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How Much Does Medicare Cost? – Parts A, B, D, Advantage & Medigap

Americans are used to paying high costs for health care. Even for those who have health insurance — and as of 2019, there are still millions who don’t — it doesn’t cover everything. However, many people assume that once they reach age 65 and start receiving Medicare benefits, it will cover all their costs. After all, we’ve already paid into the program through payroll taxes, so we should have no costs beyond that, right?

Wrong. In fact, the Medicare taxes you pay during your working years only cover the premium costs for Medicare Part A, or hospital insurance. However, you still have to pay a part of the costs for hospital stays and other inpatient care out of your own pocket. And on top of that, several other parts of Medicare have their own costs.

How Much Does Medicare Cost?

There are two primary forms of Medicare coverage. Original Medicare includes Medicare Part A and Medicare Part B, or medical insurance, which covers doctor visits and other outpatient care. You can also add Medicare Part D to cover prescription drug costs. Alternatively, you can choose a Medicare Advantage plan from a private insurer, which includes Medicare Parts A and B and usually adds coverage for drugs and some other types of care.

Put it all together, and your Medicare costs can add up to thousands of dollars. A 2020 analysis by AARP found that in 2017, people on Original Medicare spent an average of $5,801 on health care and that about 1 in 10 people spent $10,268 or more. (The analysis did not include people on Medicare Advantage plans because there was no reliable data available about their expenses.) These expenses fall into three primary categories: premiums, cost sharing, and expenses Medicare doesn’t cover.


Most health insurance comes with a monthly premium — an amount you pay to the insurer each month for coverage. According to AARP, the average Medicare beneficiary paid $2,728 in premiums in 2017. However, this cost varied widely by age. People under 65 paid an average of $1,810, while those over 65 paid an average of $2,810.

How Much Does Medicare Part A Cost?

Most people don’t pay a premium for Medicare Part A because they have already paid for it through payroll taxes. However, if you have paid Medicare taxes for fewer than 10 full years (40 quarters), you must pay a fee to buy into Part A.

For the year 2021, the monthly premium is $458 if you’ve paid Medicare taxes for fewer than 30 quarters. If you have paid them for 30 to 39 quarters, the premium is $259. That adds up to either $3,108 or $5,496 per year.

Additionally, if you don’t sign up for Medicare Part A when you first become eligible for it, you must pay a late enrollment penalty. That causes your premiums to go up by 10%. You continue to pay the higher premium for twice the number of years you delayed signing up for Part A.

How Much Does Medicare Part B Cost?

All Medicare recipients pay a premium for Part B coverage. The standard premium for 2021 is $148.50 per month, or $1,782 per year.

If you have already started collecting Social Security benefits or retirement benefits from the Railroad Retirement Board, this premium is automatically deducted from your benefits check. Otherwise, you receive a bill for your coverage.

If you neglect to sign up for Medicare Part B when you first become eligible, you pay a late enrollment penalty for this as well. This penalty is even steeper than the one for Part A. It increases your monthly premium by 10% for each 12-month period you delayed enrollment — so if you sign up three years late, your premiums go up by 30%. Moreover, this higher rate lasts for the rest of your life.

How Much Does Medicare Part D Cost?

If you choose to add Medicare Part D to your coverage, you must pay an additional premium for it. The cost per month varies based on the plan you choose. However, the Centers for Medicare & Medicaid Services (CMS) estimates the average premium for basic Part D coverage at $30.50 per month ($366 per year) for 2021.

On top of that, there’s a late enrollment penalty for Medicare Part D. You pay this penalty if you go at least 63 days without having either a Medicare prescription drug plan or a Medicare Advantage plan that provides drug coverage. The penalty is equal to 1% of the “national base beneficiary premium” ($33.06 for 2021) times the full number of months you went without coverage, rounded up to the nearest $0.10.

This amount gets added to your Part D premium for life once you sign up. For instance, if you went 30 months without drug coverage, you would pay an extra $10 per month. Additionally, this penalty rises whenever the national base beneficiary premium increases.

Medicare also tacks on a monthly income adjustment for all beneficiaries whose income is above a certain level. For 2021, this adjustment ranges from $12.30 per month if your income is over $87,000 to $77.10 per month if it’s over $500,000.

How Much Do Medicare Advantage Programs Cost?

Medicare Advantage plans are sometimes called Medicare Part C, but they’re actually not part of the federal Medicare program. Instead, private insurance companies offer them. However, they must provide all the same coverage as Original Medicare, and many plans provide more.

When you join a Medicare Advantage plan, you continue to pay your Part B premium to the federal government. The government then pays a fixed amount each month to the insurer to help cover your care costs.

Some Medicare Advantage plans charge an additional monthly premium on top of your regular Part B premium. According to CMS, the average expected premium for the year 2021 is $21 per month. Since that’s less than the average cost for a separate Part D plan, Medicare Advantage is a cheaper way to get prescription drug coverage for the average Medicare user. However, specific prices and coverages vary from plan to plan.

According to the Kaiser Family Foundation (KFF), Medicare Advantage premiums are typically lowest for health maintenance organizations (HMOs), which require you to get your care from doctors within a specific network. They’re somewhat more expensive for preferred provider organizations (PPOs), which allow you to see an out-of-network doctor for an additional cost. The KFF does not evaluate old-fashioned fee-for-service plans, which let you see any doctor you choose, but in general, these plans are expensive.

How Much Does Medigap Cost?

Original Medicare has relatively low premiums, but there are also many costs it doesn’t cover. Many people buy Medicare supplement insurance, commonly known as Medigap, to fill the “gaps” in their Medicare coverage. These plans, sold by private insurers, cover your deductibles and coinsurance. Some of them also cover costs Original Medicare doesn’t, such as care received when traveling outside the United States.

If you buy a Medigap policy as an add-on to Original Medicare, you pay an additional monthly premium to the insurer. How much it costs depends on the specific plan you choose. Under state laws, Medigap plans are sorted into several standard categories, which most states identify by the letters A through N. A chart on outlines each plan’s benefits. (Three states — Massachusetts, Minnesota, and Wisconsin — use different standard categories for Medigap policies. See each state’s specific rules.)

Insurance companies aren’t required to offer every type of Medigap policy. However, any insurer that sells Medigap policies is required to offer Plans A, C, and F.

According to eHealth Medicare, the monthly premium for a Medigap policy ranges from around $70 to $270 per month, depending on the plan type and where you live. According to Business Insider, Plan F — the most popular type of Medigap plan —  cost an average of $1,712 per year, or about $143 per month, in 2018. However, this cost varied by state, ranging from $1,310 per year in Hawaii to $1,947 per year in Massachusetts. You can find cost estimates for Medigap policies in your area by entering your zip code on the eHealth Medicare site.

Cost Sharing

On top of your Medicare premiums, you must pay a portion of the cost for all the health care services you receive. The AARP study found that Medicare recipients paid an average of $1,522 for their share of covered care in 2017. This cost came to $1,441 for beneficiaries under age 65 and $1,536 for those 65 and older.

How Much Are Medicare Deductibles?

Medicare requires you to pay a certain amount of your medical bills out of your own pocket before your Medicare coverage kicks in. This portion is called your deductible.

As of 2021, Medicare Part A charges a deductible of $1,484 for each benefit period. A benefit period starts when you enter a hospital or skilled nursing facility as an inpatient. It ends once you haven’t received any inpatient hospital care for 60 days in a row. That means you may have to pay your Medicare Part A deductible more than once in a single year.

For instance, suppose you go to the hospital for a knee operation in January, and they discharge you later that month. During that time, you pay all your care costs up to the $1,484 deductible. Then, in June — more than 60 days later — they admit you again after a fall. That starts a new benefit period, so you must once again pay all your care costs up to the deductible. There’s no limit to the number of benefit periods you can have in a single year.

Medicare Part B also has a deductible, but you only have to pay it once per year. For 2021, the Part B deductible is $203.

Medicare Part D plans usually have a deductible as well. The cost varies from plan to plan, but Medicare sets limits on how high it can be. As of 2021, your Part D deductible cannot exceed $445. According to eHealth, the average Part D deductible was $308 in 2019.

As for Medicare Advantage plans, some have deductibles and some don’t. According to eHealth, the average deductible for a Part C plan that includes prescription drug coverage was $292 in 2019. A plan can charge one deductible for all your care or have separate deductibles for medical care and prescription drugs. You have to look at the details of a specific plan to find out how much the deductible is and how often you need to pay it.

How Much Is Part A Coinsurance?

Even after you meet your deductible for Medicare, you must continue to pay a portion of your medical bills out of pocket. This amount is called coinsurance.

For Medicare Part A, the cost of coinsurance varies based on how long you spend in the hospital. You pay $0 for the first 60 days and $352 per day for the next 30. These numbers reset at the beginning of each benefit period. In other words, if you stay in the hospital for 60 days, then leave and return three months later, you’re back to Day 1 and your cost is $0.

If you stay in the hospital for more than 90 days at a stretch, you start using up your lifetime reserve days. You pay $704 per day, and Medicare pays the rest — but only for a maximum of 60 days over your entire lifetime. If you spend any more time in the hospital than that, you must pay the full cost.

That doesn’t mean you have to pay all your hospital bills in full for the rest of your life. Once you leave the hospital, your benefit period resets after 60 days. If you go back in, you start over again at Day 1, with 60 days for free and another 30 days at $352. But if you’re still in the hospital on Day 91 and you have no lifetime reserve days left, you’re responsible for the full cost.

How Much Is Part B Coinsurance?

Coinsurance costs for Part B are more straightforward than for Part A. After meeting your deductible, you pay 20% of the Medicare-approved amount for all covered medical expenses. The Medicare-approved amount is the standard amount Medicare agrees to pay all doctors and other health care providers.

You pay this 20% coinsurance for all services covered by Part B, including doctor visits, outpatient therapy, and durable medical equipment. However, if your doctor or provider charges more than the Medicare-approved amount, you must pay all the additional cost on top of your coinsurance.

How Much Are Prescription Drug Costs?

Costs for Medicare Part D vary. Some Part D plans require you to pay coinsurance — a percentage of the cost of each prescription. Others charge copayments — a flat fee for each prescription.

Many Medicare prescription drug plans sort covered drugs into different tiers. For instance, some drugs are “preferred” and have a lower copayment. According to the KFF, average costs for different tiers in 2020 were:

  • Preferred generic drugs: $0
  • Other generic drugs: $3
  • Preferred brand-name drugs: $42
  • Other brand-name drugs: 38% coinsurance
  • Specialty drugs: 25% coinsurance

Under Medicare rules, once your total prescription drug costs for the year — including the amounts paid by you and your insurer — have reached a certain amount, your coverage changes. This limit, which includes your deductible, is $4,130 for the year 2021. Once you hit this limit, you pay up to 25% of your medications’ total cost. The manufacturer of the drug pays 70% of the cost, and your insurer pays the rest.

However, that doesn’t necessarily mean you have to keep paying 25% for the rest of the year. Once your out-of-pocket costs for prescriptions hit a second limit — $6,550 in 2021 — your share of your prescription costs drops to only 5%.

To help you get out of this coverage gap (called the “doughnut hole”) faster, Medicare allows you to count the discount received from the drug manufacturer as part of your out-of-pocket costs. For instance, if you have a drug that costs $100, your insurer pays $5 for it, you pay $25, and the manufacturer pays $70. However, you can count a full $95 — your share and the manufacturer’s — toward your out-of-pocket costs. That pushes you closer to the $6,550 upper limit at which your payment falls.

How Much Are Medicare Advantage Costs?

Most Medicare Advantage plans charge you a copayment for doctor visits and other services rather than the 20% coinsurance you pay with Original Medicare Part B. However, the exact cost varies by plan. Factors that affect your copay costs include where you live, the type of plan you buy, and the company that issues it.

Costs Not Covered by Medicare

There are certain services Original Medicare simply doesn’t cover. In general, you must pay all your own costs for:

  • Dental care, including checkups, fillings, root canals, and dentures
  • Vision care, including eye exams, eyeglasses, and contact lenses
  • Hearing exams or hearing aids
  • Routine foot care, such as callus removal (according to AARP, Medicare does cover costs for foot injuries and ailments, such as heel spurs and problems related to nerve damage caused by diabetes)
  • Cosmetic surgery
  • Acupuncture
  • Long-term care in a nursing home or assisted living facility
  • Any medical care received outside the U.S.

You can get some of these expenses, such as dental and vision care, covered under a Medicare Advantage plan. However, it depends on the plan you choose. Neither Original Medicare nor Medicare Advantage ever covers costs for care received outside the country. However, some Medigap policies provide this coverage.

According to the 2020 AARP analysis, the average Medicare recipient in 2017 spent $1,551 on health care costs not covered by Medicare. This amount was $932 for beneficiaries under 65 and $1,662 for those 65 and up.

Limits on Total Costs

The $5,801 AARP says the average person on Medicare spends each year is a significant chunk of money. However, some Medicare beneficiaries have much higher costs. The 2020 study found that people at the 90th percentile for spending — those who had health care costs higher than all but 10% of the population — spent a total of $10,268 on their care in 2017. That includes $5,218 for premiums, $3,740 for cost sharing, and $2,537 for expenses not covered under Medicare.

In fact, under Original Medicare, there’s no limit on how much you can pay each year for health care. Although the program covers a large share of your costs, it doesn’t protect you from the kinds of sky-high medical bills that can drive people into bankruptcy. A 2010 paper from the University of Michigan found that more than 1 in 3 seniors who file for bankruptcy cite medical expenses as a reason.

There are two ways to put a cap on your out-of-pocket costs under Medicare. One is to choose Medicare Advantage. According to CMS, all Medicare Advantage policies are required to limit out-of-pocket spending for in-network care, which can be no higher than $7,550 in 2021. However, this out-of-pocket limit does not include the amount you spend on premiums.

If you prefer Original Medicare, you can cap your costs by adding a Medigap policy that comes with an out-of-pocket limit. Medigap Plan K policies limit your out-of-pocket costs to $6,220 for 2021, and Plan L caps them at $3,110.

You can estimate how much your total out-of-pocket costs are likely to be under different Medicare plans using the out-of-pocket cost calculator on It lets you compare Original Medicare, with or without Part D and Medigap, with a Medicare Advantage plan that includes drug coverage. The calculator factors in all your costs, including premiums, deductibles, and coinsurance. You can look at typical costs for plans with high, medium, or low premiums.

Final Word

If you’ve been thinking of Medicare as a permanent fix for high health care bills, it can come as a shock to learn how much the average beneficiary pays. However, the average cost cited in the AARP report is just that — an average. You can reduce your costs for Medicare the same way you would with any other significant expense: by shopping around.

Medicare makes it easy to comparison-shop for plans. On the Plan Compare page at, you can review your Medicare coverage options and compare specific Part D and Medicare Advantage plans available in your area.

The site asks you for details about where you live and what type of plan you want, then lists available plans with their premiums, deductibles, copays, and out-of-pocket limits. With a little more information, it can also show you how much you’ll pay out of pocket for prescription drug costs on each plan. The site even includes star ratings for each plan just like you might use to find the best products when shopping online.

To learn more about comparing Medicare plans and signing up, check out our Medicare enrollment guide.

Amy Livingston is a freelance writer who can actually answer yes to the question, "And from that you make a living?" She has written about personal finance and shopping strategies for a variety of publications, including,, and the Dollar Stretcher newsletter. She also maintains a personal blog, Ecofrugal Living, on ways to save money and live green at the same time.

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