Understanding Medicare Costs

One of the most common surprises at 65: Medicare isn't free. Part A is premium-free for most people, but Part B carries a monthly premium, both have deductibles, and Original Medicare has no built-in cap on what you pay. Here's the full picture.

📅 Reviewed and updated for 2026

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Part A Costs

Hospital insurance

The basics

Most people pay no monthly premium for Part A — but there are deductibles and coinsurance if you're hospitalized.

How Part A costs are structured

Premium-free for most people (10+ years of Medicare taxes paid)
A deductible applies per benefit period — not per year, but per hospital stay
Cost-sharing structure changes the longer a hospital stay lasts
Skilled nursing facility stays carry their own cost-sharing structure after an initial covered period

Part B Costs

Medical insurance

The monthly premium everyone pays

You pay a Part B premium every month no matter which Medicare path you choose, set annually by the federal government.

How Part B costs are structured

Standard monthly premium, set annually by the federal government
An annual deductible applies
After the deductible, you're responsible for a share of the Medicare-approved amount
No built-in cap on that share — it continues indefinitely (unless you have Medigap)
Higher earners pay more via IRMAA (Income-Related Monthly Adjustment Amount)

IRMAA — who pays more

Higher individual and joint income levels trigger higher premiums — current thresholds are set annually
Based on your income from 2 years ago — so 2026 premiums are based on 2024 taxes
You can appeal IRMAA if your income has recently dropped due to a life event

How to Offset the Costs

Medigap, Advantage, MSPs, and Extra Help

The key options

Several programs exist to help manage what you actually pay — from supplemental insurance to income-based assistance programs.

Options to explore with an advisor

Medigap: helps cover your remaining share of costs and most deductibles, in exchange for its own monthly premium
Medicare Advantage: comes with a built-in yearly out-of-pocket cap
Medicare Savings Programs: if income is limited, the state may pay your Part B premium
Extra Help: reduces Part D costs for qualifying low-income beneficiaries

At a glance

How Medicare's cost structure fits together

Premium-Free

Part A (most people)

Standard Premium

Part B (everyone pays)

Per Stay

Part A deductible applies

Annual

Part B deductible applies

No Cap

Part B coinsurance (without Medigap)

Capped Annually

Part D out-of-pocket costs

Medicare costs come from a few different pieces working together: a possible Part A premium (free for most), a Part B premium everyone pays, deductibles for both parts, and ongoing cost-sharing with no built-in cap unless you add Medigap or choose Medicare Advantage, which includes one. Exact current figures change every year — a PharmSurance advisor can walk you through what applies to your specific situation right now.

Want to understand your actual situation?

A PharmSurance advisor can walk you through how costs work under different coverage options based on your health needs and medications.

PharmSurance.com

We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE (TTY 1-877-486-2048) to get information on all of your options. If you submit your information on this site, it will be provided to one or more licensed insurance agents, who may call, email, or text you about Medicare Advantage, Medicare Supplement, and Prescription Drug Plan options. This is a general educational overview only, not specific to any plan.