And over time, costs have increased with Medicare.
Original Medicare included Part A (hospital coverage) and Part B (medical coverage). As of 2006, there’s a private, standalone prescription drug benefit called Part D since Original Medicare doesn’t cover prescription drugs.
There’s also a separate plan altogether, Medicare Part C, known as Medicare Advantage, that combines the benefits of Original Medicare with other benefits, like prescription drug coverage or telehealth services, that vary by plan.
And for people with Original Medicare, a Medicare supplement plan, also known as Medigap, can help offset the out-of-pocket costs for Parts A and B. These plans are sold by private companies and come with an added premium.
The various private additions to the Medicare lineup give people with Medicare more choices as they get older. But costs can still be high. And if you don’t take the time to compare your options when you’re eligible for Medicare, you might pay more than you have to for the same services.
To help you understand those costs, we offer a breakdown of what you can expect to pay out of pocket under the different parts. Costs can vary with private plans (Medicare Advantage, Part D and Medigap), but this overview should give you an idea of the costs of Medicare in 2022.
Medicare Part A Costs
Medicare Part A covers hospital care (including inpatient mental health) and skilled nursing facility care. Most people get Part A for free, meaning no premium. That’s because Part A is funded through work taxes. If you or your spouse has 40 work credits — earned over the course of your working life — by the time you’re eligible for Medicare, then you won’t have a premium for Part A.
You can check the status of your work credits online by creating an account with Social Security, or you could contact your local office directly. Social Security is the agency that keeps up with work credits.
For those who don’t have enough work credits by the time they’re eligible for Medicare, there is a monthly premium for Medicare Part A. In 2022, it’s $274 a month if you’ve earned between 30 and 39 work credits. If you’ve earned fewer than 30 credits, you’ll have to pay the full premium of $499 a month.
Most people do not have a premium for Part A.
But regardless of your premium, there is cost sharing under Part A. It includes a deductible (benefit period) and coinsurance. In 2022, the Part A deductible is $1,556.
The coinsurance rate for hospital stays is based on how long you’re there. For days 0 to 60, it’s $0. You’ll pay $389 a day for days 61 to 90. And if you need care beyond that point, you’ve got 60 lifetime reserve days you can tap into, at $778 per day. Once those 60 days are used up, though, you’re on your own for the full cost of care.
Skilled nursing facility care has its own cost sharing amounts. Up until day 20, there’s no coinsurance. For days 21 to 100, you’ll pay $194.50 a day. Beyond that, there are no lifetime reserve days like there are with hospital care. Starting on day 101, you’ll pay the full cost of skilled nursing facility care yourself.
And keep in mind that Original Medicare (Parts A and B together) does not have a cap in place on out-of-pocket expenses. You’ll be responsible for your portion of the costs no matter how high they get in a year.
We should also mention that the Part A deductible is based on benefit period. It’s not annual. You can have multiple benefit periods per year, and each time a new one starts, you’re responsible for the deductible and cost sharing all over again.
Here’s a breakdown of Part A costs in 2022:
| 2022 Medicare Part A Costs | |
| Part A monthly premium | $0 for people with 40+ work credits |
| $274 a month for people with 30 to 39 work credits |
|
| $499 a month for people with less than 30 work credits |
|
| Penalty for late enrollment* | 10% |
| Hospital stays | |
| Your out-of-pocket cost (per benefit period) |
|
| Deductible | $1,556 |
| Part A coinsurance, days 0 to 60 | $0 |
| Part A coinsurance, days 61 to 90 | $389 per day |
| Part A coinsurance, days 91+ | $778 per day |
| Note: After day 90 as a hospital inpatient, you have a maximum of 60 lifetime reserve days across your lifetime, not per benefit period. Once those end, you pay the full cost of care yourself. | |
| Skilled nursing facility stays | |
| Your out-of-pocket cost (per benefit period) |
|
| Part A coinsurance, days 0 to 20 | $0 |
| Part A coinsurance, days 21 to 100 | $194.50 |
| Part A coinsurance, days 101+ | All costs |
| *If you don’t qualify for premium-free Part A and you miss your initial enrollment window to buy it, then you may be charged a penalty of 10% on top of your monthly premium when you enroll. This penalty lasts for twice the number of years you could have had Part A but didn’t. | |
Medicare Part B Costs
Medicare Part B covers medically necessary outpatient care. This is a pretty broad portion of Medicare that includes things like:
- Routine checkups
- Preventive screenings, such as mammograms
- Vaccines, like ones for flu, pneumonia and shingles
- Outpatient procedures
- Lab tests
- Ambulance rides
As a side note, there’s a handy app you can download that lets you type in a medical service to see if Medicare covers it. Find it here.
Unlike with Medicare Part A, which is typically premium-free, everyone pays a Part B premium. The amount can vary, though, depending on your income. In 2022, the standard Medicare Part B premium is $170.10 a month.
But if your income from two years ago is higher than a certain threshold ($91,000 a year in 2022 for single tax filers), you’ll pay an Income-Related Monthly Adjustment Amount, or IRMAA.
IRMAA surcharges are calculated based on your income from two years ago. So, for example, if you enroll in Medicare for the first time in 2022, Medicare will look at your tax return from 2020 to determine if you qualify for the IRMAA charge.
There’s also a Part B deductible. In 2022, it’s $233. But this deductible is for the year, meaning you only have to meet it once before Medicare will start covering its share of your medical bills.
Under Part B, there’s also a coinsurance rate of 20% for covered services. And as a reminder, Original Medicare doesn’t have an out-of-pocket maximum. You’ll pay 20% of the cost of covered services no matter how much you’re billed for the year.
Here’s a breakdown of Part B costs in 2022, including IRMAA premiums:
| 2022 Medicare Part B Costs | |
| Standard Part B monthly premium | $170.10 |
| Part B annual deductible | $233 |
| Part B coinsurance | 20% |
| Penalty for late enrollment* | 10% for each full, 12-month period without Part B coverage |
| 2022 IRMAA Premiums | |
| Income (based on 2020 taxes) | Premium |
| $91,001 to $114,000 (single) | $238.10 |
| $182,001 to $228,000 (joint) | |
| >$114,000 to $142,000 (single) | $340.20 |
| >$228,000 to $284,000 (joint) | |
| >$142,000 to $170,000 (single) | $442.30 |
| >$284,000 to $340,000 (joint) | |
| >$170,000 to under $500,000 (single) | $544.30 |
| >$340,000 to under $750,000 (joint) | |
| $500,000+ (single) | $578.30 |
| $750,000+ (joint) | |
| For married couples who file separately, the premium is $544.30 a month for incomes of >$91,000 to $409,000; or $578.30 a month for incomes above $409,000. | |
| *If you miss your initial enrollment window to buy Part B, then you may be charged a penalty of 10% for each 12-month period that you went without it when you do enroll, on top of your normal monthly premium. This penalty lasts for as long as you have Part B. | |
Medicare Advantage Costs
Medicare Advantage is the private alternative to Original Medicare. Sold by individual companies on the private market, these plans are nevertheless still regulated by the federal government. By law, for instance, Medicare Advantage plans have to cover at least the same benefits as Original (both Part A and Part B).
Beyond this requirement, Advantage plans have more flexibility in offering broader benefits. Many cover things like prescription drugs, dental and vision benefits, hearing aids and exams, telehealth services, post-hospital meal delivery, gym memberships and more.
Plans vary in what they cover and in what they cost. But according to our analysis of state data from the Centers for Medicare and Medicaid Services (CMS), which oversees Medicare, nearly every Medicare member in the country (99.6%) will have access to at least one Advantage plan that comes with a $0 premium in 2022.
On average, though, the monthly premium for Medicare Advantage is about $23 in 2022.
Even if you have Medicare Advantage, you’ll still pay your Part B premium. But some plans charge an additional premium for the added benefits of the plan. Others don’t.
Deductibles also vary with Medicare Advantage. You might have no deductible at all or a high one, depending on the plan type. Look carefully at your cost sharing amounts (what you pay out of pocket) when comparing private Medicare plans against each other.
One feature that separates Medicare Advantage from Original Medicare is that Advantage plans have to cap what people pay out of pocket for covered care in a year. And the federal government sets limits in place on these caps.
The cost sharing cap varies by plan type and whether the services are in-network or not. For example, the out-of-pocket maximum for in-network services was $7,550 in 2021. Plans can set lower out-of-pocket maximums if they want, but they can’t set them higher than the federal limit.
Medicare Part D Costs
Original Medicare doesn’t cover prescription drugs, with the exception of a set of specific medications that are typically administered in a clinical setting, such as chemotherapy treatments. But for regular prescriptions, like blood pressure pills or insulin, you’ll need to find separate coverage for these. You’ve got two options for drug coverage under Medicare: a Medicare Advantage plan that includes prescription drug coverage or a standalone Part D plan.
Medicare Part D was created in 2003 and took effect in 2006. It’s prescription drug coverage for people with Original Medicare, and it’s sold by individual companies on the private market, just like Medicare Advantage.
Because these plans are private, cost and coverage varies, though, as with Advantage, there is government regulation involved. There’s a cap in place on how high Part D plans can make the annual deductible. The initial coverage limit, out-of-pocket threshold and coverage gap cost sharing is also set at the federal level as well.
Premiums vary, but the average premium for Part D is projected to be about $33 a month in 2022. Our analysis of CMS state data shows that the average lowest-cost Part D premium is just over $7 a month next year, and most people with Part D (99.8%) will have access to a plan that costs less in 2022 than it did in 2021.
As with Medicare Part B, Medicare Part D applies an IRMAA charge on top of premiums for people with incomes above $91,000 a year (for single tax filers; the married limit is doubled). This amount is added to whatever your plan’s premium is.
How much you’ll pay at the pharmacy counter for your medications depends on the plan, too. Some plans don’t charge anything for tier 1 drugs, for example, since these tend to be cheaper generics. But more expensive specialty drugs at tier 5 could be expensive even with insurance. Before you buy a Part D plan, look carefully at its drug formulary to make sure it covers what you need at a price that works for you.
Deductibles also vary with private Part D plans. In 2022, no Part D plan can have a higher annual deductible than $480. Plans can charge less than this and may even have no deductible, but they can’t have a higher deductible than this.
Under Part D, there’s also something called the “coverage gap” or “donut hole.” It doesn’t affect everyone with Part D, but it’s a situation where you’ve hit the initial coverage limit of your plan ($4,430 in 2022) but haven’t yet reached the out-of-pocket spending threshold that triggers catastrophic coverage ($7,050 in 2022).
While you’re in the donut hole, you’ll pay 25% of the cost of your covered medications, whether they’re brand name or generic. Once you hit the catastrophic spending limit, you’ll pay a flat fee or a percentage of the cost of your medications for the rest of the year. Your plan picks up the rest.
Here’s a breakdown of Part D costs in 2022:
| 2022 Medicare Part D Costs | |
| Part D premium | Varies (Average is $33) |
| Part D deductible (max) | $480 |
| Late enrollment penalty | 1% of base Part D premium x number of full months without Part D coverage (rounded to nearest .10) |
| Base Part D premium | $33.37 |
| Initial coverage limit | $4,430 |
| Cost sharing while in the donut hole (brand name & generics) | 25% |
| Out-of-pocket threshold | $7,050 |
| Cost sharing after hitting out-of-pocket threshold | Low coinsurance or copayment that varies by plan |
| IRMAA charges | |
| Income (based on 2020 taxes) |
Surcharge (added to monthly premium) |
| $91,001 to $114,000 (single) | $12.40 |
| $182,001 to $228,000 (joint) | |
| >$114,000 to $142,000 (single) | $32.10 |
| >$228,000 to $284,000 (joint) | |
| >$142,000 to $170,000 (single) | $51.70 |
| >$284,000 to $340,000 (joint) | |
| >$170,000 to under $500,000 (single) | $71.30 |
| >$340,000 to under $750,000 (joint) | |
| $500,000+ (single) | $77.90 |
| $750,000+ (joint) | |
| For married couples who file separately, the premium surcharge is $71.30 a month for incomes of >$91,000 to $409,000; or $77.90 a month for incomes above $409,000. | |
| *If you miss your initial enrollment window to buy Part B, then you may be charged a penalty of 10% for each 12-month period that you went without it when you do enroll, on top of your normal monthly premium. This penalty lasts for as long as you have Part B. | |
Medigap Costs
Medicare supplement plans, also called Medigap, help cover the gaps left by Original Medicare — the gaps in cost, that is. In other words, they help offset out-of-pocket costs under Part A and/or Part B.
You buy Medigap from individual companies for a separate premium each month. There are 10 plan types, though only 8 of them are available to new Medicare enrollees, and each is labeled with a different letter: A, B, C, D, F, G, K, L, M and N.
Note: Plans C and F are not available to anyone new to Medicare on or after January 1, 2020.
Each Medigap plan is standardized by letter type in all but three states (Massachusetts, Minnesota and Wisconsin). This means that Plan G in Florida covers the same benefits as Plan G in Oregon. The only difference is the cost. And because Medicare supplement plans are sold by private companies, the cost varies significantly depending on where you live and what’s available in your area (and who’s selling the policy).
If you want to stick with Original Medicare, a Medigap plan may be a good way to trim some of the costs that you’d otherwise have to cover yourself. Some plans, for instance, cover the Part B coinsurance, which, as a reminder, is 20% of your covered care and doesn’t have a cap in place.
For an added premium a month, you could have a plan in place to cover what you’d normally pay out of pocket under Original Medicare. We won’t get into premiums or averages here because Medicare supplement plans vary widely across the country. But it’s worth doing the math for yourself to see if the added cost of Medigap can help lower your overall medical costs for the year.