Christian Simmons, writer and researcher for RetireGuide
  • Written by
    Christian Simmons

    Christian Simmons

    Financial Writer

    Christian Simmons is a writer for RetireGuide and a member of the Association for Financial Counseling & Planning Education (AFCPE®). He covers Medicare and important retirement topics. Christian is a former winner of a Florida Society of News Editors journalism contest and has written professionally since 2016.

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  • Edited By
    Lamia Chowdhury
    Lamia Chowdhury, editor for RetireGuide.com

    Lamia Chowdhury

    Financial Editor

    Lamia Chowdhury is a financial content editor for RetireGuide and has over three years of marketing experience in the finance industry. She has written copy for both digital and print pieces ranging from blogs, radio scripts and search ads to billboards, brochures, mailers and more.

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  • Published: April 28, 2020
  • Updated: January 31, 2023
  • 15 min read time
  • This page features 14 Cited Research Articles
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How to Cite RetireGuide.com's Article

APA Simmons, C. (2023, January 31). Medicare Costs & Coverage. RetireGuide.com. Retrieved February 3, 2023, from https://www.retireguide.com/medicare/costs-and-coverage/

MLA Simmons, Christian. "Medicare Costs & Coverage." RetireGuide.com, 31 Jan 2023, https://www.retireguide.com/medicare/costs-and-coverage/.

Chicago Simmons, Christian. "Medicare Costs & Coverage." RetireGuide.com. Last modified January 31, 2023. https://www.retireguide.com/medicare/costs-and-coverage/.

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Key Principles

RetireGuide’s mission is to provide seniors with resources that will help them reach important financial decisions that affect their retirement. Our goal is to arm our readers with knowledge that will lead to a healthy and financially sound retirement.

We’re dedicated to providing thoroughly researched Medicare information that guides you toward making the best possible health decisions for you and your family.

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Key Takeaways
  • Original Medicare covers everything from inpatient hospital stays and home health care to doctor’s visits, medical equipment and preventive care. Something that is considered medically necessary is typically covered.
  • Part A is premium-free for most Medicare beneficiaries, as long as they worked and paid Medicare taxes over a certain amount of time. Part B comes with a monthly premium, which is deducted quarterly if you are not yet receiving Social Security.
  • Medicare Advantage and Part D prescription drug coverage, both of which are sold through private insurers, do not have a set price or coverage since it varies from plan to plan.

How Much Does Medicare Cost?

While Medicare provides federally administered health insurance to millions of older Americans, you may still face several out-of-pocket costs. But other plans and options are available to help you meet those expenses.

There are four parts to Medicare — Parts A through D — as well as supplemental insurance, called Medigap, which affect your out-of-pocket costs.

Important Medicare Cost Definitions
Premium
This is the monthly payment you make for Medicare coverage.
Deductible
You must pay a certain amount for medical care before Medicare kicks in. This varies for Medicare Parts A through D. This amount is called your deductible. It resets each year.
Coinsurance
This is usually measured as a percentage of your doctor, hospital or other medical bill. Coinsurance is a cost you may have to pay for your share of medical services even after you’ve paid your deductibles.
Lifetime Reserve Days
Medicare only pays for 90 days of hospitalization, but it gives you an extra 60 “lifetime reserve days” for your entire lifetime. These are additional days Medicare pays for hospitalization if you need more than 90 days in the hospital. If you use all these up, you will have to pay out-of-pocket for hospitalization.
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What Does Medicare Cover?

Original Medicare, which is made up of Parts A and B, will cover inpatient care and hospital stays, as well as doctor visits, treatments, services and outpatient care.

Medicare typically covers things that fall under the umbrella of medically necessary care. This means that services like cosmetic surgery or non-medical procedures are rarely covered.

What Medicare Covers
  • Inpatient care
  • Hospice care
  • Medical equipment
  • Doctor visits
  • Lab tests
  • Telehealth
  • Mental health services

There are some areas that are exempted from Original Medicare coverage. This includes dental care, vision care and prescription drug coverage. These areas can be covered through private plans like Medicare Advantage.

Terry Turner, senior financial writer and financial wellness facilitator, explains the difference between Medicare Part A and Medicare Part B.

Medicare Part A Costs and Coverage

Medicare Part A is hospital insurance. It covers inpatient hospital stays, skilled nursing facility care and hospice care. Long-term care is not covered under Part A.

If you receive Social Security for at least four months before your 65th birthday, you will be automatically enrolled in Part A and Part B. If you don’t receive Social Security before turning 65, you’ll need to sign up with Social Security to receive coverage.

What Medicare Part A Covers
  • Inpatient care
  • Hospice care
  • Home health care
  • Skilled nursing facility care

Part A charges no monthly premium to anyone who paid Medicare taxes through their employer for at least ten years. Those who haven’t worked that long have to pay premiums for Part A coverage. Most beneficiaries do not have to pay the premium.

2023 Medicare Part A Out-of-Pocket Costs and Increases
Charges 2023 Cost 2022 Cost Year-to-Year Change
Monthly premium for anyone who has worked 40 quarters (10 years) $0 $0 $0
Monthly premium for anyone who has worked fewer than 30 quarters (7.5 years) $506 $471 $35
Monthly premium for anyone who has worked 30 to 39 quarters (7.5 to 9.75 years) $278 $259 $19
Hospital deductible $1,600 $1,484 $116
Coinsurance per day for days 61 to 90 of hospitalization $400 $371 $29
Coinsurance per day for hospital stays beyond 91 days (using lifetime reserve days) $800 $742 $58
Coinsurance per day for skilled nursing facility stays $194.50 $185.50 $9
Don't Leave Your Health to Chance
Find a local Medicare plan that fits your needs by connecting with a licensed GoHealth insurance agent.

Medicare Part B Costs and Coverage

Medicare Part B covers most doctor visits, outpatient care, preventive services and some medical supplies. You may face a late enrollment penalty if you don’t sign up for Part B when you first become eligible.

What Medicare Part B Covers
  • Doctor visits
  • Lab tests
  • Diagnostic screenings and preventative care
  • Medical equipment
  • Ambulance services
  • Telehealth services
  • Mental health
  • Advance care planning
  • A very limited number of outpatient prescription drugs.

The Part B deductible for 2023 is $226. After meeting your deductible, you are responsible for 20% of all costs under coinsurance.

Part B premiums are based on a progressive scale depending on how much income you have and whether you filed an individual or joint tax return.

2023 Medicare Part B Premium Based on Income
Income Level for Individual Taxpayer (2023) Income Level for Joint Tax Filers (2023) Monthly Medicare Part B Premium (2023)
$97,000 or less $194,000 or less $164.90
$97,000 to $123,000 $194,000 to $246,000 $230.80
$123,000 to $153,000 $246,000 to $306,000 $329.70
$153,000 to $183,000 $306,000 to $366,000 $428.60
$183,000 to $500,000 $366,000 to $750,000 $527.50
$500,000 or more $750,000 or more $560.50
William Howery, a Medicare expert who has a decade of experience in the insurance industry, explains what you should know about the out-of-pocket costs of Medicare while shopping for a plan.

Medicare Advantage Plans Costs and Coverage

Medicare Advantage plans, is an all-in-one alternative to Original Medicare. These plans are administered by private insurance companies approved by the federal government.

Medicare Advantage bundled plans include Part A and Part B and usually have Part D drug coverage. Plans may also include other extra benefits such as vision and dental.

What Medicare Advantage Covers
  • All the services covered by Original Medicare.
  • Vision, hearing and dental are usually included.
  • Emergency and urgent medical care is always covered.
  • Most plans offer some form of prescription drug coverage.

Since Medicare Advantage plans are provided through private insurers, there are no fixed premiums, deductibles or coinsurance. Instead, they vary from plan to plan. You first must have Original Medicare before you can buy a Medicare Advantage plan.

The companies that administer the plans decide what to charge for premiums, deductibles and coinsurance once a year. Medicare does not have a hand in determining the costs. Changes take effect on Jan. 1 of the following year.

Cost-Determining Factors of Medicare Advantage Plans
  • Whether your Part B premium is included in the Advantage plan. Some Medicare Advantage plans cover all or part of your Part B premium.
  • Whether you have Medicaid or other state assistance.
  • Whether the plan charges for extra benefits you need.
  • Whether or not the plan charges a premium since some plans do not.
  • The type of Medicare Advantage plan you have and whether a doctor or other health care provider accepts it.
  • The type of health services you use.
  • The annual limit your plan sets for out-of-pocket costs for health care.
  • The amount of your coinsurance or copay, which can differ from Medicare Part B.
  • The amount of the Medicare Advantage plan deductible or whether it even has a deductible.
  • How often you use health services.
  • Added costs of seeing a health care provider outside your plan’s network.
Don't Leave Your Health to Chance
Find a local Medicare plan that fits your needs by connecting with a licensed GoHealth insurance agent.

Medicare Part D Costs and Coverage

Medicare Part D, which is provided through private insurers like Medicare Advantage, covers prescription drugs. All Part D drug plans must provide a minimum coverage level set by Medicare. However, the type of drugs covered depends on the formulary, which is a list of prescription drugs covered. Formularies vary from plan to plan.

Formularies are broken into tiers. Each tier has a different cost-sharing amount. For example, Tier I drugs may include low-cost generic medications while Tier III drugs may include non-preferred name-brand medications. Part D coverage is often included in Medicare Advantage plans.

The cost of a Part D plan varies depending on cost and which drugs it covers. If you live in a high-income household, you may have to pay an extra cost to your standard Part D premium due to the income-related monthly adjustment amount (IRMAA).

If you do not sign up for Part D coverage when you first enroll in Medicare, you can still sign up later. But you will pay an ever-increasing penalty unless you have other creditable prescription drug coverage or you receive certain other assistance from the state or federal government.

The penalty, which applies if you don’t have some form of drug coverage 63 days after your initial Medicare enrollment period ends, is based on how long you waited to enroll in a prescription drug plan. It adds a cost for each month you went without enrolling on to all future monthly premium payments.

John Clark, licensed insurance advisor and owner of Senior Solutions Insurance Agency, discusses why it is important to work with a professional when selecting a Medicare Part D drug plan.

Medicare Supplement Insurance Costs and Coverage

If you’re enrolled in Original Medicare, enrolling in Medicare supplemental insurance — also known as Medigap — may help cover additional costs such as copayments and deductibles.

Companies are free to set their own prices for each plan they offer, but the rates are filed and reviewed by the various state insurance departments.

According to the U.S. Centers for Medicare and Medicaid Services, the cost of your Medigap policy can be priced in three different ways – no age-rated, entry age-rated or attained-age-rated.

Medigap Policy Premium Pricing Rules
No Age-Rated
The same monthly premium is charged to everyone, regardless of age. For example, a 65 year old and 72 year old may pay the same $165 premium.
Issue-Age Rated
Your premiums are set based on your age when you purchase the policy. Age won’t change your premium cost. For example, a 65 year old could buy a Medigap policy for $145 a month. A 72 year old could buy the same medigap policy, but their premium is $175.
Attained-Age-Rated
The premium is first based on your current age, but then increases as you age. You may purchase a policy at 65 for $120, but your premium will increase each year.

Different insurers may charge different premiums for the exact same plan, so it’s important to compare prices between companies to find the best deal.

Long-term care, vision, dental, hearing aids and eyeglasses generally aren’t covered with Medigap. Medicare Advantage plans cannot be paired with Medigap.

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Medicare Costs & Coverage FAQs

Is Medicare free after the age of 65?
No, you will have to pay out-of-pocket costs that can include Medicare premiums for different parts of Medicare, along with deductibles and coinsurance for all parts. Medicare also doesn’t cover everything, so you’ll need to plan for additional expenses.
How much does Medicare usually cost per month?
You will pay $164.90 for Medicare Part B premiums in 2023 — more if you have a higher income. Most people don’t have to pay Part A premiums. Premiums for Medicare Advantage plans, Part D prescription drug plans and Medigap plans vary.
Does Medicare cost more than regular insurance?
Medicare usually costs less than private insurance. But if your employer pays part of your premiums through your health insurance at work, it may offset the price and be cheaper.

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Last Modified: January 31, 2023

14 Cited Research Articles

  1. U.S. Centers for Medicare & Medicaid Services. (2022, September 29). Biden-Harris Administration Announces Lower Premiums for Medicare Advantage and Prescription Drug Plans in 2023. Retrieved from https://www.cms.gov/newsroom/press-releases/biden-harris-administration-announces-lower-premiums-medicare-advantage-and-prescription-drug-plans
  2. U.S. Centers for Medicare & Medicaid Services. (2022, September 27). 2023 Medicare Parts A & B Premiums and Deductibles 2023 Medicare Part D Income-Related Monthly Adjustment Amounts. Retrieved from https://www.cms.gov/newsroom/fact-sheets/2023-medicare-parts-b-premiums-and-deductibles-2023-medicare-part-d-income-related-monthly
  3. U.S. Centers for Medicare & Medicaid Services. (2022, July 29). Annual Release of Part D National Average Bid Amount and Other Part C & D Bid Information. Retrieved from https://www.cms.gov/files/document/july-29-2022-parts-c-d-announcement.pdf
  4. U.S. Centers for Medicare & Medicaid Services. (2022). Costs. Retrieved from https://www.medicare.gov/basics/costs/medicare-costs
  5. U.S. Centers for Medicare & Medicaid Services. (2022). Costs of Medigap Policies. Retrieved from https://www.medicare.gov/supplements-other-insurance/whats-medicare-supplement-insurance-medigap/medigap-costs/costs-of-medigap-policies
  6. U.S. Centers for Medicare & Medicaid Services. (2020, November 6). 2021 Medicare Parts A and B Premiums and Deductibles. Retrieved from https://www.cms.gov/newsroom/fact-sheets/2021-medicare-parts-b-premiums-and-deductibles
  7. U.S. Centers for Medicare & Medicaid Services. (2020, January). 2020 Medicare Costs. Retrieved from https://www.medicare.gov/Pubs/pdf/11579-medicare-costs.pdf
  8. U.S. Centers for Medicare & Medicaid Services. (2019, November 8). 2020 Medicare Parts A and B Premiums and Deductibles. Retrieved from https://www.cms.gov/newsroom/fact-sheets/2020-medicare-parts-b-premiums-and-deductibles
  9. U.S. Centers for Medicare & Medicaid Services. (n.d.). Medicare Costs at a Glance. Retrieved from https://www.medicare.gov/your-medicare-costs/medicare-costs-at-a-glance
  10. U.S. Centers for Medicare & Medicaid Services. (n.d.). Your Medicare Costs. Retrieved from https://www.medicare.gov/your-medicare-costs
  11. U.S. Centers for Medicare & Medicaid Services. (n.d.). Costs for Medicare Advantage Plans. Retrieved from https://www.medicare.gov/your-medicare-costs/costs-for-medicare-advantage-plans
  12. U.S. Centers for Medicare & Medicaid Services. (n.d.). How to Get Prescription Drug Coverage. Retrieved from https://edit.medicare.gov/drug-coverage-part-d/how-to-get-prescription-drug-coverage
  13. U.S. Centers for Medicare & Medicaid Services. (n.d.). Part D Late Enrollment Penalty. Retrieved from https://edit.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/part-d-late-enrollment-penalty
  14. U.S. Centers for Medicare & Medicaid Services. (n.d.). Medigap Costs. Retrieved from https://edit.medicare.gov/supplements-other-insurance/whats-medicare-supplement-insurance-medigap/medigap-costs