Medicare has different monthly costs depending on which parts you choose

Medicare is not free. Most people pay a monthly premium for Part B (doctor visits and outpatient care) and Part D (prescription drugs). Part A (hospital care) is usually free if you or your spouse paid Medicare taxes while working. Part C (Medicare Advantage) replaces Parts A and B and has its own monthly cost. The amount you pay depends on your income, which parts you enroll in, and whether you have other insurance.

Your monthly payment is separate from what you pay when you actually use care — copays, coinsurance, and deductibles are additional out-of-pocket costs. This guide explains what the monthly premiums are, who pays them, and how your income can affect what you owe.

Key Takeaways

  • Part A (hospital insurance) is free for most people who worked and paid Medicare taxes, but Part B (medical insurance) costs a monthly premium that increases if you have higher income.
  • Part D (prescription drug coverage) has a monthly premium that varies by plan and insurance company, and you pay more if you enroll late without other drug coverage.
  • Part C (Medicare Advantage) replaces Parts A and B and may have a lower or zero monthly premium, but you still owe copays and coinsurance when you use care.
  • Your monthly premium for Part B and Part D can increase based on your income from two years ago, a rule called Income-Related Monthly Adjustment Amount (IRMAA).
  • You pay premiums by having them deducted from your Social Security check, or by paying Medicare directly if you do not receive Social Security.

Part A premiums: usually free, sometimes a monthly cost

Part A covers hospital stays, skilled nursing facility care, hospice, and some home health services. If you or your spouse worked for at least 10 years and paid Medicare taxes, you pay no monthly premium for Part A. You become may be able to access for free Part A at age 65.

If you do not have the required work history, you can still enroll in Part A by paying a monthly premium. The amount depends on how many quarters of Medicare tax you paid. Someone with 30 to 39 quarters of coverage pays less than someone with fewer than 30 quarters. These premiums change each year. Contact Social Security or Medicare directly to find out what you would pay based on your specific work history.

Part B premiums: the standard monthly cost most people pay

Part B covers doctor visits, lab tests, imaging, outpatient surgery, and medical equipment. Everyone who enrolls in Part B pays a monthly premium. The standard premium amount changes each year. In 2024, the standard Part B premium is $164.90 per month, but this figure changes annually and varies by state for some beneficiaries.

Your actual premium may be higher than the standard amount if your income is above a certain threshold. This increase is called an Income-Related Monthly Adjustment Amount (IRMAA). Medicare looks at your income from two years before you enroll. If you earned more than the threshold, you pay a surcharge on top of the standard premium. The surcharge can range from about $70 to over $500 per month depending on your income level.

If your income drops because you retire, lose a job, or have a major life change, you can ask Medicare to recalculate your IRMAA. You will need to submit proof of the income change, such as a recent tax return or a letter from your employer.

Part D premiums: prescription drug coverage costs vary by plan

Part D is optional coverage for prescription drugs. If you do not enroll when you first become may be able to access and do not have other drug coverage, you pay a late enrollment penalty for as long as you have Part D. The penalty is about 1% of the national average Part D premium for each month you were not enrolled. This penalty is added to your monthly premium permanently.

The monthly premium for Part D itself varies widely depending on which insurance company and plan you choose. Plans range from roughly $7 to $100 per month or more. The same insurance company may offer multiple plans at different prices. You can compare plans and their premiums on Medicare.gov or by calling 1-800-MEDICARE.

Your Part D premium can also increase if your income is above the IRMAA threshold. Like Part B, Medicare uses your income from two years prior to calculate this surcharge.

Part C premiums: Medicare Advantage plans with varying costs

Part C, also called Medicare Advantage, is an alternative to Original Medicare (Parts A and B). It is offered by private insurance companies and must cover everything Part A and Part B cover, plus usually includes Part D drug coverage. Some Part C plans have no monthly premium beyond what you already pay for Part B. Others charge an additional monthly premium ranging from $0 to several hundred dollars.

Even if a Part C plan has a $0 premium, you still pay copays and coinsurance when you use care. You may also have an annual out-of-pocket maximum — once you reach it, the plan covers most remaining costs for the rest of that year. Part C plans often have network restrictions, meaning you must use doctors and hospitals in their network except in emergencies.

Part C premiums and cost-sharing can change each year. You can review and change your plan during the annual enrollment period from October 15 to December 7.

How income affects your monthly payments

If your modified adjusted gross income (MAGI) exceeds certain thresholds, you pay higher premiums for Part B and Part D. Medicare uses your income from two years before the year you are paying for. For example, in 2024, Medicare looks at your 2022 income.

The income thresholds are the same for everyone, but the surcharge amounts increase as your income rises. A single person with income between $97,000 and $121,000 in 2022 pays one surcharge level; someone with income above $500,000 pays a much higher surcharge. If you are married filing jointly, the thresholds are higher.

If your income drops significantly — because you retire, lose a job, or have a major life event — you can file a form with Social Security to ask for a recalculation. You will need to provide documentation of the income change. This is called a life-changing event appeal. If approved, your new premium takes effect the following month.

How you pay your monthly premiums

Most people have their Part B and Part D premiums deducted automatically from their Social Security check each month. If you do not receive Social Security, Medicare sends you a bill in the mail, usually monthly. You can pay by check, electronic bank transfer, or credit card.

If you enroll in Part C, the premium (if any) is usually deducted from your Social Security check along with Part B, or billed separately by the insurance company. Check your enrollment paperwork to see how your specific plan handles payment.

You can change how you pay by contacting Social Security (for Social Security deduction) or Medicare directly (for billing). Keep track of your premium payments and check your Social Security statement or Medicare statements regularly to make sure the correct amount is being deducted.

When premiums increase and what to expect

Part B and Part D premiums increase each year, usually announced in the fall. The increase is tied to the cost of living adjustment (COLA) for Social Security. Some years the increase is small; other years it is larger. Medicare sends you a notice in the mail before the increase takes effect, usually in October or November.

If you disagree with your premium amount or believe there is an error, you have the right to appeal. Contact Medicare at 1-800-MEDICARE or visit Medicare.gov to file an appeal or ask questions about your specific bill.

Frequently Asked Questions

Do I have to pay for Part A if I worked but did not pay Medicare taxes?

If you worked but did not pay Medicare taxes (for example, as a government employee with a different retirement system), you may not may have access to for free Part A. You can still enroll by paying a monthly premium. Contact Social Security to learn about you may have access to for free Part A based on your work history.

What happens if I cannot afford my monthly premiums?

If your income is low, you may may have access to for programs that help pay your premiums. The may have access to Individual (QI) program and other Medicaid programs can pay Part B premiums for people with limited income. Contact your state Medicaid office or call 1-800-MEDICARE to learn what programs may be available in your state.

Can I change my Part D plan if the premium becomes too high?

Yes. You can change Part D plans during the annual enrollment period from October 15 to December 7 each year. You can also change if you have a may have access to life event, such as losing other drug coverage. The new plan takes effect January 1 of the following year.

Does my premium change if I move to a different state?

Part B premiums are the same nationwide for most people. Part D premiums vary by plan and insurance company, not by state, so your premium may change if you switch plans but not straightforward because you moved. Part C premiums may vary by location because plans are offered by region. Contact your plan to confirm your premium if you move.

What is the difference between my premium and my out-of-pocket costs?

Your premium is what you pay each month to have coverage. Your out-of-pocket costs are what you pay when you actually use care — copays, coinsurance, and deductibles. You pay both. For example, you might pay a $165 Part B premium and then pay a $20 copay when you see your doctor.