Key Takeaways
- Medicare is a federal health insurance program for people aged 65 years and older and some people with disabilities. People can either enroll in Original Medicare (Part A and Part B) or Medicare Advantage (Part C).
- Medigap is supplemental insurance that helps pay for medical services that Medicare does not cover.
- Medicare Part A typically has no premium. The standard monthly premium in 2024 for Part B is $174.70.
- Medicare Advantage plans, Medicare Part D and Medigap plans are administered by private insurers, so their costs can vary.
How Much Does Medicare Cost?
The federal government provides Original Medicare, which includes Part A (hospital insurance) and Part B (medical insurance). Although Original Medicare presents a more affordable alternative to private health insurance, there are still costs associated with Medicare Parts A and B.
Most people will not pay a monthly premium for Medicare Part A because they paid into Medicare during their entire working career via payroll deduction taxes. But if you’ve only paid Medicare taxes for 39 quarters or fewer, your premium could be between $278 and $505 per month in 2024.
There are premiums associated with Medicare Part B for all plan participants. The standard Part B premium is $174.70 per month in 2024, a small increase from 2023. If your income was greater than $103,000 filing individually or greater than $206,000 filing jointly, you will pay incrementally more. The most anyone will pay for their Part B premium in 2024 is $594 per month.
Most individuals are very satisfied with their out of pocket cost when they enroll in Medicare. It’s important to also enroll in either a Medicare Supplement or a Medicare Advantage plan to pick up the 20% cost that your original Medicare does not cover.
Michael JonesOwner of Grand Anchor Insurance SolutionsMichael Jones, owner of Grand Anchor Insurance Solutions, excels not only in Medicare expertise but also in crafting personalized health care solutions. With a keen focus on client needs, he educates and tailors plans to individual lifestyles, drawing from a wealth of experience in employee voluntary benefits as well.
Medicare Coverage
Medicare Parts A and B collectively cover many health care costs including doctor visits, inpatient care, hospital stays and certain medical treatments. Original Medicare also covers medical equipment, lab tests, hospice care, telehealth and mental health services.
Medicare Part A is also referred to as hospital insurance, as it covers services related to hospitals and limited stays in other inpatient facilities.
Types of Services Covered by Medicare Part A
- Inpatient hospital care
- Skilled nursing facility care
- Nursing home care
- Home health care
- Hospice care
Medicare Part B insurance covers a range of outpatient medical services.
Types of Services Covered by Medicare Part B
- Doctor visits
- Lab tests
- Diagnostic screenings
- Medical equipment
- Ambulance transportation
- Mental health services
But there are certain costs not covered by Original Medicare. These include costs for dental care, vision care and prescription drugs. Private plans from Medicare Advantage providers, though, do typically offer coverage for these costs.
The most significant potential expense not covered by Medicare is long-term care or custodial care. Long-term care costs include those for help with everyday activities like bathing, dressing, using the toilet, eating and moving around. Costs for additional services like meal deliveries, adult day care and transportation services also fall under long-term care. If you think you may need long-term care in the future, don’t plan to rely on Medicare. Instead, consider a separate long-term care insurance policy.
Is An Annuity Right For You?
Medicare Eligibility
Most Americans become eligible for Medicare as they approach retirement and their 65th birthday. Information from the U.S. Centers for Medicare & Medicaid Services arrives in the mail and decisions need to be made within a certain time to avoid costly penalties.
The government automatically enrolls you in both Medicare Part A and Part B if you are already receiving Social Security benefits when you turn 65. Therefore, if you are already claiming Social Security, enrollment might be as simple as opening your mail and placing your new Medicare card in your wallet.
If you are not collecting Social Security at age 65, you have a seven-month initial enrollment window to enroll in Medicare. This window opens three months before you turn 65 and closes three months after the last day of your birth month. It’s important to act quickly, otherwise, you could face delays and significant late enrollment penalties.
People receiving disability benefits for two years are also automatically enrolled in Medicare. Patients diagnosed with end-stage renal disease or amyotrophic lateral sclerosis (also known as ALS and Lou Gehrig’s disease) are immediately eligible for Medicare without the two-year disability waiting period.
Medicare Enrollment Periods
If you miss your initial enrollment period and are not eligible for a special enrollment period, Medicare general enrollment happens every year between Jan. 1 and March 31. This is your opportunity to sign up for Parts A and B for the first time.
Current beneficiaries do not need to sign up for Medicare each year. However, you do have the opportunity to review your coverage and make certain plan changes annually.
The Medicare open enrollment period runs every year from Oct. 15 to Dec. 7. During this time, you have options like switching from Original Medicare to Medicare Advantage (and vice versa), switching to a new supplement insurance policy or joining a Part D drug plan. Changes made during this period are effective on January 1 of the following year.
Medicare Advantage open enrollment runs annually from January 1 to March 31. During this time, you may only make one change and you are limited to certain options, including switching between Medicare Advantage plans or moving from Medicare Advantage to Original Medicare.
There are also special enrollment periods that certain life events, like moving or losing your current coverage, may qualify you for. You can review your full options on the Medicare website.
Medicare Part A Costs in 2024
Besides the premium, Medicare Part A participants pay deductibles and coinsurance to cover things like hospital stays and home medical equipment.
As of 2024, the Medicare Part A deductible is $1,632 per benefit period. After reaching this deductible, Medicare covers costs for hospital stays shorter than 60 days. For inpatient stays longer than 60 days, you will also pay coinsurance. The amount you will pay increases with the length of your stay.
For days 61-90, you will pay $408 per day in coinsurance. For stays beyond 90 days, the coinsurance cost is $816 per day up to a maximum of 60 reserve days over your lifetime. Once your reserve days are exhausted, you will be responsible for all costs associated with an inpatient stay after 90 days.
2024 Medicare Part A Costs and Increases
| Charges | 2024 Costs | 2023 Costs | 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 (fewer than 7.5 years) | $505 | $506 | $-1 |
| Monthly premium for anyone who has worked 30-39 quarters (7.5 years – 9.75 years) | $278 | $278 | 0 |
| Hospital Deductible | $1,632 | $1,600 | $32 |
| Coinsurance per day for days 61 to 90 of hospitalization | $408 | $400 | $8 |
| Coinsurance per day for hospital stays beyond 91 days (using lifetime reserve days) | $816 | $800 | $16 |
| Coinsurance per day for skilled nursing facility stays | $204 | $200 | $4 |
Source: MedicareInteractive
Medicare Part B Costs in 2024
How much you will pay for your Medicare Part B premium depends on your adjusted gross income. The higher your income, the higher your premium will be.
2024 Medicare Part B Premium Based on Income
| Income for Individual Taxpayers | Income for Joint Tax Filers | Monthly Medicare Part B Premium |
|---|---|---|
| $103,000 or less | $206,000 or less | $174.70 |
| Above $103,000 up to $129,000 | Above $206,000 up to $258,000 | $244.60 |
| Above $129,000 up to $161,000 | Above $258,000 up to $322,000 | $349.40 |
| Above $161,000 up to $193,000 | Above $322,000 up to $386,000 | $454.20 |
| Above $193,000 and less than $500,000 | Above $386,000 and less than $750,000 | $559.00 |
| $500,000 or above | $750,000 or above | $594.00 |
Source: Centers for Medicare and Medicaid
Medicare Part B has an annual deductible of $240 in 2024. After you meet the deductible, you will pay only 20% of the Medicare-approved amount for covered services.
Medicare Advantage Costs in 2024
Medicare Advantage bundles aspects of Original Medicare Part A and B, usually along with Part D drug coverage. Instead of managing three separate plans, a private insurance company provides you with a single plan.
While Original Medicare is completely administered through the government, Medicare Advantage involves private insurance companies approved by Medicare. The private carrier receives payments from the Medicare program to cover your costs.
Because private insurers administer Medicare Advantage plans rather than the government, the premiums, deductibles and coinsurance can vary from plan to plan. The cost of a Medicare Advantage plan is determined by a number of factors:
Medicare Advantage Plan Cost Factors
- Whether you have Medicaid or other state assistance
- Whether the plan charges a premium (some plans do not)
- Whether the plan includes your Part B premium
- Whether the plan has a deductible and how much it is
- Whether the plan charges for extra benefits
- Added costs for visiting out-of-network providers
- The type of plan you have and whether your health care provider accepts it
- The annual out-of-pocket costs limit the plan sets
- The amount of your coinsurance or copays
- How often you use the plan’s health services
- The type of health services you use
Medicare Part D Costs in 2023
Part D covers prescription drugs. If you are enrolled in Original Medicare, you must purchase Part D coverage separately to cover prescription drug costs. Many Medicare Advantage plans include some Part D coverage.
Medicare Part D costs vary depending on your medications, your plan and your pharmacy. High-income households pay more for Part D coverage. According to the U.S. Centers for Medicare and Medicaid Services, in 2024 the average monthly premium for Medicare Part D coverage is about $55.50.
Your Part D coverage may also include a deductible. In 2024, the deductible for Medicare Part D coverage cannot be more than $545.
It is important to maintain continuous drug coverage from the time you are first eligible to avoid higher fees when you enroll or re-enroll.
Talk to your doctor if your drug costs are higher than they were last year. There may be a less expensive drug available and knowing your options could save out-of-pocket expenses throughout the year.
Learn About How Annuities Can Bolster Your Retirement Strategy
Supplemental Insurance Costs in 2024
Original Medicare at its best still suffers coverage gaps or deductibles the average recipient may struggle to afford. Some common services, such as dental care, glasses and hearing aids are not covered at all.
Some people opt to purchase a supplemental plan called Medigap. This supplemental insurance is private insurance that bridges Medicare coverage gaps. It can help cover copays, coinsurance, deductibles and extended hospital visits. Some plans also cover health care costs outside the U.S.
Several factors can influence the cost of a Medigap policy. Each insurance company sets premiums based on the type of plan, your geographic area and different pricing models. For example, some plans are priced differently depending on your age, while others are not. Your gender, health history and location also influence the cost.
Each insurance company decides the premium for its Medigap policies, so costs can vary widely, even for policies with the same coverage. When you are ready to shop for a Medigap policy, you may consider exploring your coverage options and comparing insurance companies.
Frequently Asked Questions About Medicare Costs
The cost of Medicare at age 65 will depend on which type of coverage you choose. With Original Medicare, you will likely pay no premium for Part A and a standard monthly premium of $164.90 for Part B.
If you are still working when you become eligible for Medicare, you can choose to stick with your employer’s health insurance and delay signing up for Medicare. However, you can also choose to sign up for Part A, which is free for most people, while keeping your employer’s insurance.
Medicare Part B premiums are determined by the income reported on your tax return. If you are married and filing jointly, your and your spouse’s premiums will be based on your joint income. Households with joint incomes of less than $194,000 will pay the standard premium of $164.90 per month.
