Medicare at 65 is not free, but Part A hospital coverage costs nothing if you or your spouse paid Medicare taxes for 10 years

When you turn 65, you become may be able to access for Medicare. Part A, which covers hospital stays and some skilled nursing care, has no monthly premium if you have enough work history — typically 40 quarters (10 years) of Medicare tax payments. But "free" stops there. Part B, which covers doctor visits and outpatient care, costs a monthly premium that changes each year. Part D, which covers prescription drugs, also has a monthly cost. And neither Part A nor Part B covers everything — you pay deductibles, copayments, and coinsurance on top of premiums.

The word "free" misleads many people into thinking they have no costs at Medicare age. In reality, most people at 65 face monthly bills, annual deductibles, and out-of-pocket limits that can add up quickly. Understanding what you actually pay — and when — matters before you turn 65.

Key Takeaways

  • Part A (hospital insurance) has no monthly premium if you worked and paid Medicare taxes for at least 10 years, but you still pay a deductible and coinsurance when you use it.
  • Part B (doctor and outpatient care) costs a monthly premium that varies by income and year, starting around $175 per month in 2024 for most people.
  • Part D (prescription drug coverage) requires a separate monthly premium and has an annual deductible, copayments, and a coverage gap called the "donut hole".
  • If you do not sign up for Part B or Part D when you first become may be able to access, you may face permanent late-enrollment penalties that increase your premiums for life.
  • Medigap and Medicare Advantage are optional supplemental plans that change what you pay out-of-pocket, but they add their own monthly costs.

What Part A covers and what you pay

Part A covers inpatient hospital stays, skilled nursing facility care after a hospital stay, hospice care, and some home health services. If you have 40 quarters of Medicare tax history, Part A has no monthly premium. You do, however, pay an inpatient hospital deductible — the amount you must pay out of pocket before Medicare starts paying — each time you are admitted to the hospital. In 2024, that deductible is $1,632 per benefit period. A benefit period starts when you enter the hospital and ends 60 days after you leave.

After you pay the deductible, Medicare covers all costs for days 1 through 60 of a hospital stay. On days 61 through 90, you pay a daily coinsurance amount (in 2024, $408 per day). If you stay longer than 90 days, you can use lifetime reserve days, but those also require coinsurance. Skilled nursing facility care follows the same pattern: Medicare covers days 1 through 20 fully after a hospital stay, then you pay coinsurance on days 21 through 100.

What Part B covers and what you pay

Part B covers doctor visits, outpatient surgery, diagnostic tests, and some preventive care. It has a monthly premium that depends on your income. For 2024, the standard Part B premium is around $175 per month for most people, but if your income is higher, you pay more through income-related monthly adjustment amounts (IRMAA). These premiums are deducted from your Social Security check automatically.

Beyond the premium, you also pay an annual deductible — $240 in 2024 — before Medicare starts paying its share. After you meet the deductible, Medicare typically pays 80% of the approved amount for most services, and you pay 20%. For example, if a doctor visit costs $100 and Medicare approves $80, you pay $16 (20% of $80) after your deductible is met. Some preventive services, like annual wellness visits and cancer screenings, have no copayment or coinsurance.

What Part D costs and how the coverage gap works

Part D is optional prescription drug coverage. It has a monthly premium that varies by plan and insurance company — typically $5 to $100 per month, though some plans cost more. You also pay an annual deductible, usually $505 in 2024, before your plan starts paying. After you meet the deductible, you pay a copayment or coinsurance for each prescription.

Once you and your plan have spent $5,850 on covered drugs in 2024, you enter the coverage gap, often called the "donut hole." In the gap, you pay a higher percentage of drug costs — typically 25% — until your total out-of-pocket spending reaches $8,550. After that, catastrophic coverage kicks in and you pay only a small copayment per drug. This gap means your costs jump sharply in the middle of the year if you take many or expensive medications.

If you do not sign up for Part D when you first become may be able to access at 65, and you later want coverage, you may face a permanent late-enrollment penalty added to your premium for as long as you have Part D.

Income-based premiums and how they affect your bill

If your income is above a certain threshold, you pay higher premiums for Part B and Part D through IRMAA. Medicare uses your tax return from two years prior to calculate this. For 2024, if you are single and your modified adjusted gross income is over $97,000, your Part B premium increases. If you are married filing jointly and your income is over $194,000, the same applies. The higher your income, the more you pay — up to three times the standard premium for Part B.

IRMAA also applies to Part D premiums and to Part A if you do not have 40 quarters of work history. If your income changes significantly — because of retirement, a large withdrawal, or a spouse's death — you can request a life-change exemption to recalculate your premiums. This requires filing a form with Social Security, but it can lower your costs if your circumstances have changed.

Supplemental coverage: Medigap and Medicare Advantage

Original Medicare (Part A and Part B) leaves you responsible for deductibles, coinsurance, and copayments. Many people buy additional coverage to reduce these out-of-pocket costs. Medigap (also called Supplement Insurance) is sold by private insurers and covers some or all of the costs that Original Medicare does not. Medigap plans have their own monthly premiums, typically $100 to $300 or more depending on your age and the plan type, but they can significantly lower your out-of-pocket spending.

Medicare Advantage (Part C) is an alternative to Original Medicare offered by private insurance companies. It includes Part A, Part B, and usually Part D in one plan, often with a lower or zero monthly premium. However, Medicare Advantage plans typically have higher copayments and coinsurance, and they limit which doctors and hospitals you can use. You cannot have both Original Medicare with Medigap and Medicare Advantage at the same time.

When to sign up and what happens if you miss the important date

You become may be able to access for Medicare on the first day of the month you turn 65. You have a seven-month window called your Initial Enrollment Period to sign up: three months before the month you turn 65, the month you turn 65, and three months after. If you sign up during this window, your coverage starts on the first day of your may be able to access month.

If you miss this window and do not have other health coverage, you will face late-enrollment penalties. For Part B, the penalty is 10% of the standard premium for each year you were may be able to access but did not sign up — and this penalty is permanent. For Part D, the penalty is 1% of the national average premium for each month you were without coverage, also permanent. These penalties add to your monthly bill for the rest of your life, so signing up on time matters even if you do not plan to use Medicare when ready.

Frequently Asked Questions

Do I have to sign up for Medicare at 65 if I still work and have employer coverage?

If your employer has 20 or more employees, you can delay Part B without penalty as long as you are still working and covered by the employer plan. However, you should still sign up for Part A at 65, since it has no premium and covers hospital care. Once you leave your job, you have eight months to sign up for Part B without penalty.

What if I did not work long enough to get free Part A?

If you have fewer than 40 quarters of Medicare tax history, you can still get Part A at 65, but you will pay a monthly premium. In 2024, the premium is around $278 per month if you have 30 to 39 quarters, or $505 per month if you have fewer than 30 quarters. You can also buy Part A at any age if you are 65 or older, even if you never worked.

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

You have a limited window to change your coverage each year during the Annual Enrollment Period, October 15 to December 7. Outside this window, you can only make changes if you have a may have access to life event, such as losing employer coverage, moving out of your plan's service area, or becoming may be able to access for Medicaid. Missing these important date can lock you into a plan for a full year.

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, you can buy standalone dental, vision, or hearing plans, or choose a Medicare Advantage plan that includes them.

What is the out-of-pocket maximum for Medicare?

Original Medicare does not have an annual out-of-pocket maximum, which means your costs can be unlimited. Medicare Advantage plans do have out-of-pocket maximums, typically $7,550 for in-network care in 2024. This is one reason some people choose Medicare Advantage over Original Medicare with Medigap.