Medicare cost basics
Medicare costs you may pay
Premium
A fixed amount you pay to participate in a plan or program, usually as a monthly payment. Many Medicare plans have a premium.
Deductible
A preset, fixed amount you pay for your medical care and services first, before Medicare or other insurance starts to pay.
Copayment
A preset, fixed amount you pay for a service when you receive it. In a Medicare Part D plan, for example, you might have a $15 copayment for each prescription drug. Also called copay.
Coinsurance
Your share of the total cost of a covered service or prescription, calculated as a percentage of the cost after your deductible is paid. For example, if your coinsurance is 25% and the total cost for the service or prescription is $100, you would pay $25. Your insurance would pay the remaining $75.
Out-of-pocket limit
A limit that plans set on the amount of money you will have to spend out of your own pocket in a plan year. Also called maximum out-of-pocket, or MOOP for short.
For example, the maximum out-of-pocket for any Medicare Part D prescription drug plan in 2026 is $2,100.
How much does Original Medicare (Part A and Part B) cost?
Most people get Medicare Part A without a premium. Medicare Part B, which helps pay for doctor visits and outpatient care, has a premium for most people.
The Medicare Part B annual premium is $202.90 in 2026. (People with higher incomes may be required to pay more.) This premium can be paid directly to Medicare or automatically deducted from the member’s Social Security benefits.
A premium does not include cost sharing (deductible, copays and coinsurance).
How much do private Medicare plans cost?
Many Medicare Advantage (Part C) plans and most Medicare Part D prescription drug plans and Medicare Supplement insurance (Medigap) plans charge monthly premiums. You are still responsible for paying deductibles, copays and coinsurance for the care you receive.
Medicare Advantage (Part C) plan costs
Medicare Advantage (Part C) plans are offered by private insurance companies. These plans offer the same benefits as Original Medicare (Part A and Part B) and most include Medicare Part D prescription drug coverage.
Many Medicare Advantage plans have a low or $0 monthly premium. You are still responsible for deductibles, copays and coinsurance. Medicare sets an out-of-pocket maximum for Medicare Advantage plans to help limit how much you pay for covered services.
Some Medicare Advantage plans offer added benefits such as dental, hearing or vision care, fitness benefits or transportation services.
Many Medicare Advantage plans have a network of covered doctors and hospitals. Providers outside the network may cost more, or may not be covered.
Medicare Supplement (Medigap) plan costs
Medicare Supplement plans are designed to help limit out-of-pocket costs by helping pay for some of the costs Original Medicare doesn’t pay. Some Medigap plans have low to no copays. Benefits and costs vary by plan.
Most Medicare Supplement plans provide coverage for the Part A hospital deductible. In most cases, you are responsible for the Medicare Part B deductible, an annual cost of $283 in 2026.
Medicare Part D plan costs
Standalone Medicare Part D drug plans (PDP) and Medicare Advantage plans with prescription drug coverage (MAPD) set their own premiums, deductibles, copays and coinsurance.
For 2026, the annual out-of-pocket maximum is $2,100. The amount you pay for prescription drugs depends on which tier the drug is in and your current drug payment stage.
Drug tiers
Every Medicare Part D plan has a drug list (formulary) that shows all the brand-name and prescription drugs it covers. Drugs in lower tiers usually cost less.
Drug payment stages
Each Medicare prescription drug plan has three coverage stages. Out-of-pocket costs will vary depending on coverage stage.
Stage 1: Annual Deductible
For plans with an annual deductible, you pay the entire cost of prescription drugs until you reach the annual deductible limit. For plans without an annual deductible, coverage starts with the first prescription.
Stage 2: Initial Coverage
You pay a copay or coinsurance for each prescription drug; the plan pays the rest. You stay in the Initial Coverage stage until you (and/or others on your behalf) have spent $2,100 in drug costs.
Stage 3: Catastrophic Coverage
When your out-of-pocket costs reach $2,100 in 2026, you enter the Catastrophic Coverage stage and will pay $0 for Medicare Part D-covered drugs.
What if I need help paying my Medicare costs?
If you have limited income and resources, you may qualify for help with your Medicare costs. Many people who are eligible for assistance never sign up, so apply if you think you might qualify. Income and resource limits vary by program.
Dual Special Needs plans
A Dual Special Needs plan (D-SNP) is a Medicare Advantage plan for people who are eligible for both Medicare and Medicaid benefits. A D-SNP may also include some services not covered by other Medicare plans, like prescription drugs, eye care or long-term care.
If you qualify, your state Medicaid program will help pay your Part B premiums and other Medicare costs.
Learn more about Dual Special Needs plans
Extra Help program from Medicare
Helps pay some or all Medicare Part D premiums, deductibles, copays and coinsurance for those who qualify. People with both Medicare and Medicaid qualify automatically.
Learn more about Extra Help and apply
Medicare savings programs
Medicare savings programs help pay Original Medicare premiums, deductibles and coinsurance. If you are eligible for a Medicare savings program, you also qualify for Extra Help.
Learn more about Medicare savings programs
Programs of All-Inclusive Care for the Elderly (PACE)
These programs combine medical, social and long-term care services for people over the age of 55 who qualify. Not available in all states.
Other programs may be available in your state, such as a State Pharmaceutical Assistance Program (SPAP). Each program will have its own rules for qualifying.
Common questions about Medicare costs
Are there Medicare late-enrollment penalties?
Medicare Part A, Part B and Part D may charge premium penalties if you haven’t paid in for long enough or miss your initial enrollment dates.
Medicare Part A: You won’t pay a Part A premium if you or your spouse worked and paid taxes for at least 10 years.
The Part A premium penalty is charged for twice the number of years you delay enrollment. If you wait 2 years, for example, you would pay the additional 10% for 4 years (2 x 2 years). The penalty applies no matter how long you delay Part A enrollment.
Medicare Part B: The penalty for late enrollment in Part B is an additional 10% for each 12-month period that you delay it. In most cases, you have to pay the penalty every month for as long as you have Part B.
If you’re under 65 and disabled, any Part B penalty ends once you turn 65 because you’ll have another Initial Enrollment Period based on your age.
Medicare Part D: The penalty for late enrollment in a Part D plan is 1% of the average Part D premium for each month you delay enrollment. You pay the penalty for as long as you have Part D coverage.
Learn more about the Part D late enrollment penalty
Does my income impact what I pay for Medicare?
Maybe. Your Part B premium may be lower than the standard amount if you enrolled in Part B in 2024 or earlier and your premium payments are deducted from your Social Security benefits. Your premium may be higher than the standard amount if your reported income was above $109,000 for individuals or $218,000 for couples in 2026. This is called an income-related monthly adjustment amount (IRMAA).
What is the Social Security Cost-of-Living Adjustment (COLA)?
Each year, Social Security benefits are subject to a cost-of-living adjustment (COLA). This adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The premiums for Medicare coverage may change every year as well. Each adjustment is a percentage (usually an increase) of the previous year’s amount.
If you pay your Medicare Part B premium directly from your Social Security benefits, these two changes become related. Some years, the increase in the Part B premium is more than the increase from the Social Security COLA.
How should I budget for Medicare in retirement?
Making a financial plan that includes health care costs is an important part of the retirement planning process. Use this checklist to learn about what types of health care costs you should expect, how you can start preparing, and why it matters for your future.
Retirement health care checklist
How often do Medicare costs change?
Medicare costs are subject to change every year. Changes usually take effect January 1 of the following year.
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Medicare Advantage plans and Medicare prescription drug plans
Plans are insured through UnitedHealthcare Insurance Company or one of its affiliated companies, a Medicare Advantage organization with a Medicare contract and a Medicare-approved Part D sponsor. Enrollment in these plans depends on the plan's contract renewal with Medicare. You do not need to be an AARP member to enroll in a Medicare Advantage plan or Medicare Prescription Drug plan.
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