Most Medicare beneficiaries pay no Part A premium (if they have 40+ work quarters), a standard monthly Part B premium (which adjusts annually — verify current figures at Medicare.gov), and a separate Part D premium based on which plan they choose. Higher earners pay more through income-related surcharges (IRMAA). Out-of-pocket costs depend on your plan, your health, and whether you have supplemental coverage.
ClearValue Lending is not affiliated with, endorsed by, or connected to Medicare, CMS, or any government agency. Medicare premiums, deductibles, and cost-sharing amounts change each January. Always verify current figures at Medicare.gov or by calling 1-800-MEDICARE (1-800-633-4227). This page provides an educational framework, not specific plan or cost advice.
Medicare is not free. While many beneficiaries pay no Part A premium, every part of Medicare has associated costs — premiums, deductibles, coinsurance, and copayments — that can add up significantly without supplemental coverage. Understanding the cost structure helps you budget and evaluate whether a Medicare Supplement (Medigap) plan or Medicare Advantage plan makes financial sense. The Medicare.gov costs overview is the definitive, up-to-date reference — all cost figures below should be verified against it since they change annually.
Most people pay $0 for Part A because they or their spouse paid Medicare taxes for at least 10 years (40 quarters) while working. People with 30 to 39 work quarters pay a reduced premium; those with fewer than 30 quarters pay the full premium. Part A also has a per-benefit-period deductible (not an annual deductible) for hospital inpatient stays, and daily coinsurance charges kick in after 60 days in a hospital stay and after 20 days in a skilled nursing facility. The benefit-period structure means costs can reset if you have multiple hospital stays in a year. Medicare.gov's Part A costs page has the current deductible and coinsurance amounts.
Part B has a standard monthly premium that CMS announces each fall for the coming year. Beneficiaries with higher incomes pay an additional amount called the Income-Related Monthly Adjustment Amount (IRMAA), based on their income from two years prior (e.g., 2026 IRMAA is based on 2024 income). Part B also has an annual deductible; after meeting it, Medicare generally pays 80% of approved costs for covered services and you pay 20% with no cap — unless you have supplemental coverage. That uncapped 20% is why many beneficiaries add Medigap or Medicare Advantage.
Example (illustrative only — not a specific offer): A beneficiary with no supplemental coverage who has a $50,000 covered surgery faces a 20% coinsurance obligation of $10,000 on that single service after the Part B deductible. With a Medigap Plan G, the plan would pay that coinsurance after the Part B deductible is met. This illustrates why the uncapped 20% coinsurance in Original Medicare motivates many people to add supplemental coverage.
Part D premiums vary widely by plan. The national base beneficiary premium is set by CMS each year; actual plan premiums range from well below to well above that figure. Higher earners pay an IRMAA surcharge on top of their plan premium. Part D plans also have their own deductibles, copayments, and coinsurance tiers based on whether a drug is generic, preferred brand, or specialty. The Medicare.gov Part D costs page and Plan Finder tool allow you to compare plans by your specific prescriptions.
If your modified adjusted gross income (MAGI) from two years prior exceeds certain thresholds, you pay higher Part B and Part D premiums. CMS uses income tiers; each tier adds an incrementally larger IRMAA surcharge on top of the standard premium. For 2026 IRMAA thresholds and amounts, visit Medicare.gov IRMAA information. If your income dropped significantly since the year used for IRMAA calculation — due to retirement, divorce, or another qualifying life event — you can request reconsideration from Social Security using Form SSA-44.
With Original Medicare only, you pay Part B and D premiums plus uncapped 20% coinsurance — your total is unpredictable. Adding Medigap makes costs more predictable in exchange for a monthly Medigap premium. Medicare Advantage plans typically have lower out-of-pocket maximums than Original Medicare without Medigap, and often have low or $0 additional premiums, but you must use in-network providers and your benefits depend on the specific plan. There is no universally cheaper option — the right choice depends on your expected health utilization, preferred providers, and tolerance for premium vs. out-of-pocket tradeoff.