Medicare is a federal health insurance program in the United States, primarily for people age 65 or older, and for certain younger people with disabilities. It is divided into different “Parts,” each covering specific services and having its own cost structure.

Here is a detailed breakdown of the cost and what each part of Medicare entails (using 2025 cost figures for illustration, as they are generally updated annually):

 

Original Medicare (Part A and Part B)

 

This is the traditional, fee-for-service program run by the federal government.

 

1. Medicare Part A (Hospital Insurance)

 

What it Entails (Coverage):

  • Inpatient hospital care: Coverage for stays in a hospital (including critical access and psychiatric hospitals).
  • Skilled Nursing Facility (SNF) care: Short-term, post-hospital care (not long-term or custodial care).
  • Hospice care: Care for the terminally ill.
  • Some home health care.

What it Costs (2025 Examples):

  • Premium:
    • $0 for most people (if you or your spouse worked and paid Medicare taxes for at least 10 years, or 40 quarters). This is called “premium-free Part A.”
    • If you don’t qualify for premium-free Part A, you can buy it, but the monthly premium can be substantial (e.g., up to $518 in 2025, depending on your work history).
  • Deductible:
    • $1,676 per benefit period for an inpatient hospital stay. Crucially, this is NOT an annual deductible; you could pay it multiple times in a year if you have separate benefit periods. A benefit period starts the day you’re admitted and ends after you’ve been out of the hospital or skilled nursing facility for 60 days in a row.
  • Coinsurance:
    • Inpatient Hospital Stay (after deductible):
      • Days 1-60: $0 coinsurance.
      • Days 61-90: $419 per day.
      • Days 91-150: $838 per day (using one of your 60 lifetime reserve days).
      • After day 150: You pay all costs.
    • Skilled Nursing Facility Stay:
      • Days 1-20: $0.
      • Days 21-100: $209.50 per day.
      • After day 100: You pay all costs.

 

2. Medicare Part B (Medical Insurance)

 

What it Entails (Coverage):

  • Doctors’ services: Medically necessary services from doctors and other health care providers.
  • Outpatient care: Hospital outpatient services.
  • Preventive services: Screenings, shots, and your Annual Wellness Visit.
  • Durable Medical Equipment (DME): Such as wheelchairs, oxygen equipment, and walkers.
  • Some home health and mental health services.

What it Costs (2025 Examples):

  • Premium:
    • Standard Monthly Premium: $185 for most people.
    • Income-Related Monthly Adjustment Amount (IRMAA): If your modified adjusted gross income (MAGI) from two years prior exceeds a certain threshold (e.g., $106,000 for an individual or $212,000 for a married couple filing jointly in 2023 for the 2025 premium), your premium will be higher, potentially reaching up to $628.90 per month.
  • Deductible:
    • $257 per year (once met, Medicare starts to pay its share).
  • Coinsurance:
    • Generally, you pay 20% of the Medicare-approved amount for most doctor services and outpatient care after meeting the deductible. Medicare pays the other 80%.

 

Other Medicare Options

 

These are provided by private insurance companies approved by Medicare.

 

3. Medicare Part C (Medicare Advantage)

 

What it Entails (Coverage):

  • “All-in-one” coverage: Bundles Part A, Part B, and usually Part D (prescription drugs) into one plan.
  • Additional benefits: Often includes benefits not covered by Original Medicare, like routine vision, hearing, and dental care, or gym memberships.
  • Plan structure: Operates more like an HMO or PPO, with networks of doctors and hospitals.

What it Costs (Varies by Plan):

  • Part B Premium: You must continue to pay your Part B premium.
  • Part C Premium: Many plans have a monthly premium of $0 or a low premium, but this varies widely by plan and location.
  • Copayments/Coinsurance: You pay co-pays or coinsurance for services as you get them (e.g., $20 for a doctor’s visit, a percentage for a hospital stay). These amounts can be different from Original Medicare’s.
  • Out-of-Pocket Limit: All plans have an annual limit on your out-of-pocket costs for Part A and Part B services. Once you reach this limit, the plan pays 100% for covered services for the rest of the year.

 

4. Medicare Part D (Prescription Drug Coverage)

 

What it Entails (Coverage):

  • Outpatient Prescription Drugs: Coverage for self-administered prescription drugs.
  • Two Ways to Get It:
    1. A stand-alone Part D Prescription Drug Plan (PDP) to go with Original Medicare.
    2. Through a Medicare Advantage Plan (MA-PD) that includes drug coverage.

What it Costs (Varies by Plan):

  • Premium: Varies widely based on the plan you choose.
  • IRMAA: If you have higher income, you pay an extra amount, similar to Part B.
  • Deductible: Varies by plan, up to a maximum (e.g., $590 in 2025).
  • Copayments/Coinsurance: You pay these at the pharmacy for your prescriptions. The cost-sharing structure often involves a coverage gap (the “donut hole”), but recent legislation has limited beneficiary liability.

 

Supplemental Coverage (Medigap)

 

What it Entails (Coverage):

  • Fills the “Gaps” in Original Medicare: These policies, sold by private companies, help pay for the out-of-pocket costs of Original Medicare (Parts A and B), such as deductibles, copayments, and coinsurance.
  • Standardized Plans: Policies are standardized (Plans A, B, C, D, F, G, K, L, M, N), so a Plan G from one company offers the same benefits as a Plan G from another.
  • Does NOT Work with Part C: You cannot use a Medigap policy if you have a Medicare Advantage plan.

What it Costs:

  • Premium: You pay a separate monthly premium to the private insurance company for the Medigap policy. This premium varies based on the plan, company, and location.
  • Part B Premium: You must also continue to pay your Part B premium.

 

Late Enrollment Penalties

 

It’s important to note that if you don’t enroll in Part B or Part D when you are first eligible, and you don’t have other “creditable coverage” (insurance that is at least as good as Medicare’s), you may be subject to a late enrollment penalty that increases your premium for the rest of the time you have Medicare.