What You'll Actually Pay for Medicare: Premiums, Deductibles, and Coinsurance

The three costs you'll pay with Medicare

Medicare has three separate charges: a premium (a monthly fee), a deductible (what you pay before coverage kicks in), and coinsurance (your share of the cost after that). You don't pay all three for every service — it depends on which part of Medicare you're using and what kind of care you need. Understanding which costs apply to which situations keeps you from getting surprised by a bill.

The amounts change every year, and they're different for Original Medicare (Parts A and B) versus Medicare Advantage plans. Your actual out-of-pocket costs also depend on whether you have a Medigap policy or a Medicare Advantage plan, which can lower or cap what you owe.

Key Takeaways

• Medicare Part A (hospital) has no monthly premium for most people, but a deductible applies per hospital stay; Part B (doctor visits) has a monthly premium and a yearly deductible.
• Coinsurance means you pay a percentage of the cost after you've met your deductible — for example, 20% of doctor visits under Original Medicare.
• Medicare Advantage plans often have lower premiums and deductibles than Original Medicare, but they limit which doctors you can see and cap your total out-of-pocket costs.
• Medigap policies cover some or all of your coinsurance and deductibles, but they cost extra and are only available if you have Original Medicare.
• Your income affects what you pay for Part B and Part D premiums — higher earners pay more through an income-related surcharge.

Part A: Hospital coverage and what it costs

Part A covers hospital stays, skilled nursing care after a hospital stay, hospice, and some home health services. Most people who worked 40 quarters (10 years) in jobs that paid Medicare taxes don't pay a monthly premium for Part A. If you didn't work that long, you can buy Part A, and the premium varies based on how many quarters you did work.

Part A has a deductible per benefit period, not per year. A benefit period starts when you enter the hospital and ends 60 days after you leave. If you go back to the hospital within 60 days, it's the same benefit period and you don't pay a second deductible. The deductible amount changes yearly. After you meet the deductible, you pay coinsurance for days 4 through 90 of a hospital stay, and a higher coinsurance amount for days 91 and beyond (though most people's stays don't last that long).

Skilled nursing care has its own coinsurance structure: Medicare covers the first 20 days fully after a may have access to hospital stay, then you pay coinsurance for days 21 through 100.

Part B: Doctor visits, outpatient care, and premiums

Part B covers doctor visits, outpatient surgery, diagnostic tests, and some preventive care. Everyone on Medicare pays a monthly Part B premium, though the amount depends on your income. If you have higher income, you'll pay an additional amount called an Income-Related Monthly Adjustment Amount (IRMAA) on top of the standard premium.

Part B also has a yearly deductible that resets January 1st each year. Once you've paid that deductible, you typically pay 20% coinsurance for most services — Medicare pays 80%, you pay 20%. Some services like preventive care (annual wellness visits, screenings) have no coinsurance after you meet the deductible.

If your doctor doesn't accept Medicare assignment (meaning they don't agree to accept Medicare's approved amount as full payment), you could owe more than the standard 20% coinsurance. Checking whether your doctor is in-network and accepts assignment before your visit prevents unexpected bills.

Part D: Prescription drug coverage and its cost structure

Part D covers prescription drugs through private insurance companies that contract with Medicare. You choose a plan during your enrollment period, and each plan has its own premium, deductible, and coinsurance amounts. Plans are required to cover certain drugs, but the cost-sharing varies widely between plans.

Most Part D plans have a deductible (which you pay before the plan covers anything), then a copay or coinsurance for each prescription. After you and your plan have spent a certain amount on drugs in a year, you enter the "coverage gap" — a range where you pay a higher percentage of drug costs. Once your total out-of-pocket spending reaches a yearly limit, catastrophic coverage kicks in and you pay only a small copay for the rest of the year.

Your income also affects Part D premiums: higher earners pay an IRMAA surcharge just like with Part B. If you don't sign up for Part D when you're first may be able to access and you don't have other creditable drug coverage, you'll pay a permanent penalty for every month you were uninsured.

Medicare Advantage: Lower premiums, different out-of-pocket limits

Medicare Advantage (Part C) is an alternative to Original Medicare offered by private insurers. Many Advantage plans have no monthly premium or a low premium, and they often have lower deductibles than Original Medicare. However, they require you to use doctors and hospitals in their network, and they include prescription drug coverage built in.

Instead of paying coinsurance percentages like Original Medicare, Advantage plans typically use copays (a fixed dollar amount per visit). They also have an annual out-of-pocket maximum — once you've paid that amount in copays and coinsurance, the plan covers everything else for the rest of the year. This cap protects you from catastrophic costs, something Original Medicare doesn't have.

The tradeoff is less flexibility: you usually can't see out-of-network doctors except in emergencies, and you may need referrals to see specialists. If you travel frequently or have doctors you want to keep, Advantage plans may not work for you.

Medigap: Covering the gaps in Original Medicare

Medigap (Supplemental Insurance) is sold by private insurers and designed to cover costs that Original Medicare doesn't — your deductibles, coinsurance, and copays. There are 10 standardized Medigap plans (labeled A through N), and each covers a different combination of gaps. Plan G, for example, covers your Part B deductible and most of your coinsurance.

Medigap plans have their own monthly premiums, which vary by insurer and your age. You can only buy Medigap if you have Original Medicare (Parts A and B); you cannot combine it with Medicare Advantage. The best time to buy Medigap is during your six-month open enrollment period starting when you turn 65 and enroll in Part B, because insurers can't deny you or charge more based on health conditions during that window.

If you buy Medigap outside that window, insurers can charge more or deny you based on your health history. For people with chronic conditions or high healthcare costs, Medigap can be worth the extra premium because it eliminates most surprise bills.

How income affects what you pay

If your income is above a certain threshold, Medicare charges you more for Part B and Part D through the Income-Related Monthly Adjustment Amount. The income thresholds are based on your Modified Adjusted Gross Income (MAGI) from two years prior — so what you earned in 2022 affects what you pay in 2024.

The surcharge increases in brackets: the higher your income, the more you pay. If your income drops significantly (due to retirement, a spouse's death, or job loss), you can request that Medicare recalculate your IRMAA based on your current year's income instead of the prior year's. You'll need to file a form and provide documentation of the life event.

Medicare Advantage plans may also have income-related premiums, though this varies by plan. Check your plan's documentation or call the plan directly if you're unsure whether an IRMAA applies.

Frequently Asked Questions

Do I have to pay for preventive services like cancer screenings?

No. Medicare Part B covers many preventive services (mammograms, colonoscopies, blood pressure checks, flu shots) with no deductible and no coinsurance after you've met your Part B deductible. Some preventive services have no coinsurance even before you meet the deductible. Check Medicare.gov or call 1-800-MEDICARE to confirm whether a specific screening is covered.

What happens if I can't afford my premiums or deductibles?

If your income is low, you may may have access to for Medicare Savings Programs (state programs that help pay premiums and deductibles) or Extra Help (for Part D costs). Contact your state Medicaid office or call 1-800-MEDICARE to learn whether you may have access to. Some community health centers also offer sliding-scale fees for services.

Can I switch from Original Medicare to Medicare Advantage or back?

Yes, during the Annual Enrollment Period (October 15 to December 7 each year), you can switch plans. If you switch from Original Medicare to Advantage, you lose Medigap coverage and cannot buy it back without medical underwriting. If you switch from Advantage back to Original Medicare, you can buy Medigap during a limited window, but insurers can charge more based on health conditions.

Will my costs go up every year?

Yes. Premiums, deductibles, and coinsurance amounts typically increase each year. The exact increases are announced in the fall for the following year. Your Part B premium and IRMAA surcharge are set based on your income from two years prior, so they may jump if your income was higher in that year.

What if my doctor charges more than Medicare allows?

If your doctor accepts Medicare assignment, they can only charge you the coinsurance (20% of the approved amount). If they don't accept assignment, they can charge up to 15% more than Medicare's approved amount — you'd owe that extra amount on top of your coinsurance. Ask your doctor's office whether they accept assignment before your visit.