Medicare costs vary by which parts you choose and your income level
Medicare has four parts, and each one costs differently. Part A (hospital insurance) is free for most people at 65 if you or your spouse paid Medicare taxes while working. Part B (doctor visits and outpatient care) costs a monthly premium that changes each year — for 2024 it starts at $174.70 per month for most people, but rises if your income was higher two years ago. Part D (prescription drugs) and Part C (Medicare Advantage, an alternative to Parts A and B) each have their own costs that depend on which plan you pick.
Beyond premiums, you also pay deductibles (the amount you cover before Medicare starts paying), copayments (a set dollar amount per visit), and coinsurance (a percentage of the cost). These out-of-pocket costs add up differently depending on how much medical care you use and which coverage you choose.
Key Takeaways
- Part A is free for most people at 65 if you worked and paid Medicare taxes, but Part B has a monthly premium that increases each year and is higher if your income was above a certain threshold two years prior.
- Part B premiums for 2024 start at $174.70 per month for most people, but you will also pay a yearly deductible ($240 in 2024) and coinsurance on most services.
- Part D (prescription drug coverage) premiums vary by plan and range from roughly $7 to $100+ per month depending on which drugs you take and which insurer you choose.
- If your income is above $97,000 (single) or $194,000 (married), you pay a higher Part B and Part D premium called an Income-Related Monthly Adjustment Amount (IRMAA).
- Medicare Advantage (Part C) plans often have lower or zero premiums but restrict which doctors you can see and may have higher out-of-pocket costs when you need care.
Part A: Hospital insurance costs and what it covers
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 and paid Medicare taxes, Part A is free when you turn 65. You do not pay a monthly premium.
However, you do pay costs when you use the service. For a hospital stay in 2024, you pay a $1,632 deductible for the first 60 days, then $408 per day for days 61 through 90, and $816 per day for days 91 through 150. Skilled nursing facility care requires you to pay coinsurance after the first 20 days. If you did not work long enough to may have access to for free Part A, you can buy it — the premium is $505 per month in 2024 if you have 30 to 39 quarters of work history, or $278 per month if you have fewer than 30 quarters.
Part B: Doctor visits, outpatient care, and the income-based premium increase
Part B covers doctor office visits, outpatient surgery, diagnostic tests, physical therapy, and durable medical equipment like wheelchairs or oxygen. The standard monthly premium for 2024 is $174.70, but this amount changes every January. You also pay a yearly deductible of $240 (in 2024) before Part B starts paying, and then you typically pay 20% coinsurance on most services after that.
If your income was higher than $97,000 (single filer) or $194,000 (married filing jointly) in 2022, you pay an extra charge called an Income-Related Monthly Adjustment Amount (IRMAA) on top of the standard premium. This surcharge can range from roughly $70 to $560 per month depending on your income bracket. Medicare uses your tax return from two years before to calculate this, so if your income drops, you can ask Medicare to recalculate.
Part D: Prescription drug coverage and plan selection
Part D is optional, but if you do not sign up when you first become may be able to access and go without coverage, you pay a permanent penalty if you join later. Monthly premiums vary widely by plan and by pharmacy — they typically range from $7 to $100+ per month in 2024, depending on which drugs you take and which insurance company offers the plan in your area.
You also pay out-of-pocket costs for prescriptions: a copayment or coinsurance for each drug, a yearly deductible (up to $545 in 2024), and coinsurance in the coverage gap (the range where you pay a larger share). Like Part B, if your income exceeds the IRMAA thresholds, you pay a surcharge on Part D as well. The best way to find an affordable plan is to use the Medicare Plan Finder tool on Medicare.gov each October during open enrollment, because plans and their costs change every year.
Part C (Medicare Advantage): An alternative to Original Medicare
Medicare Advantage is an alternative way to get Parts A and B coverage through a private insurance company approved by Medicare. Many Advantage plans have zero monthly premiums (you still pay Part B premium to Medicare), but they restrict you to a network of doctors and hospitals, often require referrals, and may have higher copayments or coinsurance when you use care.
Advantage plans usually include Part D drug coverage built in, so you do not buy it separately. However, out-of-pocket costs can add up quickly if you need a lot of care. Some plans cap your total out-of-pocket spending per year, which can protect you if you have major medical expenses. Like Original Medicare, Advantage plans are offered by different companies and change their costs and coverage each year, so you should review your options during open enrollment in October.
Supplemental insurance (Medigap) and when to consider it
Medigap is private insurance that covers some of the costs Medicare does not — deductibles, coinsurance, and copayments. If you choose Original Medicare (Parts A and B), you can buy a Medigap policy to reduce your out-of-pocket costs. Medigap premiums vary by plan type and insurance company, typically ranging from $100 to $400+ per month depending on your age and location.
The trade-off is that Medigap costs money every month, but it protects you from large bills if you need a lot of medical care. If you choose Medicare Advantage instead, you cannot buy Medigap. The decision between Original Medicare plus Medigap versus Medicare Advantage depends on your health, how often you see doctors, and which doctors you want to use.
How income affects your Medicare costs
If your modified adjusted gross income (MAGI) from two years ago was above $97,000 (single) or $194,000 (married filing jointly), you pay IRMAA surcharges on both Part B and Part D. The surcharge increases in brackets: the higher your income, the more you pay. For example, in 2024, a single person with MAGI between $97,001 and $123,000 pays an extra $70 per month on Part B; someone with MAGI above $499,001 pays an extra $560 per month.
If your income drops — because you retired, sold a business, or had a major life change — you can ask Medicare to recalculate your IRMAA using your current year's income instead. You will need to file a form called the Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event and provide proof of the change. This can lower your premium significantly if your income has fallen.
Frequently Asked Questions
Do I have to pay for Part A at 65?
Part A is free if you or your spouse worked at least 10 years and paid Medicare taxes. If you did not work long enough, you can buy Part A for $278 to $505 per month depending on your work history. You must be 65 or older and a U.S. citizen or permanent resident to enroll.
What happens if I do not sign up for Part B when I turn 65?
If you delay Part B without a valid reason (such as still being covered by an employer plan), you pay a permanent 10% penalty on your Part B premium for as long as you have Medicare. The penalty applies for each full year you were may be able to access but did not sign up. It is usually worth signing up on time to avoid this cost.
Can I change my Medicare plan after I turn 65?
Yes, but only during specific times. The main open enrollment period runs from October 15 to December 7 each year, and changes take effect January 1. If you have a may have access to life event (such as moving, losing employer coverage, or a major income change), you may have a Special Enrollment Period to change plans outside the regular window.
Will my Medicare premiums go up every year?
Yes. Part B premiums and Part D premiums change each January based on program costs and inflation. Part A deductibles and coinsurance amounts also increase most years. The exact increase varies year to year and is announced in the fall before it takes effect.
How do I know which Medicare plan is cheapest for me?
Use the Medicare Plan Finder tool on Medicare.gov. Enter your prescriptions, preferred doctors, and pharmacies, and the tool shows you plans ranked by cost. You can compare premiums, deductibles, and out-of-pocket costs side by side. This is the most accurate way to find an affordable plan for your specific situation.