Understanding Medicare costs

It’s important to budget for out-of-pocket Medicare costs. The following sections describe those costs in more detail so that you can prepare and select a plan that fits your needs.
 

What does Medicare cost?

In general, there is a monthly premium for Medicare coverage and fees for care received. There are various out-of-pocket costs associated with Medicare Parts A, B, C and D. 
 

Part A

Part A pays for services received if you stay in a hospital to receive care. Most do not need to pay monthly premium for Part A, such as if you or your spouse paid Medicare taxes for at least 10 years while working. You will need to help cover the cost of some fees when you receive care. These expenses come in the form of deductibles and copayments.

If you are admitted to the hospital, you should expect to pay the following:

• A deductible is the amount you pay before your insurance pays.
• For Part A (hospitalization), the deductible is $1,632 per benefit period.¹

Coinsurance for Part A

Coinsurance is the percentage of your medical bill that you pay until your deductible has been met. For Part A, coinsurance is a set dollar amount that you pay for covered days spent in a hospital. Below are the Part A coinsurance amounts:

• Days 1-60: $0
• Days 61-90: $408 per day
• Days 91 and on: $816 per day, until you have used up your lifetime reserve days. You get 60 reserve days over the course of your life.
• Skilled nursing facility coinsurance: Up to $204 per day for days 21-100 per benefit period.

If your time in the hospital exceeds your number of reserve days, you will pay your remaining hospital expenses. 

Part B

Part B pays for doctor’s services and outpatient hospital services. Part B covers necessary medical treatments and preventive healthcare services. You pay a monthly premium for this coverage, which can be automatically taken out of your Social Security benefits.

Most pay a standard monthly premium, which is set each year. In 2024, the standard monthly Part B premium amount is $174.70 ($2,096.40 per year). If you were over $103,000 a year, you will pay a higher premium. For more information, refer to the Social Security Administration resource: Premiums: Rules for Higher-Income Beneficiaries.
 

Medicare Part B deductible

With Medicare Part B, you have a set deductible. For 2024, the Medicare Annual Part B deductible is $240, which you pay only once a year. After your deductible is met, you typically pay about 20% of the following:

• Most doctor services
• Durable medical equipment (DME)
• Outpatient therapy
   

Part C

Part C is Medicare Advantage Plans and the out-of-pocket costs can vary. Medicare Advantage Plans typically function like an HMO or PPO plan with common out-of-pocket costs such as:

• Monthly premiums
• Annual deductible
• Copayments 

Part D

Medicare Part D provides standalone coverage for your prescriptions and can save you money in the long run. The out-of-pocket costs you can expect with Medicare Part D may include:

• Monthly premium
• Annual deductible
• Set amount (copay) or set percentage (coinsurance) for each prescription
• Catastrophic coverage begins in Part D for 2025, once out-of-pocket costs reach $2,000
  • Once you have paid $2,000 in medications, your costs for medications will be $0.  

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