Medicare Part A and Part B costs depend on your work history and income

Most people age 65 and older pay nothing for Medicare Part A (hospital insurance) because they or their spouse paid Medicare taxes while working. Medicare Part B (medical insurance) costs a monthly premium that changes each year — in 2024, the standard premium is $164.90 per month, though you may pay more if your income is above certain thresholds.

Beyond the monthly premium, you also pay a deductible before Part B coverage begins, and you share the cost of services through copayments and coinsurance. Part A has its own deductible for hospital stays. The exact amount you pay depends on which services you use and whether you have other insurance.

Key Takeaways

  • Part A is free for most people who worked and paid Medicare taxes for at least 10 years, but those who did not work that long may pay a monthly premium of up to $278 in 2024.
  • Part B costs $164.90 per month in 2024 for most people, but rises to $247.35 or higher if your income from two years ago exceeded $103,000 (single) or $206,000 (married filing jointly).
  • Part A has a $1,632 deductible per hospital stay in 2024, and Part B has a $240 annual deductible before your coverage begins paying.
  • You pay coinsurance (a percentage of costs) for hospital stays longer than 60 days and for most outpatient services, even after you meet the deductible.
  • If you delay enrolling in Part B when you first become may be able to access, you may owe a permanent penalty on top of your monthly premium.

Part A costs: hospital insurance premiums and deductibles

If you or your spouse paid Medicare taxes for at least 10 years while working, you pay nothing for Part A. If you worked fewer than 10 years, you may still enroll, but you will pay a monthly premium. In 2024, the premium is $278 per month if you have fewer than 30 quarters of work history, or $152 per month if you have 30 to 39 quarters. A quarter equals three months of work in which you paid Medicare tax.

When you use Part A benefits — such as a hospital stay — you pay a deductible of $1,632 per benefit period in 2024. A benefit period begins the day you enter the hospital and ends 60 days after you leave. If you are readmitted after that 60-day window, a new benefit period starts and you owe another deductible. For stays longer than 60 days, you also pay coinsurance: $408 per day for days 61 through 90, and $816 per day for days 91 and beyond.

Part A also covers skilled nursing facility care, hospice, and home health services, each with their own cost structure. Skilled nursing care requires you to pay coinsurance of $204 per day for days 21 through 100 in 2024. Home health and hospice typically have no coinsurance if you use a Medicare-approved provider.

Part B costs: medical insurance premiums and income-related adjustments

The standard Part B premium in 2024 is $164.90 per month. However, if your modified adjusted gross income (MAGI) from your tax return two years prior was above certain thresholds, you pay a higher premium. For example, if you filed taxes as single and your 2022 MAGI was $103,001 to $129,000, your 2024 premium is $230.80 instead of $164.90. The premium increases further at higher income levels, reaching $247.35 per month for single filers with MAGI above $206,000.

These income-based increases are called Income-Related Monthly Adjustment Amounts (IRMAA). They explore to both Part B and Part D (prescription drug coverage). If your income drops due to retirement, job loss, or death of a spouse, you can request that Medicare recalculate your premium using your current-year income instead of the two-year-old figure.

Part B premiums are usually deducted automatically from your Social Security check. If you do not receive Social Security, Medicare sends you a bill each month. If you delay enrolling in Part B after you first become may be able to access at 65, you will owe a permanent 10 percent penalty for each 12-month period you were not enrolled, added to your premium for life.

Part B deductibles and cost-sharing after the deductible

Before Part B starts paying for most services, you must meet an annual deductible of $240 in 2024. This deductible applies to doctor visits, outpatient surgery, diagnostic tests, and other outpatient services. Once you meet the deductible, you typically pay 20 percent of the Medicare-approved amount for most services, and Medicare pays 80 percent.

Some services have different cost-sharing rules. For example, preventive services such as annual wellness visits, cancer screenings, and vaccinations have no coinsurance or deductible — Medicare covers them fully. Mental health visits and physical therapy follow the standard 20 percent coinsurance after the deductible. Urgent care centers and emergency room visits also require the $240 deductible and 20 percent coinsurance.

If a doctor or provider does not accept Medicare assignment (meaning they do not agree to accept Medicare's approved amount as full payment), you may owe more than 20 percent. These providers can charge up to 15 percent above the Medicare-approved amount, a practice called balance billing. Asking whether a provider accepts assignment before your visit helps you avoid surprise bills.

How prescription drug coverage (Part D) adds to your 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 per month in 2024, depending on the drugs you take and the plan you choose. Like Part B, Part D premiums are subject to income-related increases if your MAGI is above the thresholds.

Part D also has a deductible (up to $545 in 2024, though some plans have no deductible), and you pay coinsurance or copayments for each prescription. After you and your plan spend a combined $5,030 on covered drugs in 2024, you enter the "donut hole" — a coverage gap where you pay a larger share of drug costs until your out-of-pocket spending reaches $7,860. After that, catastrophic coverage begins and you pay only a small copayment per drug.

If you do not enroll in Part D when you first become may be able to access, you may owe a permanent penalty of about 1 percent per month of non-enrollment, added to your premium when you do join. This penalty lasts as long as you have Part D coverage.

Medigap and Medicare Advantage: alternative ways to reduce costs

Medigap (supplemental insurance) is sold by private insurers and helps pay the costs that Original Medicare does not cover — deductibles, coinsurance, and balance billing. Medigap premiums vary widely by plan type and location, ranging from roughly $100 to $400 per month. You still pay Part B and Part D premiums on top of Medigap. The advantage is predictable out-of-pocket costs: once you pay your Medigap premium, many plans cover most remaining costs.

Medicare Advantage (Part C) is an alternative to Original Medicare, offered by private insurers. Instead of paying Part A and Part B premiums separately, you pay a single monthly premium (often $0 to $50) and receive hospital and medical coverage through the plan. However, Medicare Advantage plans typically have higher deductibles and coinsurance than Original Medicare, and they often require you to use doctors and hospitals within their network. You must still pay Part D premiums separately unless the plan includes drug coverage.

Choosing between Original Medicare with Medigap, Original Medicare alone, and Medicare Advantage depends on your health, budget, and preferred doctors. Each path has different total costs and trade-offs.

When costs change: annual updates and life events

Medicare costs change every January. The Part B premium, Part A deductible, and Part D deductible amounts are announced in the fall for the following year. These changes are tied to inflation and the cost of care. You receive a notice in the mail showing your new premium and deductible amounts, usually in October or November.

If your life changes — you retire, lose income, marry, divorce, or experience a death in your family — your income-related premium adjustments may change. You can request a recalculation by contacting Social Security or Medicare directly. Similarly, if you move to a different state, your Medigap or Medicare Advantage plan options and costs may differ, so it is worth reviewing your coverage each year during the annual enrollment period (October 15 to December 7).

Frequently Asked Questions

Do I have to pay for Part A if I never worked?

If you never worked or worked fewer than 10 years in a job covered by Medicare taxes, you can still enroll in Part A at 65, but you will pay a monthly premium. In 2024, that premium is $152 to $278 per month depending on your work history. Your spouse's work history may also may have access to you for free Part A if you have been married for at least one year.

What happens if I do not enroll in Part B when I turn 65?

If you delay Part B enrollment without a valid reason (such as active employer coverage), you will owe a permanent 10 percent penalty on your premium for each 12-month period you were not enrolled. This penalty stays with you for life, so enrolling late is costly. The initial enrollment window is the three months before, the month of, and three months after your 65th birthday.

Can I reduce my Part B premium if my income drops?

Yes. If your income has dropped significantly since the year Medicare used to calculate your premium (usually two years ago), you can request that Medicare recalculate using your current-year income. Life events such as retirement, job loss, or death of a spouse may have access to you to request a recalculation. Contact Social Security or Medicare to file a request.

Are there any free preventive services under Part B?

Yes. Medicare Part B covers certain preventive services with no deductible and no coinsurance, including annual wellness visits, cancer screenings (mammogram, colonoscopy, Pap test), cardiovascular screening, diabetes screening, and most vaccinations. These services are covered at 100 percent if you use a Medicare-approved provider.

What is the difference between what I pay out-of-pocket and my premium?

Your premium is the monthly fee you pay to have coverage. Out-of-pocket costs are what you pay when you actually use services — deductibles, coinsurance, and copayments. Your total yearly cost is your premiums plus your out-of-pocket costs. Medigap and Medicare Advantage plans change how these costs are split between premiums and out-of-pocket expenses.