How Much Does Medicare Cost?

🎯 10 Key Takeaways: What Medicare Really Costs in 2026

Part A is “premium-free” for most people — but only if you or your spouse paid Medicare taxes for at least 10 years (40 quarters). Otherwise, you could pay up to $565/month.

Part B costs $202.90/month in 2026 — a $17.90 increase from 2025, and the first time the premium has ever exceeded $200.

High earners pay dramatically more — income-related surcharges (IRMAA) can push Part B premiums as high as $689.90/month.

The Part A hospital deductible is $1,736 per benefit period — not per year, meaning multiple hospital stays can trigger this deductible more than once.

Part B has a $283 annual deductible — after which you still owe 20% coinsurance with no out-of-pocket cap unless you have supplemental coverage.

Part D prescription drug premiums average $34.50/month — but the maximum deductible is now $615, and annual out-of-pocket costs cap at $2,100.

Medicare Advantage (Part C) premiums are dropping — the average monthly premium decreased to about $14.00 in 2026.

Medicare costs the federal government nearly $1 trillion annually — roughly 12.9% of all federal spending, and projected to nearly double by 2036.

The Medicare Trust Fund (Part A) is projected to be depleted by 2033 — meaning the program faces serious long-term financial pressure.

Low-income programs exist to help — Medicaid, the Part D Low-Income Subsidy (“Extra Help”), and Medicare Savings Programs can cover premiums and cost-sharing for qualifying individuals.

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💰 1. No, Medicare Is Not Free — Here’s What “Premium-Free” Actually Means

This is the single biggest misconception in American healthcare: that turning 65 means you get free health insurance. The reality is much more nuanced.

Medicare Part A is the only portion that qualifies as “premium-free” — and only if you or your spouse accumulated at least 40 quarters (10 years) of paying Medicare payroll taxes while working. More than 99% of Medicare beneficiaries meet this requirement and pay no monthly Part A premium. But that doesn’t mean Part A is cost-free once you actually need hospital care.

If you haven’t worked enough quarters, the costs are substantial:

💵 Part A Premium Situation	2026 Monthly Cost	Who This Applies To
40+ quarters of work ✅	$0/month	Most retirees and their spouses
30-39 quarters of work ⚠️	$311/month	People with partial work histories
Fewer than 30 quarters ❌	$565/month	Those with limited or no U.S. work history

💡 Critical insight: Even with a “free” Part A premium, you still face a $1,736 hospital deductible per benefit period in 2026 — an increase of $60 from 2025. A “benefit period” resets 60 days after you leave the hospital or skilled nursing facility, which means if you’re hospitalized twice in the same year with a sufficient gap between stays, you could pay that deductible twice.

🏥 Part A Cost-Sharing in 2026	What You Pay
Hospital deductible (per benefit period)	$1,736
Days 1–60 of hospital stay	$0 (after deductible)
Days 61–90 coinsurance	$434/day
Lifetime reserve days (91+)	$868/day
Skilled nursing facility (days 21–100)	$217/day
Beyond 100 days in skilled nursing	All costs — Medicare stops paying

💡 Pro tip: The lifetime reserve days are exactly that — lifetime. You only get 60 total across your entire Medicare enrollment. Once they’re used, there’s no more Part A hospital coverage beyond day 90 in any benefit period.

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🩺 2. Part B Costs $202.90/Month — And That’s Just the Starting Price

Medicare Part B covers doctor visits, outpatient care, preventive services, durable medical equipment, and mental health services. The standard monthly premium for Part B in 2026 is $202.90, an increase of $17.90 from $185.00 in 2025.

But calling it “the” premium is misleading. What you actually pay depends heavily on your income.

Why did it jump so much? The increase is mainly due to projected price changes and assumed utilization increases consistent with historical experience. CMS also noted that without their action to slash spending on skin substitutes (a wound care product that had been subject to abusive pricing), the premium increase would have been about $11 more per month.

📋 Part B Basics for 2026	Amount
Standard monthly premium	$202.90
Annual deductible	$283
Coinsurance after deductible	20% of Medicare-approved amount
Out-of-pocket maximum	None ❌ (Original Medicare has no cap)

That last line is the one that catches people by surprise. There’s no yearly limit on what you pay out-of-pocket unless you have supplemental coverage like a Medigap policy or a Medicare Advantage plan.

💡 Critical insight: A single major surgery or extended treatment could leave you with thousands in uncapped 20% coinsurance charges. This is why the vast majority of Medicare beneficiaries supplement their Original Medicare coverage.

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📊 3. The Income Surcharge Most Retirees Don’t Plan For: IRMAA Explained

Here’s where Medicare costs can escalate quickly — and where many retirees get blindsided. If your Modified Adjusted Gross Income (MAGI) from two years ago exceeds certain thresholds, you’ll pay an income-related monthly adjustment amount (IRMAA) on top of your standard premiums.

The surcharge is based on your Modified Adjusted Gross Income from two years ago, meaning your 2026 IRMAA liability is based on your MAGI from 2024.

👤 Single Filer MAGI (2024)	👫 Joint Filer MAGI (2024)	💲 Total Part B Premium/Month	Part D Surcharge/Month
$109,000 or less	$218,000 or less	$202.90	$0.00
$109,001 – $137,000	$218,001 – $274,000	$284.10	$14.50
$137,001 – $171,000	$274,001 – $342,000	$405.80	$37.40
$171,001 – $205,000	$342,001 – $410,000	$527.50	$60.30
$205,001 – $500,000	$410,001 – $750,000	$649.20	$83.20
Above $500,000	Above $750,000	$689.90	$91.00

IRMAA follows a “cliff” structure, meaning even $1 over an income threshold can trigger a significantly higher monthly premium. For a married couple both on Medicare, crossing just one bracket by a single dollar could mean over $1,000 more per year in combined premiums.

💡 Pro tip: Sources of income that count toward MAGI include pensions, 401(k)/IRA withdrawals, Roth conversions, capital gains, Social Security benefits, rental income, and even tax-exempt municipal bond interest. Strategic timing of Roth conversions and required minimum distributions in the years before and during Medicare enrollment can save you thousands.

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🎂 4. Turning 65? Here’s Your Actual First-Year Medicare Price Tag

When you turn 65, you become eligible for Medicare — but the cost structure is far from intuitive. Here’s what a typical new enrollee at age 65 in 2026 can expect to pay:

📝 Cost Component	Annual Cost (Standard)	Notes
Part A premium	$0	Assuming 40+ work quarters ✅
Part B premium	$2,434.80/year	$202.90 × 12 months
Part B deductible	$283	Paid once per year
Part D premium (average)	$414/year	~$34.50/month average, varies by plan
Part D deductible (maximum)	$615	Not all plans charge the full amount
Medigap premium (Plan G average)	~$1,800–$3,600/year	Varies widely by state and insurer
Minimum annual cost (no Medigap)	~$3,130+	Before any medical services used
Typical annual cost with Medigap	~$5,000–$7,000+	Depends on plan and location

💡 Critical insight: If you don’t enroll in Part B or Part D when first eligible and don’t have qualifying alternative coverage, you’ll face permanent late enrollment penalties. The Part D penalty is calculated by multiplying 1% of the “national base beneficiary premium” ($38.99 in 2026) times the number of full uncovered months you didn’t have creditable coverage. That penalty stays with you for as long as you have Part D.

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💊 5. Part D Prescription Drug Coverage: Lower Premiums, Higher Deductibles, and a New Out-of-Pocket Cap

Medicare Part D saw dramatic changes under the Inflation Reduction Act, and 2026 brings both good and bad news.

The good news: The average stand-alone Part D plan total premium is projected to decrease to $34.50 in 2026, down $3.81 from 2025. Insulin copays remain capped at $35/month, recommended vaccines are covered at no cost, and the donut hole coverage gap is permanently gone.

The concerning news: The Part D deductible can be no more than $615 per year in 2026, and annual out-of-pocket costs will increase from $2,000 to $2,100.

💊 Part D Costs in 2026	Amount
Average standalone premium	~$34.50/month 📉
Maximum annual deductible	$615
Annual out-of-pocket spending cap	$2,100
Insulin copay cap	$35/month 💉
Vaccine cost	$0 for recommended vaccines ✅
National base beneficiary premium	$38.99

Once you hit the $2,100 out-of-pocket limit, you pay $0 for covered drugs for the rest of the year. This is a transformative protection for people on expensive medications.

💡 Critical insight: Recent bids from private insurance plans administering the Part D benefit anticipate a 35% increase in their annual per-enrollee costs in 2026, according to the Congressional Budget Office. This unexpected spike — driven partly by the growing use of GLP-1 medications and changes in manufacturer assistance programs — could push Part D costs significantly higher in coming years, even if premiums are currently stabilized through federal subsidies.

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🏢 6. Medicare Advantage (Part C): Lower Premiums, But Read the Fine Print

Medicare Advantage plans, offered by private insurers, provide an alternative to Original Medicare. In 2026, the average monthly Medicare Advantage premium will decrease to $14.00, down from $16.40 in 2025.

That sounds incredible — until you understand the trade-offs.

⚖️ Original Medicare vs. Medicare Advantage	Original Medicare (Parts A + B)	Medicare Advantage (Part C)
Monthly premium (Part B)	$202.90	$202.90 + plan premium (~$14 avg)
Doctor/hospital choice	Any Medicare-accepting provider	Usually limited to network
Out-of-pocket maximum	None ❌	Yes, capped by law ✅
Extra benefits (dental, vision, hearing)	Not covered	Often included
Referral requirements	None	May need referrals for specialists
Prior authorization	Rare	Common

💡 Critical insight: Medicare Advantage plans are projected to be overpaid by $76 billion in 2026, largely due to upcoding practices that inflate diagnoses, according to the Center for Medicare Advocacy. This means taxpayer money is flowing to insurer profits rather than strengthening the Medicare Trust Fund — a growing concern as the program faces solvency challenges.

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🏛️ 7. The Staggering Bill Taxpayers Foot: What Medicare Costs the Government

Medicare isn’t just a personal cost — it’s one of the largest line items in the entire federal budget.

Spending on Medicare came out to roughly $1.1 trillion in 2024, or approximately $17,786 per beneficiary. It ranks as the second-largest federal program behind Social Security.

🇺🇸 Medicare’s Federal Footprint	Amount/Detail
Total Medicare spending (2024)	~$1.1 trillion
Share of federal budget	~12.9%
Cost per beneficiary	~$17,786/year
Part A (Hospital Insurance) share	$422 billion (37.8%)
Part B (Medical Insurance) share	$553 billion (49.3%)
Part D (Prescription Drugs) share	$146 billion (13%)
Projected spending by 2036	~$2 trillion 📈
Hospital Insurance Trust Fund depletion	Projected 2033 ⚠️

Only 57% of Medicare’s costs were financed through payroll taxes, premiums, and other receipts in 2023, with payments from the federal government’s general fund making up the difference. That general fund share has been growing — from 16% in 1973 to 43% in 2023 — meaning Medicare increasingly competes with every other federal priority for funding.

CBO projects Medicare costs to roughly double to almost $2.0 trillion by 2036, due largely to the aging population and rising per-beneficiary health care costs.

💡 Critical insight: The Hospital Insurance Trust Fund is projected to run out by 2033. If Congress takes no action, Medicare Part A would only be able to pay about 89% of its obligations at that point. This doesn’t mean Medicare would disappear, but it could mean reduced benefits or higher costs for beneficiaries unless legislative reforms are enacted.

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👴 8. What Seniors Actually Pay: The Real Monthly Budget for Medicare in 2026

Let’s look at what a typical 65+ retiree realistically pays for comprehensive Medicare coverage in 2026 — because the standard premium is just the tip of the iceberg.

💸 Realistic Monthly Medicare Budget	Low Estimate	Mid Estimate	High Estimate
Part B premium	$202.90	$202.90	$202.90
Part D premium	$0 (cheapest plan)	$34.50	$80+
Medigap/Supplement premium	$0 (no supplement)	$150	$300+
IRMAA surcharge (if applicable)	$0	$81.20	$487.00
Total monthly premium cost	~$203	~$469	~$1,070+
Total annual premium cost	~$2,436	~$5,628	~$12,840+

And this is before you pay a single deductible, coinsurance, or copay for actually using medical services.

💡 Critical insight: The 2026 Medicare Part B premium increase amounts to a net cut in Social Security benefits, bringing the effective COLA down from 2.8% to 2.1%. For many retirees living primarily on Social Security, rising Medicare premiums are steadily eroding their purchasing power every year.

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🛡️ 9. Hidden Ways to Lower Your Medicare Costs That Most People Miss

Not everyone has to pay full price. Several lesser-known programs can dramatically reduce what you owe:

Medicare Savings Programs (MSPs) — State-run programs that pay some or all of your Medicare premiums and cost-sharing if your income and assets fall below certain thresholds. Four levels exist: Qualified Medicare Beneficiary (QMB), Specified Low-Income Beneficiary (SLMB), Qualifying Individual (QI), and Qualified Disabled and Working Individuals (QDWI).

Extra Help / Low-Income Subsidy (LIS) — Older adults with incomes up to 150% of the federal poverty level qualify for the Medicare Part D Low-Income Subsidy, which lowers premiums and out-of-pocket costs for prescription drugs.

IRMAA Appeals — If you’ve experienced a life-changing event (retirement, divorce, death of a spouse, significant income drop), you can request that SSA use more recent income data instead of your 2024 tax return. This is done through Form SSA-44.

🔑 Cost-Reduction Strategy	Who Qualifies	Potential Savings
Medicare Savings Programs	Low-income seniors	Premiums + deductibles + coinsurance covered
Extra Help (LIS)	Income ≤150% FPL	Part D premiums and copays reduced
IRMAA appeal (SSA-44)	Life-changing income events	Avoid thousands in surcharges
Roth conversion planning	Pre-Medicare retirees	Lower future MAGI to avoid IRMAA brackets
Part D plan shopping	Everyone, annually	Plans change yearly — compare during Open Enrollment

💡 Pro tip: Open Enrollment runs from October 15 to December 7 every year. Even if you’re happy with your current plan, drug formularies, premiums, and networks change annually. A 10-minute comparison could save hundreds of dollars.

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❓ Frequently Asked Questions

Is Medicare completely free at age 65? No. While most people don’t pay a Part A premium, everyone pays for Part B ($202.90/month in 2026), and you’ll likely also pay for Part D drug coverage and potentially supplemental insurance. Deductibles, coinsurance, and copays apply across all parts.

What happens if I can’t afford Medicare premiums? You may qualify for Medicare Savings Programs through your state Medicaid office, which can pay your Part B premium and sometimes your deductibles and coinsurance too. The Part D Extra Help program assists with prescription drug costs.

Can my Medicare premium change from year to year? Yes. CMS sets new premium, deductible, and coinsurance amounts every fall for the following year. Additionally, if your income changes significantly, your IRMAA surcharge can go up or down.

Why is Medicare so expensive for the government? The combination of an aging baby boomer generation, rising healthcare costs, expensive new medications (including GLP-1 drugs), and increasing per-beneficiary utilization all drive costs upward. The program covers over 64 million people with comprehensive hospital, medical, and prescription drug benefits.

What’s the difference between Medicare and Medicaid? Medicare is a federal program based primarily on age (65+) or disability. Medicaid is a joint federal-state program based on income. Some people qualify for both (called “dual eligibles”), in which case Medicaid often covers Medicare premiums and cost-sharing.

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This article reflects 2026 Medicare costs as published by the Centers for Medicare & Medicaid Services (CMS), the Social Security Administration, the Congressional Budget Office, and other federal agencies. Medicare costs are subject to annual adjustment. Consult a licensed insurance counselor or your State Health Insurance Assistance Program (SHIP) for personalized guidance. This content is informational only and does not constitute financial or legal advice.