Medicare has premiums, deductibles, and copays — it is not free, but costs vary by which parts you choose

Medicare is not free. You pay premiums (monthly fees), deductibles (what you pay before coverage starts), and copays or coinsurance (your share of each service). The amount you pay depends on which parts of Medicare you sign up for and your income. Most people pay something every month for the rest of their lives.

The confusion comes from the word "free" — Medicare is a federal insurance program, not a free clinic. You earned it through payroll taxes during your working years, but that does not mean using it costs nothing. Think of it like Social Security: you paid in, and now you get a benefit, but the benefit itself has conditions and costs.

Key Takeaways

  • Part A (hospital insurance) is free at 65 if you paid Medicare taxes for at least 10 years, but you pay a deductible each time you are admitted to the hospital.
  • Part B (doctor visits and outpatient care) costs a monthly premium that increases if you delay signing up, plus a deductible and copays for each visit.
  • Part D (prescription drugs) requires a separate monthly premium and has copays that vary by drug tier and pharmacy.
  • Your actual out-of-pocket costs depend on which parts you choose, your income, and whether you buy supplemental coverage (Medigap) or join a Medicare Advantage plan.
  • If your income is below certain thresholds, you may pay reduced or zero premiums for Part B and Part D through programs like the Low-Income Subsidy.

What Part A costs and what it covers

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 do not pay a monthly premium for Part A at age 65. If you did not work that long, you can buy Part A, but the premium is high — it varies by how many quarters of work credits you have.

Even though Part A is premium-free, you still pay when you use it. In 2024, the hospital deductible is $1,632 per admission — that is what you pay out of pocket before Part A starts covering your hospital bill. If you are admitted multiple times in the same year, you pay the deductible each time. After you meet the deductible, Part A covers most of your hospital costs, but there are limits on how long it will pay for a single stay.

What Part B costs and when you should sign up

Part B covers doctor visits, outpatient surgery, diagnostic tests, and some preventive care. The standard monthly premium in 2024 is $164.90, but it increases if your income is above certain thresholds. The premium also increases by 10 percent for each year you delay signing up after you turn 65, and that penalty stays with you for life.

You also pay a yearly deductible for Part B — $240 in 2024 — before Part B starts paying its share. After you meet the deductible, you typically pay 20 percent of the cost of each service, and the doctor or clinic pays 80 percent. Some preventive services (like annual wellness visits and cancer screenings) have no copay if you go to an in-network provider.

If you are still working at 65 and have health insurance through your job, you can delay Part B without penalty. You must sign up within eight months of leaving that job or losing that coverage, or you will face the permanent premium increase. The window is strict, so mark your calendar if this applies to you.

What Part D costs and how to avoid penalties

Part D is prescription drug coverage. You choose a plan from private insurers, and the monthly premium varies by plan — it can range from under $10 to over $100 per month depending on which drugs the plan covers and which pharmacy you use. You also pay a yearly deductible (up to $545 in 2024, though many plans have lower or no deductible) and copays for each prescription.

Like Part B, if you do not sign up for Part D when you first become may be able to access at 65, you pay a penalty for every month you go without it. The penalty is about 1 percent of the national average Part D premium per month, and it is added to your premium permanently. If you have creditable drug coverage through a former employer or union, you may be able to delay without penalty — check with that plan before you turn 65.

How much you actually pay: Medigap versus Medicare Advantage

Your total costs depend on whether you choose Original Medicare (Parts A and B) with a Medigap (supplemental) policy, or a Medicare Advantage plan. These are two different paths, and the costs work very differently.

With Original Medicare plus Medigap, you pay Part A and Part B premiums, deductibles, and copays to Medicare, and then you pay a separate monthly premium to a private insurer for Medigap coverage. Medigap helps pay the deductibles and copays that Original Medicare does not cover. The Medigap premium can range from $100 to $300 or more per month depending on your age, location, and which Medigap plan you choose. You also need to buy Part D separately.

Medicare Advantage is an alternative to Original Medicare. You enroll in a private plan instead, and it covers Parts A, B, and usually D all in one plan. The monthly premium is often lower or even zero, but you typically pay higher copays when you use services, and you must use doctors and hospitals in the plan's network. Medicare Advantage plans have an out-of-pocket maximum — a yearly cap on what you pay — which Original Medicare does not have.

Income-based help with premiums and costs

If your income is low, you may pay reduced or no premiums for Part B and Part D through the Low-Income Subsidy (also called Extra Help for Part D). You may also may have access to for Medicaid in your state, which can cover Medicare premiums, deductibles, and copays. The income thresholds and rules vary by state.

To check whether you may have access to, contact your state Medicaid office or call 1-800-MEDICARE. You can also explore through your local Area Agency on Aging. These programs are not automatic — you have to report your income and ask. If your income drops during the year (for example, if you retire mid-year), you can explore at any time, not just during the annual enrollment period.

What to ask your doctor and when to seek help

Before you turn 65, ask your current doctor or clinic whether they accept Medicare. Ask specifically whether they accept Medicare assignment, which means they agree to accept Medicare's payment as full payment for most services. If a doctor does not accept assignment, you may owe more out of pocket.

If you are confused about your costs or think a bill is wrong, call the phone number on your Medicare card or the bill itself. You can also contact 1-800-MEDICARE to ask questions about coverage or to report a billing problem. If you are on a Medicare Advantage plan and a service was denied, ask the plan to explain why and whether you can appeal.

Frequently Asked Questions

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

If you did not pay Medicare taxes for at least 10 years, you can still buy Part A at age 65, but the premium is high — around $278 per month in 2024 if you have fewer than 30 quarters of work credits. If you have 30 or more quarters, the premium is lower. Contact Social Security to find out how many quarters you have.

What happens if I cannot afford my Medicare premiums?

If your income is below 150 percent of the federal poverty level, you may may have access to for the Low-Income Subsidy, which can reduce or eliminate your Part B and Part D premiums. Your state Medicaid program may also help. Call 1-800-MEDICARE or your local Area Agency on Aging to find out what programs you may have access to for based on your income.

Can I change my mind about which Medicare parts to sign up for?

Yes, but there are important date and penalties. You can change during the Annual Enrollment Period (October 15 to December 7 each year). If you miss that window and want to add a part you did not sign up for, you may face a permanent premium penalty unless you have a may have access to life event like losing other insurance.

Does Medicare cover dental, vision, or hearing?

Original Medicare does not cover routine dental, vision, or hearing care. Some Medicare Advantage plans include these benefits, though usually with limits. If you need these services, ask about plans in your area that cover them, or budget for out-of-pocket costs.

What is the difference between a deductible and a copay?

A deductible is the amount you pay out of pocket before your insurance starts paying. A copay is a fixed amount you pay for each service after you meet the deductible. For example, with Part B, you pay a $240 deductible once per year, then 20 percent copay for most services after that.