Medicare costs vary by which parts you choose and your income level

Medicare has four parts, and each one costs money differently. Part A (hospital insurance) is free for most people at 65 because they or a spouse paid Medicare taxes while working. Part B (doctor visits and outpatient care) costs a monthly premium that changes each year — in 2024 it was $164.90 per month for most people, but this amount rises annually. Part D (prescription drugs) and Part C (Medicare Advantage, an alternative to Original Medicare) have their own premiums that depend on which plan you pick.

Beyond premiums, you also pay deductibles, copayments, and coinsurance when you use services. Part A has a deductible of $1,632 per hospital stay in 2024. Part B has a $240 annual deductible, then you pay 20% of approved costs. Part D premiums and cost-sharing depend entirely on the drug plan. These out-of-pocket costs can add up quickly if you have chronic conditions or take multiple medications.

Your actual monthly cost depends on three things: which parts you enroll in, whether you choose Original Medicare or Medicare Advantage, and your income. Higher earners pay more for Part B and Part D through an income-related surcharge called IRMAA (Income-Related Monthly Adjustment Amount). If you delay enrolling when you first become may be able to access, you may face permanent penalty increases on your premiums.

Key Takeaways

  • Part A is free for most people; Part B premiums start around $165 per month in 2024 and increase yearly.
  • Part D (drug coverage) premiums vary by plan and range from roughly $7 to $100+ per month depending on which drugs you take.
  • Medicare Advantage plans (Part C) often have lower or zero premiums but may charge higher copayments when you use services.
  • If your income exceeds certain thresholds, you pay an extra surcharge on top of your Part B and Part D premiums.
  • Deductibles, copayments, and coinsurance are separate from premiums and can reach thousands of dollars per year.

Part A and Part B premiums: what most people pay

Part A is automatic and free if you or your spouse worked and paid Medicare taxes for at least 10 years. You do not pay a monthly premium. However, you do pay a deductible when you use it: $1,632 per hospital stay in 2024, and you pay coinsurance for days 61 through 90 of a hospital stay ($408 per day in 2024) and beyond.

Part B costs a standard monthly premium of $164.90 in 2024 for new enrollees, though this amount changes yearly. If you enrolled in Part B before 2024, you may pay a different amount based on when you first signed up — this is called "hold harmless" protection. You also pay a $240 annual deductible for Part B, then 20% coinsurance for most services after that.

Part B premiums are deducted automatically from your Social Security check if you receive benefits. If you do not receive Social Security, Medicare bills you directly. Delaying Part B enrollment past your initial enrollment window (the three months before and after you turn 65) triggers a permanent 10% premium increase for each year you delayed, so timing matters.

Part D drug coverage: premiums depend on your plan

Part D premiums vary widely because there are dozens of plans to choose from, and each one covers different drugs at different costs. A basic plan might cost $7 to $15 per month, while plans covering more expensive or specialty drugs can cost $80 to $150 per month. The lowest-cost plan in your area changes every year, so comparing plans annually is important.

Beyond the premium, you also pay out-of-pocket costs when you fill prescriptions. Most plans have a deductible (often $100 to $500), then you pay a copayment or coinsurance for each drug. Once your total out-of-pocket spending reaches a certain amount (the "donut hole" threshold), your costs change again. In 2024, the donut hole started at $5,030 in total spending.

If you do not enroll in Part D when you first become may be able to access and you do not have other drug coverage, you pay a permanent penalty of about 1% of the national average Part D premium for each month you were uninsured. This penalty is added to your premium for as long as you have Part D, so enrolling on time saves money over the long run.

Medicare Advantage (Part C) premiums and out-of-pocket costs

Medicare Advantage plans are an alternative to Original Medicare (Parts A and B). Many Advantage plans have zero monthly premiums, which makes them look cheaper at first. However, they often charge higher copayments and coinsurance when you use services — a doctor visit might cost $40 to $60 instead of 20% coinsurance, and specialist visits can be $75 to $150.

Advantage plans also have an annual out-of-pocket maximum, which Original Medicare does not. In 2024, that maximum was capped at $8,050 for in-network services. Once you hit that limit, the plan pays 100% of covered services for the rest of the year. This can protect you if you have major medical expenses, but it also means your total costs are predictable.

Advantage plans include Part D drug coverage built in, so you do not buy a separate drug plan. The premium for the Advantage plan covers both medical and drug benefits. However, Advantage plans have network restrictions — you must use in-network doctors and hospitals, or pay much more. If you travel frequently or see specialists outside your plan's network, Original Medicare may cost less overall.

Income-related surcharges (IRMAA) for higher earners

If your income exceeds certain thresholds, Medicare charges you an extra monthly surcharge on top of your Part B and Part D premiums. This is called the Income-Related Monthly Adjustment Amount (IRMAA). In 2024, the surcharge started for single filers with income over $97,000 and married couples filing jointly over $194,000, but these thresholds change yearly.

The surcharge is based on your modified adjusted gross income (MAGI) from your tax return from two years prior. So in 2024, Medicare looked at your 2022 tax return. If your income increased significantly in 2023 or 2024 — for example, from selling a home or receiving an inheritance — you can request a recalculation by submitting a Life-Changing Event form to Social Security.

The surcharge can be substantial. In 2024, the highest earners paid an extra $560 per month on Part B and up to $163 per month on Part D, on top of the standard premiums. If you are affected, it is worth reviewing your income sources to see if any are temporary or if you can adjust your tax filing strategy with an accountant.

Costs you pay beyond premiums: deductibles and coinsurance

Premiums are only part of your Medicare costs. You also pay deductibles (a fixed amount before coverage kicks in) and coinsurance (a percentage of the cost after the deductible). Part A has a $1,632 deductible per hospital stay, and you pay coinsurance for extended stays. Part B has a $240 annual deductible, then you pay 20% of the approved amount for most services.

Skilled nursing facility care, home health, and hospice each have their own cost rules. If you need a hospital stay followed by skilled nursing care, you may owe both a Part A deductible and coinsurance for the nursing facility. Outpatient mental health services have a higher coinsurance (50% instead of 20%) unless you meet certain conditions. These details matter if you have chronic conditions or expect to use services regularly.

Many people buy a Medigap policy (supplemental insurance) to cover some of these out-of-pocket costs. Medigap premiums range from $100 to $300+ per month depending on your age and location, but they can save you thousands if you use services frequently. Alternatively, some people choose Medicare Advantage specifically because of its out-of-pocket maximum, which limits total costs in a given year.

How to estimate your total monthly Medicare cost

To get a realistic picture of what you will pay, add up three numbers: your Part B premium (roughly $165 in 2024, or more if you have IRMAA), your Part D premium (varies by plan, typically $10 to $80), and any Medigap or Advantage plan premium you choose. Then estimate your average monthly out-of-pocket costs based on how often you see doctors, fill prescriptions, and use other services.

Medicare.gov has a plan comparison tool where you can enter your medications and doctors to see which plans cost the least for your situation. You can also call 1-800-MEDICARE to speak with someone who can walk you through the options. Many Area Agencies on Aging offer free counseling on Medicare costs and coverage — search "State Health Insurance information Program" (SHIP) plus your state name to find a local counselor.

Your costs will change every year. Medicare premiums and deductibles increase annually, and new plans enter the market while others exit. Reviewing your coverage each fall during the Annual Enrollment Period (October 15 to December 7) helps you catch savings you might miss by staying with the same plan year after year.

Frequently Asked Questions

Do I have to pay for Part A?

Most people do not pay a monthly premium for Part A because they or a spouse paid Medicare taxes while working. However, you do pay a deductible ($1,632 per hospital stay in 2024) and coinsurance for longer stays. If you did not work long enough to may have access to for free Part A, you can buy it for up to $278 per month in 2024.

What happens if I do not enroll in Part B or Part D on time?

If you delay Part B enrollment past your initial window, you pay a permanent 10% premium increase for each year you were late. For Part D, the penalty is roughly 1% of the national average premium per month uninsured, added to your premium permanently. These penalties can add hundreds of dollars per year over time.

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

Yes. During the Annual Enrollment Period (October 15 to December 7), you can switch from Original Medicare to Medicare Advantage, between Advantage plans, or from Advantage back to Original Medicare. You can also change your Part D plan. If you have a major life change (like moving, losing employer coverage, or a significant income drop), you may be able to switch outside the enrollment period.

Does Medicare cover everything, or will I have gaps?

Medicare does not cover dental, vision, hearing aids, or long-term care. It also does not cover all prescription drugs — only those on your plan's formulary. Many people buy Medigap or choose Medicare Advantage to fill these gaps, or they pay out-of-pocket for uncovered services. Reviewing what is and is not covered helps you budget for total healthcare costs.

How do I know if I am paying too much in IRMAA?

If your income dropped significantly in the current year (from a job loss, retirement, or major life event), you can request an IRMAA recalculation by submitting a Life-Changing Event form to Social Security. You will need to document the change with tax returns, pay stubs, or other proof. Social Security will then recalculate your surcharge based on your current income.