Is Medicare free when you turn 65? How much will Medicare premiums be in 2025? How much does Medicare cost each month? If you’re an older adult, you’ve probably had some of these questions. 

Medicare coverage includes a wide range of medical services and can plays a big role in helping you stay healthy and well as you age. Coverage is broken up into four parts, each providing a different set of health care benefits. The parts of Medicare include:

• Parts A and B (original Medicare)
• Part C (private Medicare Advantage plans)
• Part D (prescription drug plans)

You can also buy an optional, supplemental Medigap plan, which helps pay for costs not covered by Medicare Parts A and B.

It’s important to understand that Medicare is not free—and it does not cover everything. Most people with Medicare pay for a portion of their costs out of their own pocket, depending on the plan and the specific services received. 

What are the out-of-pocket costs for Medicare?

The Medicare costs you’ll pay out of your own pocket include premiums, deductibles, copayments, and coinsurance. Often referred to as Medicare cost sharing, these expenses can add up. In 2022, 29% of Medicare households dedicated 20% or more of their total household spend to health-related costs, compared to 7% of non-Medicare households.¹

Below, we explain the various types of out-of-pocket costs you may encounter after enrolling in Medicare. 

Premiums

A premium is the amount you pay each month to keep your Medicare plan active, whether it’s Part B, a Medicare Advantage plan, Part D, and/or a Medigap policy. For example, the average estimated premium for Medicare Part D in 2025 is $46.50.

Some people who do not have a work history may also have to pay a premium for Part A.

Deductibles

Before Medicare begins to pay out benefits, you are responsible for paying a certain amount. This is called the deductible. For example, if you have a hospital stay covered under Part A in 2025, you will have to pay a deductible of $1,676 before your Medicare coverage kicks in.

Copayments

A copayment is a fixed rate you pay for prescriptions, doctor visits, and other types of health care services. For example, you may pay $25 every time you see a specialist.

Coinsurance

Coinsurance refers to a percentage of costs you pay for a covered drug or service once you've met your deductible. For example, you may pay 20% of the cost of each covered service, while insurance pays the remaining 80%. Learn more about original Medicare (Parts A and B) costs and Part C costs.

Understanding your out-of-pocket Medicare costs isn't just about numbers—it's about peace of mind." explained Jen Teague, NCOA Director for Health Coverage and Benefits. "Knowing what you're responsible for helps you make smarter choices about you care, avoid unpleasant surprises, and protect both your health and your wallet."

Need Help Thinking Through Your Medicare Options?

How can I tell if I am eligible for Medicare? Are Medicare Advantage plans worth it? Is cataract surgery covered 100% by Medicare?

We know you may have many questions about Medicare. If you need help exploring your options, NCOA has trusted partners committed to helping you make the best coverage choices for your needs. Our partners are knowledgeable, licensed Medicare enrollment advisors who meet our Medicare Standards of Excellence. Learn more.

Sources

 

1. KFF - Medicare. Medicare Households Spend More on Health Care Than Other Households. March 14, 2024. Found on the internet at https://www.kff.org/medicare/issue-brief/medicare-households-spend-more-on-health-care-than-other-households/