Medicare costs vary by which parts you choose and your income level

Medicare has four parts, and each one costs money in a different way. Part A (hospital insurance) is usually free if you or your spouse paid Medicare taxes for at least 10 years while working. Part B (doctor visits and outpatient care) costs a monthly premium that changes each year — in 2024 it starts at $174.70 per month for most people, but higher earners pay more. Part D (prescription drugs) premiums depend entirely on which plan you pick. Part C (Medicare Advantage) replaces Parts A and B and typically costs less in monthly premiums, but you pay more when you use care.

Beyond premiums, you also pay deductibles, copays, and coinsurance. Part A has a deductible of $1,740 per hospital stay in 2024. Part B has a $240 annual deductible, then you pay 20% of what Medicare approves for most services. Part D deductibles and copays depend on your plan. Medicare Advantage plans set their own deductibles and copays, which can be lower or higher than Original Medicare.

Income affects what you pay. If your modified adjusted gross income exceeds certain thresholds — $97,000 for single filers in 2024 — you pay a higher Part B premium and a separate Part D premium surcharge. These income-related adjustments can add $70 to $560 per month to your Part B bill alone, depending on how much your income exceeds the threshold.

Key Takeaways

  • Part A is usually free; Part B premiums start at $174.70 monthly in 2024 but rise with income above $97,000.
  • You pay a $1,740 deductible per hospital stay under Part A and a $240 annual deductible under Part B, then 20% coinsurance for most services.
  • Part D (prescription drug) costs depend entirely on which plan you choose, with premiums ranging from $7 to $100+ monthly.
  • Medicare Advantage plans often have lower or zero monthly premiums but charge copays and coinsurance when you receive care.
  • Higher income triggers surcharges on Part B and Part D premiums that can add hundreds of dollars per month to your costs.

Part A costs: hospital stays and skilled nursing

Part A covers inpatient hospital care, skilled nursing facility care, hospice, and some home health services. You do not pay a monthly premium for Part A if you or your spouse worked and paid Medicare taxes for at least 10 years. If you do not meet that requirement, you can buy Part A coverage, but the premium is $278 to $505 per month depending on how many years of work history you have.

When you use Part A services, you pay a deductible per benefit period. A benefit period starts the day you enter the hospital and ends 60 days after you leave without receiving any inpatient hospital or skilled nursing care. In 2024, the Part A deductible is $1,740 per benefit period. After you pay the deductible, Medicare covers all approved hospital costs for days 1 through 60. Days 61 through 90 cost you $435 per day in coinsurance. If you stay longer than 90 days, you can use your "lifetime reserve days" — you have 60 of these over your entire lifetime — and pay $870 per day.

Skilled nursing facility care (not custodial care in a nursing home) is covered after a may have access to hospital stay of at least three days. Medicare covers all costs for days 1 through 20. Days 21 through 100 cost you $217.50 per day in coinsurance. After day 100 in a benefit period, you pay all costs.

Part B costs: doctors, outpatient services, and preventive care

Part B covers doctor visits, outpatient hospital services, medical equipment, and preventive care. The standard monthly premium in 2024 is $174.70, but this amount changes every January. If your modified adjusted gross income is above $97,000 (single) or $194,000 (married filing jointly), you pay a higher premium — the surcharge can reach $560 per month for the highest earners.

You also pay an annual deductible of $240 in 2024, which resets every January 1. After you meet the deductible, Medicare pays 80% of approved charges for most services, and you pay the remaining 20% as coinsurance. For some preventive services — like annual wellness visits, cancer screenings, and vaccinations — you pay nothing after the deductible is met.

If your doctor does not accept Medicare assignment (meaning they do not agree to charge only what Medicare approves), you may owe more than 20%. Doctors who do not accept assignment can charge up to 15% above the Medicare-approved amount, a practice called "balance billing." Preventive services are an exception: participating doctors must provide them at no cost to you.

Part D costs: prescription drug coverage

Part D is optional but recommended. If you do not enroll when you first become may be able to access and later decide to join, you pay a permanent penalty of about 1% of the national average Part D premium for each month you were not covered. The national average premium changes yearly; in 2024 it is around $34.70 monthly, so the penalty could be roughly 34 cents per month for each month you delayed.

Part D premiums vary widely depending on which plan you choose — they can range from $7 to $100+ per month. Each plan has its own formulary (list of covered drugs), deductible, and cost-sharing structure. Most plans have a deductible of $0 to $545 in 2024. After the deductible, you typically pay a copay or coinsurance for each prescription until you reach the out-of-pocket spending limit, which is $8,850 in 2024. Once you hit that limit, catastrophic coverage kicks in and you pay only a small copay or coinsurance for the rest of the year.

If your income exceeds the Part B threshold, you also pay an income-related surcharge on top of your Part D premium. This surcharge ranges from $12.70 to $76.40 per month in 2024, depending on your income level.

Medicare Advantage (Part C) costs and trade-offs

Medicare Advantage plans are an alternative to Original Medicare (Parts A and B). They are offered by private insurance companies and must cover everything Original Medicare covers, but they often do it with different cost structures. Many Advantage plans have a $0 monthly premium, which sounds cheaper than paying Part B premiums. However, you typically pay more when you actually use care.

Advantage plans set their own deductibles, copays, and coinsurance limits. A plan might charge $0 to see your primary care doctor but $50 to see a specialist. Hospital stays might have a $500 copay. Prescription drugs are included in most Advantage plans, so you do not buy Part D separately. Out-of-pocket maximums vary by plan but are capped by Medicare at $7,550 for in-network care in 2024.

Advantage plans often include extra benefits that Original Medicare does not, such as dental, vision, hearing, or fitness programs. However, you are locked into the plan's network of doctors and hospitals. If you see an out-of-network provider (except in emergencies), you pay the full cost. Plans can change their networks, premiums, and benefits every year on January 1, so you need to review your options annually during the Annual Enrollment Period (October 15 to December 7).

Medigap (supplemental insurance) costs

Medigap policies are sold by private insurance companies and help pay the costs that Original Medicare does not — deductibles, coinsurance, and copays. You buy Medigap in addition to Parts A and B; you cannot use it with Medicare Advantage. Medigap premiums vary by plan type, your age, your location, and the insurance company. Plans are standardized by the federal government and labeled A through N, so Plan G from one company covers the same benefits as Plan G from another, but the price can differ.

In 2024, Medigap premiums typically range from $100 to $300+ per month, depending on the plan and your age. Younger enrollees generally pay less. Some states allow insurance companies to use "community rating," meaning everyone pays the same premium regardless of age; other states allow "age-rated" premiums, where older people pay significantly more. The most popular plans are G and N because they offer broad coverage at a moderate cost.

Income-related surcharges and how they work

If your modified adjusted gross income (MAGI) exceeds certain thresholds, Medicare charges you higher premiums for Part B and Part D. MAGI is your adjusted gross income plus tax-exempt interest income. The income thresholds are adjusted each year. In 2024, the thresholds are $97,000 for single filers and $194,000 for married couples filing jointly.

The surcharge is based on your tax return from two years prior. So in 2024, Medicare uses your 2022 tax return to calculate surcharges. If your income changes significantly — you retire, sell a home, or have a major life event — you can report the change to Social Security and request a recalculation. Without a reported change, you pay the surcharge based on the old income until the next year's tax return is processed.

The surcharge tiers are steep. For Part B, a single filer with MAGI between $97,000 and $123,000 pays an extra $70 per month. At the highest tier (MAGI over $500,000), the surcharge reaches $560 per month. Part D surcharges range from $12.70 to $76.40 per month depending on income level. These surcharges explore to you alone, not to your spouse, even if you file jointly.

Frequently Asked Questions

Does Medicare cost the same for everyone?

No. Part A is free for most people but costs $278 to $505 monthly if you do not have enough work history. Part B premiums start at $174.70 but rise with income. Part D and Medigap costs vary by plan and location. Income-related surcharges add $70 to $560 per month to Part B for higher earners.

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

Original Medicare does not have an out-of-pocket maximum, meaning your costs can be unlimited. Medicare Advantage plans have a capped out-of-pocket maximum of $7,550 for in-network care in 2024. Medigap policies can reduce or eliminate out-of-pocket costs depending on the plan type.

Can I reduce my Medicare costs?

Yes. Choosing a Medigap plan can lower your out-of-pocket costs but adds a monthly premium. Switching to Medicare Advantage may lower premiums but increase copays. Reviewing your Part D plan annually during open enrollment can save money if a cheaper plan covers your drugs. If your income drops, report it to Social Security to reduce income-related surcharges.

Do I have to pay for preventive services under Medicare?

No. Part B covers most preventive services — annual wellness visits, cancer screenings, vaccinations, and cardiovascular screenings — at no cost after you meet your deductible. However, if your doctor finds a problem during a preventive visit and treats it, that treatment is not preventive and you pay coinsurance.

What happens if I delay enrolling in Medicare?

If you delay Part B enrollment without a valid reason, you pay a permanent 10% premium increase for each year you were late. If you delay Part D, you pay a permanent surcharge of about 1% of the national average premium per month of delay. Part A has no penalty, but you should enroll when first may be able to access to avoid gaps in coverage.