due to retirement, job loss, or other life changes, you can request that Medicare recalculate your IRMAA using your current year's income instead of the two-year-old figure. You'll need to file a form and provide documentation of the change.

Medigap and Medicare Advantage: Different Cost Models

After you enroll in Original Medicare (Parts A and B), you have two main options for additional coverage. Medigap (supplemental insurance) is sold by private insurers and helps pay the 20% coinsurance, deductibles, and copays that Original Medicare doesn't cover. Medigap premiums vary widely by plan type, location, and insurer — typically ranging from $100 to $300+ per month. You pay both your Medicare Part B premium and your Medigap premium, but Medigap has no deductible and no out-of-pocket maximum, so your costs are more predictable.

Medicare Advantage (Part C) is an alternative to Original Medicare offered by private insurers. Instead of paying Medicare directly, you pay the insurer, who receives a fixed amount from Medicare. Most Medicare Advantage plans have $0 premiums (beyond your Part B premium), but they typically have lower deductibles and copays than Original Medicare. However, they limit which doctors and hospitals you can use, and they often require referrals for specialists. Out-of-pocket maximums are capped — in 2024, the maximum is $8,850 for in-network care — so your costs are predictable but potentially higher if you need a lot of care.

Choosing between Medigap and Medicare Advantage depends on your health, your doctors, and how much care you expect to use. Neither is universally cheaper; it depends on your situation.

How Costs Change Year to Year

Medicare premiums, deductibles, and copays change every January. The Centers for Medicare & Medicaid Services (CMS) announces the new amounts in the fall, usually in October. Part B premiums and deductibles are tied to Social Security's cost-of-living adjustment (COLA), though Part B can increase faster than COLA in some years. Part A deductibles and copays also rise annually, though not always by the same percentage.

Part D premiums and formularies change plan by plan. Even if you stay with the same insurer, your plan's costs and drug coverage may shift. This is why Medicare recommends reviewing your coverage each fall during the Annual Enrollment Period (October 15 to December 7) and switching plans if a cheaper option becomes available.

Income thresholds for IRMAA surcharges also adjust yearly, usually increasing slightly. If your income is close to a threshold, a small raise or a change in filing status could push you into a higher surcharge bracket.

Frequently Asked Questions

Do I have to pay for Part A if I worked and paid Medicare taxes?

If you or your spouse worked and paid Medicare taxes for at least 10 years, Part A is free. If you worked fewer than 10 years, you can buy Part A, but the monthly premium ranges from $278 to $556 depending on your work history. The premium amount changes yearly.

What happens if I can't afford my Medicare premiums?

If your income is low, you may may have access to for programs like the Medicare Savings Program or Extra Help (for Part D). These are run by your state and can help pay your premiums and out-of-pocket costs. Contact your local Medicaid office or call 1-800-MEDICARE to learn what programs are available where you live.

Is there a limit to how much I pay out of pocket under Original Medicare?

Original Medicare (Parts A and B) has no out-of-pocket maximum. You pay coinsurance (20% of approved charges) for the rest of your life, with no cap. This is one reason many people buy Medigap or choose Medicare Advantage, both of which have limits on what you pay.

Can I change my Part D plan if my medications become more expensive?

Yes. During the Annual Enrollment Period (October 15 to December 7), you can switch to a different Part D plan. If your plan removes a drug from its formulary or significantly raises the copay mid-year, you may also be able to switch outside the enrollment period — contact your plan to ask about exceptions.

What is the penalty for not enrolling in Part D on time?

If you go without Part D coverage for more than 63 days after you first become may be able to access, you pay a permanent penalty. The penalty is roughly 1% of the national average Part D premium for each month you were without coverage. This penalty is added to your premium for as long as you have Part D, even if you switch plans.