Medicare has three main costs: your monthly premium, your deductible, and your copayments

Medicare costs money in three separate ways. You pay a premium (a monthly fee), a deductible (what you pay before Medicare starts covering), and copayments or coinsurance (your share of each doctor visit or service). The amount you pay depends on which parts of Medicare you have and your income.

Part A (hospital insurance) is free for most people at 65 if they or their spouse paid Medicare taxes for at least 10 years. Part B (doctor visits and outpatient care) costs a monthly premium that changes each year. Part D (prescription drugs) has a monthly premium that varies by plan. Part C (Medicare Advantage) replaces Parts A and B and usually has a lower or zero premium but higher copayments when you use care.

Your actual out-of-pocket costs depend on which parts you choose, which insurance company you pick, and your income level. Someone on a higher income pays more for Part B and Part D premiums than someone with lower income.

Key Takeaways

  • Part A is free for most people; Part B, Part D, and Part C each have separate monthly premiums that you pay to Social Security or your insurance company.
  • You also pay a deductible before Medicare coverage begins, and then copayments or coinsurance for each service you use.
  • Your premium amount depends on your income — higher earners pay more for Part B and Part D.
  • Most people pay premiums through automatic deduction from their Social Security check, but you can also pay by mail or online.
  • If you cannot afford your premiums, you may be able to get help through Medicaid or a Medicare Savings Program in your state.

How Part A and Part B premiums are deducted from your Social Security check

If you receive Social Security, your Part A and Part B premiums are automatically taken out of your monthly check. You do not have to do anything — Social Security handles it. The amount comes out before you see your payment, so you receive the remainder.

If you do not yet receive Social Security but you are enrolled in Medicare, you will receive a bill from Medicare each month. You can pay by mail, by phone, or online through the Medicare website. The bill tells you the amount and the due date.

Your Part B premium changes each year on January 1. Social Security sends a notice in December telling you the new amount. If you are already getting Social Security, the new premium is deducted starting in January. If you are not yet receiving Social Security, your bill will reflect the new amount.

Part D and Part C premiums: how and when you pay

Part D (prescription drug coverage) and Part C (Medicare Advantage) premiums are paid directly to the insurance company you chose, not to Social Security or Medicare. You can usually set up automatic monthly payments from your bank account, or you can pay by check or online through the insurance company's website.

You choose your Part D plan and Part C plan during the annual enrollment period (October 15 to December 7 each year). Your coverage and premium start on January 1. If you miss the important date, you may have to wait until the next year to enroll, or you may pay a penalty when you do enroll later.

If you switch plans during the year because of a life event (like moving to a different state or losing other insurance), your new plan's premium starts the month after your switch is approved.

Deductibles and copayments: what you pay when you use care

After you pay your premium, you still pay money when you actually use Medicare services. Part A has a deductible for hospital stays (the amount changes each year). Part B has a deductible, and then you pay 20 percent of the cost of most services after that. Part D has a deductible for prescriptions, and then you pay a copayment or percentage of the drug cost depending on which tier the drug is on.

Part C (Medicare Advantage) combines Parts A and B into one plan. It usually has a lower or zero premium, but it has copayments for doctor visits, urgent care, and emergency room visits. The copayment amounts depend on which plan you choose.

These costs add up over the year. If you use a lot of medical services, you will pay more in copayments and deductibles. Medicare has an out-of-pocket maximum — once you reach it in a calendar year, Medicare covers 100 percent of most services for the rest of that year.

Income-related premiums: higher earners pay more

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 (IRMAA). Social Security uses your tax return from two years ago to calculate your income, so the amount can change with a delay.

For example, if your income was high in 2022, your 2024 premiums will be higher. If your income drops in 2023 (because you retired or had a major life change), you can ask Social Security to recalculate your premium based on your current income. You have to submit proof of the change, like a recent tax return or a letter from your employer.

The income thresholds and premium amounts change each year. Social Security sends you a notice if your income puts you in a higher bracket. You can call Social Security at 1-800-772-1213 to ask what your premium will be.

Getting help paying your premiums if money is tight

If your income is low, you may be able to get help paying your Part B and Part D premiums through a Medicare Savings Program in your state. These programs are run by your state Medicaid office, and they pay some or all of your premiums directly to Medicare.

To learn about you may have access to, contact your state Medicaid office or call 1-800-MEDICARE (1-800-633-4227). You will need to provide proof of income and citizenship. The income limits vary by state and change each year.

If your income is very low, you may also be able to get Medicaid coverage in your state, which can cover your premiums and your copayments. Medicaid rules vary widely by state, so the best first step is to call your state Medicaid office or use the 1-800-MEDICARE number to find out what programs exist where you live.

Payment methods: how to pay your bills

For Part A and Part B, if you get Social Security, the premium is deducted automatically. If you do not get Social Security, you can pay by mail, by phone at 1-800-MEDICARE, or online at Medicare.gov.

For Part C and Part D, you pay the insurance company directly. Most companies let you set up automatic bank account deduction, pay by check, or pay online through their website. Your insurance company's bill or website tells you all the payment options they accept.

If you miss a payment, you will receive a notice. You usually have a grace period to pay before your coverage is suspended. If your coverage is suspended, you can restart it by paying what you owe. Call your insurance company or Medicare to ask about the grace period and how to catch up.

Frequently Asked Questions

Can I change my Part D or Part C plan if my premium goes up?

Yes, during the annual enrollment period (October 15 to December 7), you can switch to a different plan with a lower premium. If your plan's premium increases during the year and you are already enrolled, you can also switch plans outside the enrollment period. Call your current plan or 1-800-MEDICARE to ask about your options.

What happens if I do not pay my Medicare premium?

If you do not pay your Part B or Part D premium, your coverage can be suspended. You will receive a notice before this happens. Once you pay what you owe, your coverage restarts. If you have trouble paying, contact Medicare or your state Medicaid office to ask about payment plans or financial help programs.

Do I have to pay for Medicare if I am still working?

Yes, you still pay Part B and Part D premiums if you are enrolled in Medicare, even if you are working and have employer health insurance. However, if your employer has 20 or more employees, you may be able to delay enrolling in Part B without a penalty. Talk to your employer's benefits office and call 1-800-MEDICARE to understand your options.

How do I know if my income is too high for a Medicare Savings Program?

Income limits vary by state and change each year. The easiest way to find out is to call your state Medicaid office or 1-800-MEDICARE and give them your income. They can tell you right away whether you may have access to for a program in your state and what documents you need to provide.

Can I get a refund if I overpay my Medicare premium?

Yes. If you overpay, Medicare or your insurance company will send you a refund or credit it toward future premiums. If you think you have overpaid, call 1-800-MEDICARE or your insurance company to ask them to review your account.