Medicare is more than just another health plan—it’s the backbone of healthcare coverage for millions of Americans age 65 and older, as well as people with certain disabilities, End-Stage Renal Disease (ESRD), or ALS. But while Medicare provides essential coverage and peace of mind, figuring out how much it will actually cost you can feel like a puzzle with too many pieces.
The truth is, Medicare costs will vary for each individual. Monthly premiums, deductibles, coinsurance, and other out-of-pocket expenses, like prescriptions, all play a role in your overall Medicare cost. Add in extra factors like income, supplemental coverage, and whether you choose a Medicare Advantage plan or stick with Original Medicare, and the numbers can look very different from one person to the next.
Here’s the good news: with the right information, you can estimate Medicare costs confidently. This guide will break it all down—monthly premiums, income-related monthly adjustment amounts (IRMAA), prescription drug coverage, and supplemental insurance—so you can plan ahead and avoid surprises.
Understanding Medicare Advantage
If you’re exploring Medicare coverage, one of the first big decisions is whether to stick with Original Medicare (Parts A and B) or choose a Medicare Advantage plan (Part C).
A Medicare Advantage plan rolls all of your Medicare services into one package. It covers everything in Parts A and B and often throws in extra perks like:
- Prescription drug coverage (Part D)
- Dental, vision, and hearing benefits
- Wellness perks, like gym memberships or telehealth
Here are a few things to know about the cost side:
- Lower or even $0 monthly premiums: Some Medicare Advantage plans boast a $0 premium, but don’t forget—you’ll still pay your Part B premium.
- Network restrictions: Advantage plans often require you to use a provider network, which can limit your choices compared to Original Medicare.
- Varying out-of-pocket costs: While the premiums may be lower, copays and deductibles can vary widely by plan.
For some, Medicare Advantage is more affordable up front, while for others, it can be more expensive long-term if frequent healthcare services are needed. The key is comparing plans carefully based on your health needs and budget.
Medicare Costs and Income
One of the biggest factors in estimating your Medicare cost is your income. Unlike many other insurance programs, Medicare premiums aren’t one-size-fits-all.
If you earn more, you’ll pay more. This comes in the form of the Income-Related Monthly Adjustment Amount (IRMAA).
- IRMAA applies to Part B (medical insurance) and Part D (prescription drug coverage).
- Your Modified Adjusted Gross Income (MAGI)—as reported on your tax return from two years prior—is what determines whether you’ll pay the standard Medicare premiums or an additional income-related amount.
For example:
- If your income is modest, you’ll likely pay only the standard Medicare premium.
- If your income is above certain thresholds, expect to see an added surcharge on top of the standard premium.
Understanding this is key to budgeting. A higher income today can lead to higher Medicare costs tomorrow, so planning around MAGI is essential.
Health Insurance Options
Medicare isn’t one-size-fits-all. Beneficiaries can choose from several different paths, and each comes with its own set of costs.
Original Medicare
- Part A (hospital insurance): Usually free if you paid Medicare taxes for 10+ years.
- Part B (medical insurance): Comes with a monthly premium and out-of-pocket costs for services.
- Add-ons needed: Many people also purchase Medigap or a standalone Part D prescription drug plan to cover what Original Medicare doesn’t.
Medicare Advantage (Part C)
- Bundles Parts A and B (and often Part D).
- May include extra benefits like dental, vision, and hearing.
- Can mean lower premiums, but often includes provider restrictions.
Medicaid Services
- For people with very low incomes, Medicaid can work alongside Medicare to reduce out-of-pocket costs significantly.
Choosing between these options depends on your finances, your health, and how much flexibility you want in choosing providers.
Medicare Part A and B Costs
Part A (Hospital Insurance)
- $0 monthly premium if you paid Medicare taxes for at least 10 years.
- If not, you’ll pay a premium ranging from $310 to $570 per month (2026).
- Deductibles and coinsurance still apply for hospital stays.
Part B (Medical Insurance)
- Standard premium in 2026: $202.90 per month.
- Higher earners pay more due to IRMAA.
- Premiums are typically deducted directly from Social Security benefits.
- On top of the premium, you’ll pay coinsurance and copays for outpatient services.
Knowing these costs is foundational for estimating your Medicare budget. Even if Part A is free, Part B always comes with a monthly premium.
Drug Coverage and Medicare
Prescription drugs are often one of the biggest ongoing healthcare expenses. That’s where Medicare Part D comes in.
- Monthly premiums: Vary by plan and income level.
- Deductibles and copays: Add to your out-of-pocket costs.
- IRMAA applies here too: Higher-income beneficiaries pay more for prescription drug coverage.
- Bundled with Medicare Advantage: Many Advantage plans include Part D automatically.
For those struggling with medication costs, the Extra Help program can lower premiums and copays, ensuring prescriptions remain affordable.
Higher Income and Medicare Premiums
Here’s where things get tricky: Medicare is one of the only federal programs that charges more if your income is higher.
- IRMAA increases premiums for Part B and Part D.
- MAGI thresholds: Determined by tax returns filed two years ago.
- Applies to both individual and joint filers.
Example: If you file jointly and your MAGI is above the set threshold, both you and your spouse will pay higher premiums. If your income has recently decreased—for instance, due to retirement—you can appeal IRMAA to potentially lower your premiums.
Coordinating Medicare with Other Insurance
Many people don’t rely on Medicare alone. Medicare can be coordinated with other insurance to provide comprehensive health coverage with minimal out-of-pocket expenses. If you have employer-sponsored coverage, retiree insurance, or Medicaid, you’ll need to understand how these work together.
- Employer coverage: If you’re still working past 65, your employer plan may act as primary insurance with Medicare secondary (or vice versa depending on employer size).
- Medicaid services: Can fill in the gaps for low-income individuals, covering premiums, deductibles, and more.
- Medigap policies: Help cover what Original Medicare doesn’t, especially for those without other supplemental coverage.
Coordinating properly ensures you’re not overpaying or leaving gaps in your coverage. It’s also natural to wonder about the stability of your coverage. Can Medicare Drop You? explores this in detail and clears up common misconceptions so you can feel confident about your benefits.
Medicare Supplement Insurance
Medigap is like your safety net. These private insurance plans help cover the deductibles, copays, and coinsurance that Original Medicare leaves behind.
- Wide variety of plans: Some cover nearly all out-of-pocket costs, while others cover less.
- Premiums vary: Depending on the plan and insurer, Medigap premiums can add significantly to your monthly expenses.
- Not for everyone: If you have a Medicare Advantage plan, you can’t also buy Medigap.
For people who want predictable healthcare costs, Medigap can be a smart investment.
Estimating Medicare Costs
When figuring out how to estimate Medicare costs effectively, consider these factors:
- Monthly premiums: Part A (if applicable), Part B, Part D, or Medicare Advantage.
- Income-related adjustments (IRMAA): Based on your MAGI.
- Out-of-pocket costs: Deductibles, copays, coinsurance.
- Prescription drug coverage: Premiums plus out-of-pocket medication costs.
- Supplemental coverage: Medigap premiums or Medicare Advantage alternatives.
Online calculators and Medicare’s own resources can help you estimate your costs more precisely. But remember: your health status and income can change, which means your Medicare costs might shift year to year.
Managing Medicare Costs
Once you’ve estimated your costs, it’s time to figure out how to manage them. A few strategies include:
- Choose the right coverage option: Compare Original Medicare, Medicare Advantage, and Medigap carefully.
- Plan around IRMAA: If possible, manage your MAGI to avoid higher premiums.
- Use Extra Help or Medicaid services: For low-income beneficiaries, these programs can save hundreds (or even thousands) per year.
- Review annually: During Medicare’s Open Enrollment, re-evaluate your plan to ensure you’re still getting the best deal.
The more proactive you are, the easier it is to keep Medicare costs affordable.
Next Steps in Medicare Planning
Estimating and managing Medicare costs isn’t a one-time project—it’s an ongoing process. Here’s what to do next:
- Review your current coverage. Make sure it still fits your healthcare needs.
- Estimate your annual Medicare cost. Include premiums, deductibles, and out-of-pocket expenses.
- Compare your options each year. New plans and benefits roll out annually.
- Seek professional advice. A licensed Medicare broker or agent can help you navigate the details.
Frequently Asked Questions About Medicare Costs
Q: Is Medicare free once I turn 65?
A: Not entirely. Part A (hospital insurance) is usually premium-free if you’ve paid Medicare taxes for at least 10 years. However, Part B (medical insurance) always comes with a monthly premium, and you may also pay for Part D prescription drug coverage or a Medicare Advantage plan.
Q: How does my income affect Medicare costs?
A: Your Medicare premiums may increase if your income is above certain thresholds due to the Income-Related Monthly Adjustment Amount (IRMAA). This applies to both Part B and Part D. Your income from two years prior (as reported on your tax return) determines whether you pay only the standard premium or more.
Q: What’s the difference between Original Medicare and Medicare Advantage when it comes to cost?
A: Original Medicare includes Part A and Part B, with separate costs for Part D and optional Medigap coverage. Medicare Advantage (Part C) bundles these benefits, often at a lower or even $0 premium, but costs like copays and provider restrictions can vary widely.
Q: Do I need supplemental insurance like Medigap?
A: Medigap isn’t required, but it can help cover deductibles, copays, and coinsurance that Original Medicare doesn’t pay for. If you choose Medicare Advantage instead of Original Medicare, you can’t buy Medigap.
Q: How much will Medicare cost me each month?
A: Costs vary based on your income, coverage choices, and health needs. In 2025, the standard Part B premium is $185 per month, Part A is usually free, and Part D premiums depend on the plan and your income. Supplemental coverage (like Medigap or Advantage) adds to your monthly expenses.
Q: Can I get help lowering my Medicare costs?
A: Yes. Low-income beneficiaries may qualify for Medicaid or the Extra Help program, which reduces prescription drug costs. Reviewing and comparing plans each year during Open Enrollment can also help ensure you’re not overpaying.
Q: What happens if my income drops after I retire?
A: If your income decreases, you can appeal your IRMAA adjustment. This may lower your Medicare premiums moving forward.
By understanding how Medicare costs are determined—and how your income, coverage choices, and supplemental plans all play into the equation—you can take control of your healthcare budget and avoid unwanted surprises.
If you’re ready to take the next step, check out our Complete Guide to Medicare Enrollment to make sure you’re fully prepared when it’s time to sign up.
Medicare isn’t free, and costs vary for everyone. But by learning how to estimate Medicare costs effectively, planning around your monthly premium, factoring in your modified adjusted gross income, and weighing options like Medicare Advantage and Medigap, you’ll be prepared to make confident, cost-effective choices for your healthcare future.
At Medicare School, we make navigating Medicare simple. From estimating your Medicare costs to comparing plans and understanding IRMAA, our experts are here to guide you every step of the way. Don’t tackle Medicare alone—let us help you find the right coverage at the right cost.
Ready to get started? Visit Medicare School today and take the guesswork out of Medicare planning.