Medicare costs you money in four ways

Most people pay a monthly premium for Part B (doctor visits) and Part D (prescription drugs). You also pay a deductible before Medicare starts to cover costs, copayments or coinsurance when you use care, and sometimes more if you earn above a certain income. The amount you pay depends on which parts of Medicare you have, which plan you choose, and how much medical care you actually use in a year.

If you worked 40 quarters (10 years) under Social Security, you do not pay a premium for Part A (hospital insurance). If you did not work that long, you can still buy Part A, but the premium is higher. Part B and Part D always have a monthly cost unless you may have access to for a program that helps pay your premiums.

Key Takeaways

  • Part A (hospital) is free if you worked 10 years under Social Security; Part B (doctor) and Part D (drugs) have monthly premiums that change each year.
  • You pay a deductible before Medicare covers most services, and then you pay a share of the cost (copayment or coinsurance) each time you use care.
  • If your income is above a certain level, you pay a higher premium called an Income-Related Monthly Adjustment Amount (IRMAA).
  • Medigap and Medicare Advantage plans change how much you pay out of pocket, but they have their own premiums and rules.
  • Programs like Medicaid, the Low-Income Subsidy, and the Medicare Savings Program can help pay your premiums and out-of-pocket costs if your income is low.

Part A (hospital insurance) costs

If you have 40 work credits (roughly 10 years of work), you pay nothing for Part A. Your taxes during your working years already paid for this coverage. If you do not have 40 credits, you can still buy Part A. The monthly premium in 2024 is $278 if you have 30 to 39 credits, or $505 if you have fewer than 30 credits. These amounts change each year.

Once you have Part A, you pay a deductible each time you are admitted to the hospital. In 2024, that deductible is $1,632 per hospital stay. After you pay the deductible, Medicare covers all hospital costs for the first 60 days. Days 61 through 90 cost you $408 per day. If you stay longer than 90 days, you enter "lifetime reserve days" — you have 60 of these over your entire life, and they cost $816 per day. After that, you pay all costs yourself.

Part A also covers skilled nursing care (not regular nursing home care) for up to 100 days after a hospital stay. You pay nothing for the first 20 days. Days 21 through 100 cost you $204 per day in 2024. Home health care and hospice have different rules and often cost you nothing.

Part B (doctor and outpatient care) costs

Part B has a monthly premium that changes each year. In 2024, the standard premium is $164.90 per month for most people. You pay this whether you use the doctor or not. The premium is taken from your Social Security check automatically, unless you asked to pay by mail.

Part B also has an annual deductible of $240 in 2024. Once you meet this deductible, you pay 20% of the cost for most doctor visits, lab tests, and imaging. Medicare pays the other 80%. Some services, like preventive care (annual wellness visits, cancer screenings, vaccines), have no deductible and no copayment — Medicare covers them fully.

If you use an out-of-network provider (a doctor who does not accept Medicare), you may pay more. Original Medicare (not Medicare Advantage) allows any provider who accepts Medicare, but some charge more than Medicare's approved amount. You are responsible for the difference.

Part D (prescription drug) costs

Part D premiums vary widely depending on which plan you choose. In 2024, premiums range from about $7 to $100 per month, though most plans fall between $20 and $50. You choose a plan during the annual enrollment period (October 15 to December 7 each year), and the premium is added to your Part B bill.

Part D has a deductible (usually $35 to $545 per year, depending on the plan) before the plan starts to pay for drugs. After you meet the deductible, you pay a copayment or coinsurance for each prescription. The amount depends on the drug's "tier" — generic drugs cost less than brand-name drugs. Once you and your plan have spent $5,030 on drugs in a year, you enter the "coverage gap" or "donut hole," where you pay a larger share of the cost. When your total out-of-pocket spending reaches $7,050, catastrophic coverage kicks in and you pay only a small copayment for the rest of the year.

Not all drugs are covered by all plans. Your plan has a formulary — a list of covered drugs. If your doctor prescribes a drug not on the formulary, you can ask the plan for an exception, but you may have to pay more or switch drugs.

Income-related premiums (IRMAA)

If your income is above a certain level, you pay a higher premium for Part B and Part D. This is called an Income-Related Monthly Adjustment Amount, or IRMAA. Medicare uses your tax return from two years ago to calculate your income, so changes in your income do not affect your premium until two years later.

In 2024, if you are single and your income is more than $97,000, you pay extra. If you are married and file jointly, the threshold is $194,000. The higher your income, the higher the extra amount. For example, a single person with income between $97,000 and $123,000 pays an extra $70 per month for Part B in 2024. Someone with income above $499,000 pays an extra $560 per month.

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 will need to report the change and provide proof (like a tax return or letter from your employer). This is called a life-changing event.

Medigap and Medicare Advantage change what you pay

Original Medicare (Part A and Part B) leaves you responsible for deductibles, copayments, and coinsurance. Medigap (supplemental insurance) is a private policy that covers some or all of these costs. Medigap has its own monthly premium, but it can lower your out-of-pocket costs significantly. A Medigap plan that covers the Part B deductible and 20% coinsurance might cost $100 to $300 per month, depending on your age and location, but it means you pay nothing when you see the doctor.

Medicare Advantage (Part C) is an alternative to Original Medicare offered by private insurance companies. It usually has a lower or zero monthly premium, but it has copayments for doctor visits (often $20 to $50) and a yearly out-of-pocket maximum (usually $6,700 to $7,550 in 2024). Once you reach that maximum, the plan pays 100% of covered costs for the rest of the year. Medicare Advantage plans also include Part D drug coverage, so you do not buy a separate Part D plan.

Choosing between Original Medicare with Medigap and Medicare Advantage depends on how much care you use, which doctors you see, and whether you prefer predictable costs or a yearly maximum. There is no single right answer for everyone.

Programs that help pay your costs

If your income is low, you may may have access to for Medicaid (a joint federal and state program), the Low-Income Subsidy (which helps pay Part D premiums and out-of-pocket costs), or the Medicare Savings Program (which helps pay Part B premiums and deductibles). These programs are run by your state, so may be able to access and benefits vary. You can contact your state Medicaid office or call 1-800-MEDICARE to learn whether you may have access to.

The Extra Help program (another name for the Low-Income Subsidy) helps pay Part D premiums and deductibles if your income is below 150% to 175% of the federal poverty level, depending on your state. In 2024, that is roughly $1,920 to $2,200 per month for a single person. If you may have access to, you pay little or nothing for prescriptions.

The Medicare Savings Program pays your Part B premium (and sometimes your Part A premium and deductibles) if your income is between 100% and 200% of the federal poverty level. Each state runs this program differently, so the exact income limits and benefits vary. You explore through your state Medicaid office.

Frequently Asked Questions

Why did my Part B premium go up this year?

Medicare adjusts Part B premiums each year based on expected costs. The premium also depends on your income (IRMAA). If your income increased, your premium may have gone up for that reason. If your income stayed the same but the standard premium increased, that is because Medicare's costs rose. You can see the new premium amount on your Medicare card or in a letter from Social Security.

Do I have to pay for preventive care?

No. Medicare Part B covers preventive services like annual wellness visits, cancer screenings, vaccines, and blood pressure checks with no deductible and no copayment. You pay nothing as long as you see a provider who accepts Medicare. Some preventive services have age or frequency limits — for example, mammograms are covered once per year for women 40 and older.

What happens if I do not pay my Medicare premium?

If you do not pay your Part B or Part D premium, Medicare can drop your coverage. If you drop Part B and do not re-enroll during the annual enrollment period, you may have to pay a penalty (a higher premium) when you do re-enroll. For Part D, the penalty is permanent — it is added to your premium for as long as you have Part D. If you cannot afford your premium, contact your state Medicaid office to see if you may have access to for help.

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

Yes, but only during certain times. The annual enrollment period is October 15 to December 7, when you can switch between Original Medicare and Medicare Advantage, or change your Part D plan. If you have a major life change (like losing employer coverage, moving, or a significant drop in income), you may may have access to for a Special Enrollment Period, which gives you 60 days to make changes outside the annual window.

How do I know what my total out-of-pocket costs will be?

It depends on how much care you use and which plan you have. Original Medicare has no yearly out-of-pocket maximum, so costs can be unlimited. Medicare Advantage has a yearly maximum (usually $6,700 to $7,550), after which the plan pays 100%. Medigap plans vary — some cover all out-of-pocket costs, while others cover only part. Your plan's summary of benefits document shows deductibles, copayments, and coinsurance. You can also use the Medicare Plan Finder tool on Medicare.gov to compare costs for your specific situation.