Many people are surprised to learn that Medicare is not completely free. While it provides valuable coverage for hospital and medical care, you will still be responsible for certain costs. Understanding the different types of expenses—premiums, deductibles, copayments, and coinsurance—will help you plan your retirement budget more effectively.

Breaking Down the Costs

  • Part A (Hospital Insurance): Most people don’t pay a premium for Part A if they or their spouse worked at least 10 years and paid Medicare taxes. However, there are still costs when you need hospital care, including a deductible each benefit period and daily coinsurance charges for longer stays.

  • Part B (Medical Insurance): Part B comes with a monthly premium that most people must pay. The amount can be higher if your income is above certain levels. You’ll also have an annual deductible and coinsurance of 20% for most services like doctor visits, outpatient care, and durable medical equipment.

  • Part C (Medicare Advantage): These plans are offered by private insurance companies. Premiums vary, and some plans may have a $0 premium. But you will usually pay copayments for doctor visits, hospital stays, and prescriptions, along with an annual out-of-pocket maximum that protects you from unlimited costs.

  • Part D (Prescription Drug Coverage): Each plan sets its own premium, deductible, and copays for medications. Costs depend on which drugs you take, the plan’s formulary, and whether you use a preferred pharmacy.

Medigap’s Role

If you stay with Original Medicare, you can add a Medigap policy to help pay for deductibles, coinsurance, and copayments. While these plans have higher monthly premiums, they protect you from unexpected bills and give you more predictable costs.

Why This Matters

Understanding Medicare costs isn’t just about numbers—it’s about protecting your savings. Without the right coverage, even one hospital stay or major prescription bill could create financial stress. A Medicare agent can explain how premiums and out-of-pocket costs balance out in real life, helping you choose the plan that best fits your budget.