The Ultimate Guide to Medicare Insurance Costs

Medicare insurance costs come from five different places:

1. Original Medicare’s own monthly premiums, deductibles and coinsurance
2. Medicare Part D drug costs
3. Medigap plan pricing
4. Medicare Advantage pricing and out-of-pocket limits.
5. IRMAA, the income-related surcharge higher earners pay on Part B and Part D

This guide puts every major figure in one place, with a plain-language explanation of what each one actually means for you underneath it. We update this document automatically as Medicare and the plans change their numbers. The figures stay current so you can return to this form every year.

1) Original Medicare Costs

Original Medicare (Parts A and B) isn’t free. These are the deductibles, coinsurance amounts, and thresholds Medigap is built to cover. Note: A Medigap Plan G should cover all these cost except the Part A premium, Part B premium and the B deductible.

Part A Premium

Most people get Part A with no monthly premium because they or a spouse paid Medicare taxes for at least 40 quarters (10 years) of work. Repeat: Most people don’t pay this!!! If you fall short of that work history requirement, you may have to pay a monthly premium for Part A itself. Medigap doesn’t cover this premium since it’s a Medicare cost, not a cost-sharing gap.

Part A Deductible

This is what you’d owe Original Medicare for each hospital benefit period, not each calendar year. A benefit period starts the day you’re admitted as an inpatient and doesn’t end until you’ve gone 60 days in a row without any inpatient hospital or skilled nursing care. If you’re discharged, stay out more than 60 days, and get admitted again, a new benefit period starts and the deductible applies again. That means a bad year with two separate hospitalizations can mean paying this deductible twice. A Medigap plan like Plan G or Plan N covers the Part A deductible in full, no matter how many times it applies in a year.

Part B Premium

This is the standard monthly premium nearly everyone pays for Part B, typically deducted from your Social Security check. Higher earners pay more through IRMAA, an income-related surcharge added on top of the standard amount. IRMAA is a Part B and Part D issue, not a Medigap cost. Your Medigap premium doesn’t change based on your income. See are Medigap premiums based on income for more on that distinction, and see the IRMAA chart in section 5 for the current income brackets.

Part B Deductible

This applies once per calendar year, not per visit or per benefit period. After you meet it, Original Medicare starts paying its 80% share of most Part B services. Only Medigap Plans C and F cover the Part B deductible, and both have been closed to new enrollees since 2020. If you have Plan G, Plan N, or any other current Medigap plan, you’re responsible for this deductible yourself each year.

Hospital Coinsurance, Days 61–90

Original Medicare covers the first 60 days of an inpatient hospital stay in a benefit period at no daily coinsurance (beyond the Part A deductible). From day 61 through day 90, you owe a daily coinsurance amount. A comprehensive Medigap plan covers this coinsurance in full, so a long hospital stay doesn’t turn into a daily bill.

Hospital Lifetime Reserve Days

Beyond day 90 in a benefit period, Medicare gives you 60 “lifetime reserve days” you can draw on, at a much higher daily coinsurance, and once used they’re gone for good. Medigap covers that coinsurance while you’re using lifetime reserve days. What Medigap does beyond that is the more important protection: standardized Medigap plans also cover 100% of Medicare-eligible hospital expenses for an additional 365 days after your Medicare benefits (including lifetime reserve days) are fully exhausted. That’s a real, if rarely used, backstop against a catastrophic hospital stay.

Skilled Nursing Facility Coinsurance

Medicare covers the first 20 days of a qualifying skilled nursing facility stay in full. From day 21 through day 100, you owe a daily coinsurance, which Medigap covers. Medicare doesn’t pay anything toward skilled nursing care beyond day 100 in a benefit period, and no Medigap plan covers that gap since Medigap only picks up cost-sharing on services Medicare itself is already paying for. Learn more about MEdicare skilled nursing.

📌 Note: Skilled nursing is different from long-term custodial care. Neither Medicare nor Medigap covers an extended nursing home stay once you no longer need skilled care.

Outpatient Physical Therapy Threshold

Medicare used to cap outpatient physical therapy, speech-language pathology, and occupational therapy at a hard yearly dollar limit. That hard cap is gone, but Medicare still tracks a combined yearly threshold for these services. Once your approved charges cross it, your therapist has to document that continuing therapy is medically necessary for Medicare to keep paying its share. It isn’t a stopping point, just a documentation checkpoint, and Medigap keeps covering its normal share of the Part B coinsurance on these services whether you’re above or below the threshold. Learn more about Medicare and Physical Therapy.

Get a Medigap Quote Enroll in Medigap

2) Medicare Part D Prescription Drug Costs

Medicare Part D is a separate product from Medigap, whether you pair it with Original Medicare and Medigap or get it bundled into a Medicare Advantage plan. These are the figures that shape what you pay for prescriptions. Higher earners also pay an IRMAA surcharge on top of their plan premium (see section 5).

Average Part D Premium

This is a nationwide average, not a quote. Actual premiums swing widely by plan and by which pharmacy network and drug list (formulary) fit your prescriptions. The least expensive plan on paper isn’t automatically the best one if it doesn’t cover your specific medications well. You can see Part D premiums at medicare.gov

Part D Maximum Deductible

This is the highest deductible any Part D plan is allowed to charge before it starts sharing drug costs with you. A few plans set their deductible lower than this maximum, and some charge no deductible at all, so it’s worth comparing.

Part D Out-of-Pocket Maximum

Federal law now caps what you pay out of pocket for covered Part D drugs in a calendar year. Once your covered prescription costs for the year reach this amount, your plan covers the rest of your covered drugs for the remainder of the year at no additional cost to you. Learn more about part D

💡 Tip: Pairing Original Medicare and Medigap with a standalone Part D plan gives you the freedom to shop every plan available in your area for the one that actually fits your medications, rather than being locked into whatever drug coverage comes bundled with a Medicare Advantage plan.

3) Medigap Plan Costs

Medigap monthly premiums are based on where you live, what plan you select and usually your age and gender. They’re never based on income, so IRMAA doesn’t apply to Medigap. The best way to see Medigap prices is to get a customize instant Medigap quote here.

A few Medigap plans don’t work like standard first-dollar coverage. High Deductible Plan F and Plan G ask you to pay a set amount before full coverage kicks in, and Plans K and L share costs with you up to an annual limit instead of covering everything. Visit our Senior65.com Ultimate guide to Medigap costs here.

High Deductible Plan F and Plan G

Both high-deductible versions work the same way: you pay Medicare-eligible costs out of pocket until you hit this deductible for the year, and after that the plan covers the same benefits as its standard counterpart at 100%. Because the monthly premium runs well below standard Plan F or Plan G, this option tends to fit people who don’t expect to need much care and want catastrophic-level protection at a lower fixed cost. Plan F, high-deductible or standard, is only available if you were eligible for Medicare before 2020.

Plan K and Plan L Out-of-Pocket Maximums

Plans K and L don’t cover Medicare’s cost-sharing in full the way Plan G or Plan N do. Instead, they pay a percentage of your Medicare-eligible costs (Plan K generally around 50%, Plan L around 75%) and you cover the rest, up to the annual out-of-pocket maximum shown above. Once you hit that maximum for the year, the plan covers 100% of Medicare-eligible costs for the remainder of the year. Lower premiums are the trade-off for carrying more of the early cost-sharing yourself. V

Get a Medigap Quote Enroll in Medigap

4) Medicare Advantage Costs

Medicare Advantage plans build in their own annual out-of-pocket maximum instead of relying on a separate Medigap policy. These are the caps that limit your exposure in a plan year. You still pay your Part B premium in a Medicare Advantage plan, and higher earners pay IRMAA on Part B and on any built-in drug coverage (see section 5).

In-Network Annual Out-of-Pocket Cap

Every Medicare Advantage plan is required to set an annual limit on what you pay for in-network Medicare-covered services. Once your costs hit that limit for the year, the plan covers 100% of in-network Medicare-covered care for the rest of the year. This cap resets every plan year and varies by plan, some set it well below the federal maximum shown above, so it’s worth comparing across plans rather than assuming they’re all the same.

Combined In- and Out-of-Network Maximum (PPOs)

PPO-style Medicare Advantage plans let you see out-of-network providers, but at a higher cost, and they set a separate, higher combined cap that includes both in-network and out-of-network spending. If you go out-of-network often, this combined limit (not the in-network cap alone) is the number that actually describes your worst-case exposure for the year. HMO plans typically don’t cover out-of-network care at all outside emergencies, so this figure mainly applies to PPOs.

To see your monthly price for Medicare Advantage (MA) you need to visit Medicare.gov.

📌 Note: Medicare Advantage’s built-in drug coverage is convenient, and it’s a genuine advantage for people who’d rather not manage a separate Part D plan. The trade-off is that you’re locked into that plan’s specific drug list for the year, while Medigap buyers can shop from many low-cost standalone Part D plans to find the one that actually matches their prescriptions. See Medigap vs. Medicare Advantage for the fuller comparison.

5) IRMAA: Income-Related Part B and Part D Costs

If your income is above a certain level, you pay more for Part B and Part D through IRMAA (Income-Related Monthly Adjustment Amount). Social Security sets it using the modified adjusted gross income (MAGI) on your tax return from two years ago, so this year’s amounts are based on your 2024 income. Most people on Medicare pay the standard amounts in the top row.

Figures updated 9/25/2026. Source: Medicare.gov.

IRMAA Thresholds

Going over a bracket limit by even $1 puts you in the next bracket for the whole year. If your income is close to a limit, the timing of IRA withdrawals, Roth conversions or the sale of a home or investment can make a difference. Senior65.com strongly recommends that you talk with a tax professional before making changes.

Part B IRMAA

The Part B column shows your total monthly Part B premium, which is the standard premium plus the surcharge. It’s usually deducted from your Social Security check. Medicare Advantage members pay it too, since everyone in an MA plan still pays Part B.

Part D IRMAA

The Part D surcharge is added on top of whatever your drug plan charges, and it’s paid to Medicare, not to your plan. It applies whether you have a standalone Part D plan or a Medicare Advantage plan that includes drug coverage.

Married Filing Separately

If you’re married, lived with your spouse at any time during the tax year, and file separately, the brackets are much tighter. Any income above the lowest bracket puts you in one of the top two tiers.

Can You Lower or Appeal IRMAA?

If your income dropped because of a life-changing event such as retirement, reduced work hours, marriage, divorce or the death of a spouse, you can ask Social Security to use your more recent income by filing Form SSA-44. See 7 Essential Tips to Reduce Your IRMAA Medicare Premiums for more.

📌 Note: IRMAA is set by Social Security based on your taxes. We can’t give tax advice or help with your IRMAA amount, so please contact Social Security at 1-800-772-1213 or a tax professional with IRMAA questions.

IRMAA Doesn’t Affect Medigap

A higher-income retiree pays more for Part B and Part D, but pays the same Medigap premium as anyone else of the same age, in the same area, on the same plan. See are Medigap premiums based on income for more.

Which Path Makes the Most Sense for You?

Original Medicare paired with a comprehensive Medigap plan and a standalone Part D plan gives you the fewest surprises: predictable monthly premiums, almost no cost-sharing left to worry about, and no provider networks to navigate. Medicare Advantage trades that predictability for a lower (sometimes $0) monthly premium and bundled extras, in exchange for networks, prior authorization, and the annual out-of-pocket caps above. For a deeper look at what drives Medigap premiums specifically (by state, carrier, and plan) see the Ultimate Guide to Medigap Costs and Premiums. If Plan G’s premium is a stretch, can’t afford Medigap Plan G covers the lower-cost alternatives, including the high-deductible option explained above.

A Medigap quote takes less than 30 seconds with no cost or personal information required to compare. There’s never a fee to work with us, and by law no one can offer you a lower price on the exact same plan. Call 800-930-7956 if you’d like help going through the options.

Get a Medigap Quote Enroll in Medigap