Medicare costs break into four parts, and what you pay depends on which parts you choose and your income

Medicare has four parts — A, B, D, and Medigap or Medicare Advantage — and each one costs differently. Part A (hospital insurance) is free for most people who paid Medicare taxes while working. Part B (doctor visits and outpatient care) costs a monthly premium that changes each year. Part D (prescription drugs) varies by plan. Medigap and Medicare Advantage are supplemental options with their own costs. Your total out-of-pocket spending also depends on deductibles, copays, and coinsurance amounts, which also shift annually.

In 2024, the numbers are specific. Part B premiums start at $174.70 per month for most people, though higher earners pay more. Part A has a $1,632 deductible per hospital stay. Part D premiums range from roughly $7 to $100+ monthly depending on the plan you choose. These figures change on January 1 each year, so what you paid in 2023 is not what you pay now.

Key Takeaways

  • Part A (hospital) is free for most people; Part B (doctor visits) costs $174.70 monthly in 2024 for standard earners, more if your income is higher.
  • Part B has a $1,632 annual deductible in 2024, and you pay 20% of approved amounts after that.
  • Part D (prescription drugs) premiums vary by plan and range from under $10 to over $100 per month.
  • If your income exceeds certain thresholds, you pay higher premiums for Parts B and D through Income-Related Monthly Adjustment Amounts (IRMAA).
  • Medigap and Medicare Advantage are separate insurance products with their own monthly premiums and out-of-pocket limits.

Part A costs: hospital coverage

Part A covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health services. Most people who worked and paid Medicare taxes for at least 10 years do not pay a monthly premium for Part A. You only pay when you use it.

When you are admitted to a hospital, you pay a deductible of $1,632 per benefit period in 2024. A benefit period starts when you enter the hospital and ends 60 days after you leave without returning. If you go back to the hospital within that window, the same deductible applies. After you meet the deductible, Medicare covers all approved costs for the first 60 days. Days 61 through 90 cost you $408 per day in coinsurance. Beyond 90 days, costs rise to $816 per day.

For skilled nursing facility stays (after a hospital stay of at least three days), Medicare covers the first 20 days fully. Days 21 through 100 cost you $204 per day in coinsurance in 2024. After 100 days, you pay the full cost.

Part B costs: doctor visits and outpatient care

Part B covers doctor visits, lab tests, imaging, outpatient surgery, and durable medical equipment. The standard monthly premium in 2024 is $174.70 for people whose modified adjusted gross income (MAGI) is $97,000 or less (or $194,000 or less if married filing jointly). This premium is deducted automatically from your Social Security check if you receive benefits, or you pay it directly to Medicare.

After you pay the Part B deductible of $240 in 2024, Medicare covers 80% of approved amounts and you pay 20%. This coinsurance continues throughout the year — there is no out-of-pocket maximum under Original Medicare Part B alone. If you see many specialists or have frequent procedures, your costs can accumulate quickly.

If your income is higher, you pay more. Medicare uses your tax return from two years prior to calculate Income-Related Monthly Adjustment Amounts (IRMAA). For 2024 coverage, Medicare looked at your 2022 tax return. If your MAGI exceeded $97,000 (single) or $194,000 (married filing jointly), you pay an additional amount on top of the standard $174.70 premium. The surcharge ranges from $69.90 to $349.40 per month depending on your income bracket.

Part D costs: prescription drug coverage

Part D is optional coverage for prescription drugs offered by private insurance companies approved by Medicare. Premiums vary widely by plan and by pharmacy, ranging from roughly $7 to over $100 per month in 2024. The plan you choose, the drugs you take, and your local pharmacy all affect the cost.

Most Part D plans have a deductible (often $0 to $545 in 2024, depending on the plan), a copay or coinsurance for each drug, and a coverage gap sometimes called the "donut hole." Once you and your plan spend $5,850 combined on covered drugs in 2024, you enter the coverage gap and pay a larger share of drug costs until total out-of-pocket spending reaches $8,550. After that, catastrophic coverage kicks in and you pay a small copay for the rest of the year.

Like Part B, Part D premiums increase if your income is high. IRMAA surcharges for Part D range from $12.70 to $76.20 per month in 2024 depending on your income level.

Income-Related Monthly Adjustment Amounts (IRMAA) explained

If you earn more than a certain amount, Medicare charges you higher premiums for Parts B and D. These surcharges are called IRMAA. For 2024, the income thresholds are $97,000 (single filers) and $194,000 (married filing jointly). If your modified adjusted gross income exceeds these amounts, you pay more.

The surcharge tiers increase as income rises. A single filer with MAGI between $97,001 and $123,000 pays an extra $69.90 per month for Part B. At $123,001 to $153,000, the surcharge jumps to $174.70. At the highest tier ($243,001 and above), the surcharge is $349.40 per month. Part D surcharges follow a similar structure but with smaller dollar amounts.

Medicare uses your tax return from two years prior. If your income changed significantly — you retired, sold a home, or had a major life event — you can request a recalculation by contacting Social Security. Provide documentation of the change, and Medicare may adjust your premiums retroactively.

Medigap and Medicare Advantage: supplemental coverage costs

Original Medicare (Parts A and B) leaves you responsible for deductibles, coinsurance, and copays. Two options exist to reduce these costs: Medigap and Medicare Advantage.

Medigap is supplemental insurance sold by private companies that pays some or all of your out-of-pocket costs under Original Medicare. There are 10 standardized Medigap plans (A through N), each with a different combination of coverage and cost. Premiums range from roughly $100 to $300+ per month depending on the plan, your age, your location, and the insurance company. Medigap does not cover prescription drugs, so you still need Part D. Medigap premiums do not increase based on IRMAA.

Medicare Advantage (Part C) is an alternative to Original Medicare offered by private insurance companies. It includes Parts A, B, and usually D in one plan. Monthly premiums are often $0 to $50, but you pay copays and coinsurance when you use services, and you must use in-network providers. Out-of-pocket maximums in 2024 range from roughly $3,000 to $7,500 depending on the plan. Medicare Advantage premiums also increase with IRMAA.

What changes year to year

Medicare costs are adjusted annually, usually announced in October for the following January. Part B premiums, Part A deductibles, Part D deductibles and coverage gap thresholds, and IRMAA surcharges all change. The amounts depend on inflation, healthcare utilization, and program costs.

Your personal costs may also change if your income changes, if you switch plans, or if you turn 65 and become newly may be able to access. If you are still working at 65, you may delay Part B enrollment without penalty, but you must enroll within eight months of leaving your job or face a permanent surcharge. If your income drops significantly due to retirement or job loss, request an IRMAA recalculation within 60 days of the change.

Frequently Asked Questions

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

No. If you or your spouse worked and paid Medicare taxes for at least 10 years, Part A is free. You pay only when you use hospital or skilled nursing services, and only the deductible and coinsurance amounts explore.

What happens if my income goes down after I retire?

Contact Social Security within 60 days of the change and request an IRMAA recalculation. Provide documentation such as a recent tax return, a letter from your employer, or proof of a life event. Medicare may lower your Part B and Part D surcharges retroactively.

Can I switch from Original Medicare to Medicare Advantage or Medigap during the year?

You can switch during the Annual Enrollment Period (October 15 to December 7 each year), effective January 1. Outside that window, you can switch only if you may have access to for a Special Enrollment Period due to a life event such as moving, losing employer coverage, or a change in income.

Why is my Part B premium higher than my neighbor's?

Your premium may be higher because of IRMAA surcharges based on your income. Medicare looks at your tax return from two years prior. If your income is above the threshold, you pay extra. Your neighbor may have lower income or may have requested an IRMAA recalculation after a life event.

Do I need both Medigap and Part D?

Medigap covers your out-of-pocket costs under Original Medicare but does not cover prescription drugs. Part D is a separate drug plan. If you choose Original Medicare with Medigap, you must also enroll in Part D during your initial enrollment period or face a permanent surcharge when you do enroll.