What Medicare Actually Costs When You Turn 65

Medicare has a monthly premium, but Part A is free for most people

When you turn 65, you become may be able to access for Medicare, but "free" depends on which part you're looking at. Part A (hospital insurance) costs nothing per month for most people because you or your spouse paid Medicare taxes while working. Part B (doctor visits and outpatient care) has a monthly premium that most people pay. Part D (prescription drugs) also has a monthly premium. Part C (Medicare Advantage) is an alternative to Parts A and B offered by private insurers, and costs vary.

The amount you pay depends on your work history, your income, and which parts you choose. If you worked for at least 10 years and paid Medicare taxes, Part A is free. If you didn't work that long, you can still get Part A but will pay a monthly premium. Part B premiums change each year and are based on your income from two years prior — higher earners pay more.

Key Takeaways

Part A (hospital insurance) is free if you or your spouse worked and paid Medicare taxes for at least 10 years.
Part B (doctor and outpatient services) has a monthly premium that starts at a base amount and increases for higher incomes.
You must sign up for Part B during your initial enrollment window or face a permanent penalty on your premium.
Part D (prescription drugs) requires a separate monthly premium and enrollment through a private plan.
If you delay enrollment without a valid reason, you will owe a higher premium for as long as you have Medicare.

Part A: Hospital insurance and what it covers

Part A covers inpatient hospital stays, skilled nursing facility care after a hospital stay, hospice, and some home health services. You pay nothing per month if you have 40 quarters of Medicare-covered work history — roughly 10 years of work where you paid Medicare taxes. Your spouse's work history counts too, so if one of you worked long enough, both of you get free Part A.

If you don't have 40 quarters, you can still get Part A by paying a monthly premium. The amount depends on how many quarters you have: fewer quarters means a higher premium. Even if you pay a premium, Part A still covers the same services. You will also pay a deductible when you enter the hospital ($1,676 per benefit period in 2024, though this amount changes yearly) and coinsurance for longer stays.

Part B: Doctor visits and the income-based premium

Part B covers doctor visits, lab tests, imaging, outpatient surgery, and durable medical equipment. Everyone on Medicare pays a monthly premium for Part B unless they have certain low-income protections. The base premium is set each year by Medicare; in 2024 it was $164.90 per month for most people, but the actual amount you pay may be higher or lower depending on your income.

Medicare uses your income from two years before to set your Part B premium. If your income was high, you pay an Income-Related Monthly Adjustment Amount (IRMAA) on top of the base premium — sometimes significantly more. You also pay a $240 annual deductible (in 2024) before Part B coverage begins, and then 20% coinsurance for most services after that.

You must sign up for Part B during your Initial Enrollment Period, which runs from three months before the month you turn 65 through three months after. If you delay without a valid reason (such as still being covered by an employer plan), you will pay a permanent 10% penalty on your Part B premium for each year you were late — and this penalty stays with you for life.

Part D: Prescription drug coverage and plan selection

Part D is prescription drug coverage offered by private insurance companies under contract with Medicare. It is not automatic — you must choose a plan and enroll. Each plan has its own monthly premium, deductible, and list of covered drugs. Premiums vary widely, from under $10 per month to over $100, depending on the plan and the drugs you take.

You enroll in Part D during your Initial Enrollment Period (same window as Part B) or during the annual open enrollment period in October and November. If you go without Part D coverage when you first become may be able to access, you will owe a permanent penalty of about 1% of the national average Part D premium for each month you were uninsured — and this penalty also stays with you for life. The exception is if you had other creditable drug coverage (such as from an employer or union) during the gap.

Part C: Medicare Advantage as an alternative

Part C, also called Medicare Advantage, is an alternative way to get your Medicare benefits. Instead of enrolling in Part A and Part B separately, you join a private insurance plan that covers hospital, doctor, and usually prescription drug services. Many Medicare Advantage plans have a $0 monthly premium, though you still pay the Part B premium to Medicare. Some plans charge an additional premium on top.

Medicare Advantage plans often have lower out-of-pocket costs than Original Medicare (Part A and Part B) for routine care, but they typically have networks — you must use doctors and hospitals in the plan's network, except in emergencies. You can switch to Original Medicare during the annual open enrollment period or if you move out of the plan's service area.

When you must enroll and what happens if you miss the important date

Your Initial Enrollment Period is seven months long: three months before the month you turn 65, the month you turn 65, and three months after. During this window, you can enroll in Part A, Part B, and Part D without penalty. If you miss this window, you can still enroll later, but you will owe a permanent penalty on Part B and Part D premiums.

The only exception is if you were covered by an employer or union health plan when you turned 65. In that case, you have eight months after your coverage ends to enroll in Medicare without penalty. You must provide proof of that coverage when you enroll. If you are unsure whether your employer coverage counts as creditable coverage, contact your employer's benefits office or call Medicare at 1-800-MEDICARE.

Income and how it affects your costs

Your income determines how much you pay for Part B and Part D through the Income-Related Monthly Adjustment Amount (IRMAA). Medicare looks at your Modified Adjusted Gross Income (MAGI) from your tax return two years before. If your income is above a certain threshold, you pay more. The thresholds change each year, and they are higher for married couples filing jointly than for single filers.

If your income drops significantly — because you retired, had a major life event, or lost income — you can ask Medicare to recalculate your IRMAA using your current year's income instead. You must file a form and provide documentation of the change. This is called a Life-Changing Event adjustment and can lower your premium when ready rather than waiting for the next year's calculation.

Frequently Asked Questions

Do I have to enroll in Medicare when I turn 65?

You must enroll in Part A and Part B during your Initial Enrollment Period to avoid penalties, even if you do not plan to use Medicare right away. The exception is if you are still covered by an employer health plan — in that case, you can delay Part B enrollment without penalty, but you should still enroll in Part A.

What if I'm still working at 65 and have employer health insurance?

If your employer has 20 or more employees, your employer plan is primary and Medicare is secondary. You can delay enrolling in Part B without penalty, but you must enroll in Part A. When you leave your job, you have eight months to enroll in Part B. Keep proof of your employer coverage in case Medicare asks for it.

Can I change my mind about which Medicare plan I choose?

Yes. You can switch between Original Medicare and Medicare Advantage during the annual open enrollment period (October 15 to December 7). If you join a Medicare Advantage plan and change your mind within the first three months, you can switch back to Original Medicare. Outside these windows, changes are limited.

Will my Part B premium go down if my income drops?

Not automatically. Medicare recalculates IRMAA once a year based on your prior-year income. If you had a major life event — retirement, divorce, death of a spouse, or significant income loss — you can request a recalculation using your current income. You must file a form and provide documentation within 60 days of the event.

What happens if I can't afford the Part B or Part D premium?

If your income is low, you may be able to get help through Medicaid or the Medicare Savings Program, which pays some or all of your Part B premium. You can also choose a lower-cost Part D plan or ask about patient information programs from drug manufacturers. Contact your state Medicaid office or call 1-800-MEDICARE to learn what programs you may be able to use.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.