Medicare Isn't Free — Here's What You'll Actually Pay

One of the biggest misconceptions about Medicare is that it’s “free healthcare.” The truth is more nuanced:

Part A is premium-free for most people (but has deductibles)
Part B has a monthly premium everyone pays
Part D, Medicare Advantage, and Medigap all have their own costs

Let’s break down every cost so there are no surprises.

2026 Medicare Costs at a Glance

Coverage	Monthly Premium	Annual Deductible	Key Costs
Part A (Hospital)	Usually $0	$1,676 per benefit period	$0 for first 60 days, then $419/day (days 61-90)
Part B (Medical)	$185.00/month*	$257/year	20% coinsurance after deductible
Part D (Drugs)	$0–$100+/month	Up to $590	Copays vary by tier; $2,000 out-of-pocket cap (new!)
Medicare Advantage	Often $0 (+ Part B)	Varies by plan	$3,000–$8,000 annual MOOP
Medigap Plan G	$100–$250/month	$257 (Part B deductible)	After deductible, Plan G pays 100% of gaps
Medigap Plan N	$80–$200/month	$257 (Part B deductible)	Small copays for office visits ($20) and ER ($50)

* Part B premium is income-based. Higher earners pay IRMAA surcharges — see below.

The IRMAA Surcharge: Higher Income = Higher Premiums

If your Modified Adjusted Gross Income (MAGI) exceeds certain thresholds, you pay more for Parts B and D. This is called IRMAA (Income-Related Monthly Adjustment Amount).

Single Income (MAGI)	Married Filing Jointly	Part B Premium	Part D Surcharge
≤ $106,000	≤ $212,000	$185.00	$0
$106,001 – $133,000	$212,001 – $266,000	$259.00	+$13.70
$133,001 – $167,000	$266,001 – $334,000	$370.00	+$35.30
$167,001 – $200,000	$334,001 – $400,000	$480.90	+$57.00
$200,001 – $500,000	$400,001 – $750,000	$591.90	+$78.60
≥ $500,000	≥ $750,000	$628.90	+$85.80

💡 IRMAA uses your tax return from 2 years ago. If your income dropped (retirement, life event), you can appeal with SSA Form SSA-44.

New for 2026: The $2,000 Part D Out-of-Pocket Cap

Starting in 2026, Medicare Part D has a $2,000 annual out-of-pocket maximum for prescription drug costs. This is a major change from the Inflation Reduction Act.

Before 2026, there was no true out-of-pocket cap — some beneficiaries paid $10,000+ per year for specialty medications. The new cap applies whether you have a standalone Part D plan or drug coverage through Medicare Advantage.

Additionally, Medicare now offers a Medicare Prescription Payment Plan that lets you spread your drug costs evenly across the year instead of paying large amounts at the pharmacy counter.

How to Reduce Your Medicare Costs

Compare plans annually — don’t auto-renew without checking for better options
Use Medicare Savings Programs (MSPs) — income-qualified programs can pay your Part B premium
Apply for Extra Help (LIS) — can reduce Part D costs to $0 or near-$0
Choose generics when possible — Tier 1 drugs cost a fraction of brand-name
Use preferred pharmacies — many plans offer lower copays at specific pharmacies
Work with an independent agent — we find savings you didn’t know existed

Want a Personalized Cost Estimate?

We’ll compare your options and find the most cost-effective Medicare plan for your situation.

Senior Benefits Hub is a service of Triangle Life & Health®

Tagged 2025, Medicare, Medicare Costs, Part B Premium