Medicare costs vary by the plan you choose and the care you receive

Medicare is not free. You pay premiums (monthly fees), deductibles (amounts you pay before coverage starts), and copayments or coinsurance (your share of each service). The total cost depends on which Medicare plan you pick — Original Medicare (Parts A and B), a Medicare Advantage plan, or a Medigap policy — and how much medical care you use during the year.

Most people who worked 10 or more years pay no premium for Part A (hospital insurance). Part B (medical insurance) has a monthly premium that changes each year; in 2024 it was $164.90 for most people, though higher earners pay more. If you did not work long enough to may have access to for premium-free Part A, you can buy it, but the cost is steep — up to $471 per month in 2024.

Beyond premiums, you also pay when you use care. Part A has a deductible of $1,632 per benefit period in 2024 (this amount changes yearly). Part B has a $240 annual deductible in 2024. After you meet these deductibles, you typically pay 20% of the cost for most services, and Medicare pays 80%. Prescription drug coverage (Part D) adds another monthly premium and has its own deductible and cost-sharing.

Key Takeaways

  • Part A (hospital) is usually free if you worked 10 or more years; Part B (medical) costs a monthly premium that increases each year and is higher for people with larger incomes.
  • You pay deductibles before coverage begins, then typically pay 20% of costs for most services while Medicare covers 80%.
  • Original Medicare has no yearly cap on out-of-pocket costs, so a serious illness or injury can result in very high bills.
  • Medicare Advantage plans have a yearly out-of-pocket maximum, but usually require you to use doctors in their network.
  • Medigap policies cover some or all of the costs you would otherwise pay out of pocket, but add a separate monthly premium.

Part A and Part B premiums and deductibles

Part A covers hospital stays, skilled nursing facility care, hospice, and some home health services. If you or your spouse paid Medicare taxes for at least 10 years while working, you pay no monthly premium for Part A. If you did not work that long, you can buy Part A; the premium ranges from $278 to $471 per month depending on how many years you or your spouse worked, and these amounts change yearly.

Part A has 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. If you go back to the hospital more than 60 days later, a new benefit period begins and you pay the deductible again. After you pay the deductible, you pay nothing for the first 60 days of a hospital stay. Days 61 through 90 cost $408 per day in 2024. Beyond 90 days, costs rise sharply.

Part B covers doctor visits, outpatient care, medical equipment, and some preventive services. The Part B premium in 2024 was $164.90 per month for most people, but people with higher incomes pay $230.80, $329.70, $428.60, or $560.50 per month depending on their tax return from two years prior. These premiums increase each year. Part B also has an annual deductible of $240 in 2024. After you meet this deductible, you typically pay 20% of the Medicare-approved amount for most services, and Medicare pays 80%.

Part D prescription drug coverage costs

Part D is optional coverage for prescription medications. You choose a plan from private insurance companies, and each plan has its own monthly premium, deductible, and cost-sharing structure. Premiums vary widely — from roughly $7 to $100 per month depending on the plan and the drugs it covers. The average premium across all plans was around $34 per month in 2024, but this varies by region and plan.

Part D has an annual deductible that can be up to $545 in 2024, though many plans have lower deductibles or none at all. After you meet the deductible, you typically pay a copayment (a set dollar amount) or coinsurance (a percentage of the cost) for each prescription. As you spend more on drugs, you may enter the "donut hole" — a coverage gap where you pay a larger share of costs — though this gap has been shrinking in recent years. Once your total out-of-pocket spending reaches a yearly limit (around $8,850 in 2024), catastrophic coverage kicks in and you pay only a small copayment for the rest of the year.

If your income is low, you may may have access to for Extra Help, a program that reduces Part D premiums and cost-sharing. Contact Social Security or your state Medicaid office to learn whether you may have access to.

Original Medicare versus Medicare Advantage: cost differences

Original Medicare (Parts A and B) has no yearly limit on how much you pay out of pocket. If you have a serious illness or need extensive care, your costs can climb very high. You can see any doctor or hospital that accepts Medicare, which is most providers nationwide. Many people with Original Medicare buy a Medigap policy to cover the costs they would otherwise pay themselves.

Medicare Advantage (Part C) is an alternative to Original Medicare offered by private insurance companies. Most Medicare Advantage plans have a yearly out-of-pocket maximum — typically $7,550 in 2024, though this varies by plan. Once you reach this limit, the plan pays 100% of covered services for the rest of the year. However, Medicare Advantage plans usually require you to use doctors and hospitals in their network, and many require referrals to see specialists. Some plans charge $0 in monthly premiums, though you still pay Part B premiums to Medicare.

The trade-off is predictability versus choice. With Original Medicare, you have more freedom to see any provider, but your costs are unpredictable. With Medicare Advantage, your yearly costs are capped, but your provider options are limited.

Medigap policies and what they cover

Medigap (also called Supplemental Insurance) is a policy sold by private insurance companies that pays some or all of the costs you would pay under Original Medicare — deductibles, copayments, and coinsurance. It does not cover prescription drugs, long-term care, dental, vision, or hearing aids. Medigap is only available to people with Original Medicare, not to those with Medicare Advantage.

There are 10 standardized Medigap plans, labeled A through N. Plan A is the most basic and least expensive. Plans G, K, L, and M are popular middle-ground options. Plans F and G cover the Part B deductible, which can save money if you use a lot of medical care. The most comprehensive plans (F and G) cover nearly all out-of-pocket costs, but they cost more in monthly premiums. Medigap premiums vary by age, location, and which plan you choose, and they increase as you age. A basic plan might cost $100 to $150 per month, while a comprehensive plan can cost $250 to $400 or more.

You can enroll in Medigap during a six-month open enrollment period that starts the month you turn 65 and are enrolled in Part B. If you miss this window, insurers can deny you coverage or charge you more based on your health history.

Income-based premiums and how they work

If your income is above a certain threshold, you pay higher premiums for Part B and Part D. Medicare uses your Modified Adjusted Gross Income (MAGI) from your tax return from two years before the current year. For example, in 2024, Medicare looks at your 2022 tax return.

In 2024, if your MAGI was over $97,000 as a single person or $194,000 as a married couple filing jointly, you paid an income-related monthly adjustment amount (IRMAA) on top of your regular Part B premium. The higher your income, the higher this surcharge. Part D premiums also have income-related increases for higher earners. If your income changes significantly — because you retire, have a major loss, or experience another life event — you can ask Medicare to recalculate your premiums based on your current year income instead of your prior year return.

Costs you should plan for but Medicare does not cover

Medicare does not cover dental care, vision exams, eyeglasses, hearing aids, or routine foot care. It also does not cover long-term care (nursing home or in-home care for non-medical reasons), most physical therapy beyond a certain number of visits, or most cosmetic procedures. Some Medicare Advantage plans offer limited dental or vision benefits, but these are usually modest.

Many seniors budget separately for these services or buy standalone dental and vision insurance. Long-term care is particularly expensive — nursing home care can cost $100,000 or more per year depending on your location — and most people pay for it out of pocket, through Medicaid (if they may have access to), or through long-term care insurance purchased before they turn 65.

Frequently Asked Questions

Why do some people pay more for Part B than others?

Medicare charges higher Part B premiums to people with higher incomes. The surcharge is based on your Modified Adjusted Gross Income from your tax return from two years prior. If your income was over $97,000 (single) or $194,000 (married filing jointly) in 2024, you paid extra. These income thresholds change yearly.

What happens if I cannot afford my Medicare costs?

If your income is low, you may may have access to for Medicaid, which can help pay your Medicare premiums and cost-sharing. You can also ask about Extra Help for Part D premiums and copayments. Contact your state Medicaid office or Social Security to learn what you may may have access to for based on your income and assets.

Can I switch from Original Medicare to Medicare Advantage or vice versa?

Yes, but only during certain times. The Annual Enrollment Period runs from October 15 to December 7 each year, and you can make changes that take effect January 1. If you have a may have access to life event — such as moving out of your plan's service area, losing other insurance, or a major change in income — you may be able to switch outside this window.

Do I have to buy Part D prescription drug coverage?

Part D is optional, but if you do not enroll when you first become may be able to access and go without coverage for 63 days or more, you may pay a permanent penalty on your premiums. If you do not take prescription drugs, you can skip Part D, but you cannot go back and enroll later without this penalty.

What should I ask my doctor or Medicare about costs?

Ask your doctor whether a service or test is covered by Medicare and what your out-of-pocket cost will be. Call Medicare at 1-800-MEDICARE or visit Medicare.gov to check whether a specific service, drug, or provider is covered under your plan. Ask your insurance company for an estimate before any major procedure.