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). The exact amount depends on which Medicare parts you have, which insurance company you choose, and how much medical care you use. Most people pay at least a premium and a deductible; many pay all four.

Key Takeaways

  • Part A (hospital insurance) has no monthly premium for most people, but charges a deductible when you enter the hospital and daily copayments for stays longer than 60 days.
  • Part B (doctor visits and outpatient care) costs a monthly premium that increases if you delay signing up, plus a yearly deductible and 20% coinsurance on most services.
  • Part D (prescription drugs) costs vary widely by plan and pharmacy, and you pay more if you enroll late without other drug coverage.
  • Medigap and Medicare Advantage plans have their own premiums and cost-sharing rules that replace or supplement what you pay to Medicare directly.
  • Your income affects what you pay for Part B and Part D premiums through Income-Related Monthly Adjustment Amounts (IRMAA).

Part A: Hospital Insurance Costs

Part A covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health services. You do not pay a monthly premium for Part A if you or your spouse paid Medicare taxes for at least 10 years while working. If you do not meet that requirement, you can buy Part A, and the monthly premium ranges from roughly $278 to $505 depending on how many years you or your spouse worked and paid taxes.

When you use Part A, you pay a deductible each time you enter the hospital. For 2024, that deductible is $1,632 per hospital stay. After you pay the deductible, Medicare covers all costs for days 1 through 60. On days 61 through 90, you pay a daily copayment (for 2024, that is $408 per day). If you stay longer than 90 days, you enter your "lifetime reserve days" — 60 additional days you can use over your entire lifetime — and you pay $816 per day for those days.

For skilled nursing facility care (not regular nursing home care), you pay nothing for days 1 through 20, then $204 per day for days 21 through 100. After day 100, you pay all costs yourself.

Part B: Doctor Visits and Outpatient Care Costs

Part B covers doctor visits, outpatient surgery, diagnostic tests, and durable medical equipment. The standard monthly premium for Part B in 2024 is $164.90, but you may pay more if your income is above a certain level. This income-based increase is called an Income-Related Monthly Adjustment Amount (IRMAA), and it can raise your premium to as much as $560.50 per month depending on your income from two years ago.

You also pay an annual deductible for Part B — $240 in 2024. After you meet the deductible, you typically pay 20% of the cost of services, and Medicare pays 80%. This 20% you pay is called coinsurance. For some services like office visits, your doctor may charge a fixed copayment instead of coinsurance; the amount varies by doctor and location.

If you delay signing up for Part B when you first become may be able to access at 65, you pay a permanent penalty. The penalty is 10% of the standard premium for each full year you delayed, added to your premium for life. If you wait three years to sign up, you pay 30% more than the standard premium forever.

Part D: Prescription Drug Coverage Costs

Part D is optional prescription drug coverage sold by private insurance companies approved by Medicare. The monthly premium varies by plan and ranges from roughly $7 to $100 or more, depending on which drugs the plan covers and which pharmacy you use. You choose a plan during the annual enrollment period (October 15 to December 7), and the plan you pick determines what you pay.

Most Part D plans charge a yearly deductible, which can be up to $545 in 2024. After you meet the deductible, you pay a copayment or coinsurance for each prescription. The amount depends on the drug's "tier" — how the insurance company categorizes it. Generic drugs are usually cheaper than brand-name drugs on the same tier.

Part D has a coverage gap called the "donut hole." Once you and your plan have spent $5,850 combined on covered drugs in 2024, you enter the gap and pay more out of pocket until your total out-of-pocket spending reaches $7,050. After that, catastrophic coverage kicks in and you pay only a small copayment or coinsurance for the rest of the year. If you delay signing up for Part D when you first become may be able to access, you pay a permanent penalty of about 1% of the national average Part D premium for each month you were late, added to your premium for life.

Medigap: Supplemental Insurance Costs

Medigap (also called Supplement insurance) is sold by private companies and covers some of the costs that Original Medicare does not — deductibles, copayments, and coinsurance. Medigap is optional, but many people buy it to reduce their out-of-pocket costs. The monthly premium for Medigap ranges from roughly $100 to $400 or more, depending on which plan you choose, your age, your location, and the insurance company.

There are ten standardized Medigap plans, labeled A through N. Each plan covers a different combination of costs. For example, Plan G covers the Part B deductible and 80% coinsurance for hospital stays beyond 60 days, while Plan N covers the Part B deductible but not the hospital coinsurance. You pay the Medigap premium directly to the insurance company, separate from your Medicare premium.

If you buy Medigap within six months of turning 65 and signing up for Part B, you have a may provide right to buy any plan at any price the company charges. If you wait longer, the insurance company can deny you coverage or charge you more based on your health history.

Medicare Advantage: All-in-One Plan Costs

Medicare Advantage (Part C) is an alternative to Original Medicare. It is sold by private insurance companies and includes Part A, Part B, and usually Part D all in one plan. Many Medicare Advantage plans charge no monthly premium beyond the Part B premium you already pay to Medicare, though some charge an additional premium. You still pay the Part B premium to Medicare.

Medicare Advantage plans use copayments and coinsurance instead of the 20% coinsurance in Original Medicare. A typical office visit might cost $20 to $50 as a copayment, rather than 20% of the actual charge. However, Medicare Advantage plans have an annual out-of-pocket maximum — a cap on how much you pay in a year. For 2024, that maximum is $8,050 for in-network care. Once you reach it, the plan pays 100% of covered services for the rest of the year. Original Medicare has no out-of-pocket maximum.

Medicare Advantage plans often include benefits that Original Medicare does not, such as dental, vision, or fitness programs, but these vary by plan and location. You must use doctors and hospitals in the plan's network, except in emergencies. If you see an out-of-network doctor, you pay more or the plan may not cover the visit at all.

Income-Related Costs: IRMAA Explained

If your income is above a certain level, you pay more for Part B and Part D premiums through an extra charge called an Income-Related Monthly Adjustment Amount (IRMAA). IRMAA is based on your income from two years before the year you are paying for. For example, your 2024 IRMAA is based on your 2022 income reported on your tax return.

The income thresholds for IRMAA change each year. For 2024, if you are single and your income is over $97,000, you pay an IRMAA. If you are married filing jointly and your income is over $194,000, you pay an IRMAA. The higher your income, the higher your IRMAA. At the highest income level, you can pay three times the standard Part B premium.

If your income drops — because you retire, lose a job, or have a major life change — you can ask Medicare to recalculate your IRMAA. You must file a form called the "Life-Changing Event" notice and provide proof of the change, such as a recent tax return or a letter from your employer.

When to Ask Your Doctor About Costs

Before you have a procedure or start a new medication, ask your doctor or pharmacist what it will cost you. Costs vary by location, by which Medicare plan you have, and by which pharmacy or facility you use. Your doctor may not know the exact price, but they can tell you whether the service is covered by Medicare and whether there are less expensive alternatives.

If you use Original Medicare and Medigap, ask whether your doctor accepts Medicare assignment — meaning they agree to accept Medicare's approved amount as full payment. If they do not, they can bill you for the difference, and Medigap may not cover it. If you use Medicare Advantage, ask whether the doctor is in your plan's network and what your copayment will be.

If you take multiple medications, ask your pharmacist to review them for interactions and to check whether a generic version costs less. Part D plans often charge less for generic drugs than brand-name drugs, and switching can save you hundreds of dollars a year.

Frequently Asked Questions

Does my Part A premium change if I work longer?

No. Once you have 40 quarters (10 years) of Medicare tax contributions, you may have access to for premium-free Part A for life. Working longer does not lower your premium because there is no premium to lower. However, if you have fewer than 40 quarters, your premium decreases as you accumulate more quarters, up to a maximum of 30 quarters.

What happens if I cannot afford my Medicare premiums?

If your income is low, you may may have access to for programs that help pay your premiums. The Medicare Savings Program (MSP) can pay your Part B and Part D premiums and some cost-sharing. Medicaid, the state program for low-income people, can also help. Contact your state Medicaid office or call 1-800-MEDICARE to learn whether you may have access to.

Can I change my Medicare plan if costs are too high?

Yes. You can change your Part D plan or Medicare Advantage plan during the annual enrollment period (October 15 to December 7) each year. You can also switch from Original Medicare to Medicare Advantage or vice versa during this period. If you have a major life change like losing employer coverage, you may have a special enrollment period outside the annual window.

Why did my Part B premium increase so much?

Part B premiums increase each year based on the cost of medical care and changes in the Medicare program. Premiums also increase if your income rises and you become subject to IRMAA. If your income dropped, contact Medicare within 60 days to ask for a recalculation. If you do not report the change, you will overpay.

Do I pay the same copayment at every doctor's office?

No. In Original Medicare, you pay 20% coinsurance, which varies based on what the service costs. In Medicare Advantage, copayments are set by your plan but can differ by type of visit — a routine office visit might cost $20, but a specialist visit might cost $50. Always ask before your appointment what you will owe.