Most people pay nothing for Medicare Part A and around $185 per month for Part B in 2025, but the total cost picture is more complicated than those two numbers suggest. Between deductibles, coinsurance, income-based surcharges, and gaps that catch people off guard, what you actually spend depends on how much care you use, how much you earn, and whether you have supplemental coverage.
What Part A Costs in 2025
Part A covers hospital stays, skilled nursing facility care, hospice, and some home health services. The premium side is straightforward for most people: if you or your spouse paid Medicare taxes for at least ten years (40 quarters of work), your Part A premium is $0. About 99 percent of Medicare beneficiaries fall into this category, so Part A is often described as “premium-free.”
If you didn’t accumulate enough work history, the numbers shift dramatically. People with 30 to 39 quarters of coverage pay a reduced monthly premium of about $285 in 2025. Those with fewer than 30 quarters pay the full premium, which is $518 per month. This situation most often affects people who worked in jobs not covered by Social Security, immigrants who arrived later in life, or spouses who didn’t work outside the home long enough.
Even with a $0 premium, Part A is not free when you actually use it. Every time you’re admitted to a hospital, you face a deductible of $1,676 per benefit period. A benefit period starts the day you’re admitted and ends once you’ve been out of a hospital or skilled nursing facility for 60 consecutive days. If you’re readmitted after that 60-day window closes, you pay the deductible again. For the first 60 days of a hospital stay, the deductible is your only cost. Days 61 through 90 add a coinsurance charge of $419 per day. Beyond 90 days, you dip into a lifetime reserve of 60 extra days at $838 per day, and once those are gone, you’re responsible for the full cost.
Skilled nursing facility care has its own cost structure. The first 20 days after a qualifying hospital stay are fully covered. Days 21 through 100 come with a coinsurance of $209.50 per day. After day 100, Medicare stops paying entirely.
What Part B Costs in 2025
Part B covers doctor visits, outpatient care, lab tests, durable medical equipment, mental health services, and ambulance rides. The standard monthly premium for 2025 is $185, deducted directly from your Social Security check in most cases. Unlike Part A, virtually everyone enrolled in Part B pays a premium.
On top of the premium, you pay an annual deductible of $257 before Part B starts covering services. Once you’ve met the deductible, the standard split is 80/20: Medicare pays 80 percent of the approved amount, and you pay the remaining 20 percent as coinsurance. There is no annual cap on that 20 percent in Original Medicare, which is one of the program’s most significant gaps. A single expensive illness or a string of specialist visits can run up coinsurance charges quickly because they just keep accumulating.
Income-Related Surcharges
Higher-income beneficiaries pay more for Part B (and Part D) through a mechanism called the Income-Related Monthly Adjustment Amount, or IRMAA. The surcharge is based on your modified adjusted gross income from two years prior, so your 2023 tax return determines your 2025 premiums. For individuals earning above $106,000 (or couples above $212,000), the standard $185 premium increases in steps. At the highest income tier, the Part B premium can exceed $590 per month.
IRMAA catches some retirees by surprise, especially in the year they retire or sell a home, because a one-time income spike can push them into a higher bracket for two years. If your income has dropped significantly since the tax year being used, you can request a reconsideration from the Social Security Administration by filing a form documenting the life-changing event, such as retirement, divorce, or the death of a spouse.
Why Part B Costs Keep Climbing
The Part B premium is recalculated annually, and it has trended upward for decades. One of the biggest drivers is pharmaceutical spending. Between 2008 and 2016, Medicare Part B drug spending rose by about 34 percent, fueled by a 53 percent jump in the cost per claim even as the total number of claims actually fell by 12 percent. Specialty drugs were particularly responsible, with spending in that category climbing 56 percent over the same period.1PubMed Central. A decade of increases in Medicare Part B pharmaceutical spending: what are the drivers? Part B drugs include physician-administered medications like chemotherapy infusions, injectable biologics, and certain immunosuppressants, which tend to be far more expensive per dose than pills you pick up at a pharmacy.
This spending growth feeds directly into premiums because Part B premiums are set to cover roughly 25 percent of the program’s projected costs, with the federal government subsidizing the rest. When the cost of Part B services rises, premiums follow. Outpatient procedures, imaging, and the growing use of hospital outpatient departments for services that used to happen in cheaper office settings have also pushed spending higher.
Preventive Services You Won’t Pay For
One important exception to the 20-percent coinsurance rule is preventive care. Under provisions of the Affordable Care Act, Medicare waives cost-sharing for a range of preventive services, including annual wellness visits, certain cancer screenings, flu shots, cardiovascular screenings, and diabetes testing.2PubMed Central. Effect of cost-sharing reductions on preventive service use among Medicare fee-for-service beneficiaries Before the ACA, most of these services required the beneficiary to pay a deductible or coinsurance. The law’s goal was to remove the financial barrier that discouraged people from getting screened early.
The catch is that the zero-cost guarantee only applies when the service is coded as purely preventive. If your doctor discovers a polyp during a screening colonoscopy and removes it, the procedure can be reclassified as diagnostic, which triggers the standard 20 percent coinsurance. This reclassification frustrates many beneficiaries who expected a free screening and then receive a bill. Recent legislative efforts have aimed at closing this gap, though the rules continue to evolve.
The Observation Status Trap
One of the more financially dangerous quirks of Medicare involves the distinction between inpatient admission and outpatient observation status at a hospital. When you’re formally admitted as an inpatient, Part A covers the stay (subject to the deductible and coinsurance described above). But when you’re placed on observation status, which can look and feel identical to an inpatient stay from the patient’s perspective, Medicare treats the entire episode as outpatient care under Part B.3Center for Medicare Advocacy. Hospital Observation Status
This distinction has serious downstream consequences. Part B coinsurance applies to every service you receive during the stay, including medications that would have been bundled into the Part A payment if you’d been formally admitted. Worse, Medicare only covers skilled nursing facility care after a qualifying three-day inpatient hospital stay, and observation days don’t count toward those three days. A patient who spends four nights in a hospital bed on observation status and then needs rehab in a nursing facility can be denied coverage entirely, leaving them responsible for costs that can easily reach hundreds of dollars per day.3Center for Medicare Advocacy. Hospital Observation Status
You have the right to ask your hospital whether you’ve been admitted as an inpatient or placed on observation. Hospitals are required to provide written notice if you’ve been on observation for more than 24 hours, but many patients don’t realize the financial implications until after discharge. If you’re in the hospital and a nursing facility stay seems likely afterward, asking about your status early gives you the best chance of catching a problem before it becomes a large bill.
Medicare Advantage vs. Original Medicare
Everything described so far applies to Original Medicare, the traditional fee-for-service program. Medicare Advantage plans, offered by private insurers, bundle Part A and Part B coverage (and usually Part D drug coverage) into a single plan with different cost-sharing rules. Many Advantage plans charge no additional premium beyond the standard Part B premium, and they include an annual out-of-pocket maximum, which Original Medicare lacks.
Research comparing the two pathways found that projected out-of-pocket costs for a typical enrollee were 18 to 24 percent lower in Medicare Advantage than in traditional fee-for-service Medicare between 2014 and 2019.4PubMed. Expected Out-Of-Pocket Costs: Comparing Medicare Advantage With Fee-For-Service Medicare That cost advantage comes partly from the annual cap on spending and partly from the extra benefits many plans include, such as dental, vision, and hearing coverage that Original Medicare doesn’t offer.
The tradeoff is flexibility. Medicare Advantage plans typically use provider networks, meaning you may be limited to certain doctors and hospitals, and referrals may be required for specialists. Original Medicare lets you see any provider who accepts Medicare assignment, anywhere in the country. For people who travel frequently, split time between states, or have established relationships with providers outside a plan’s network, Original Medicare paired with a supplement can be a better fit despite the higher potential out-of-pocket exposure.
Filling the Gaps with Medigap
Many people on Original Medicare buy a Medigap (Medicare Supplement) policy to cover some or all of the cost-sharing that Part A and Part B leave behind. These are standardized plans labeled with letters (Plan G, Plan N, and so on), and each letter covers a defined set of gaps. Plan G, for instance, covers the Part A deductible, hospital coinsurance, skilled nursing coinsurance, Part B excess charges, and the 20 percent Part B coinsurance after you meet the annual deductible out of pocket.
Research into how well supplemental policies protect beneficiaries has found wide variation. Plans differ substantially in their ability to reduce financial vulnerability, and some still leave enrollees with significant out-of-pocket costs depending on the illness.5Europe PMC. Illness-episode approach: costs and benefits of medigap insurance Premiums for Medigap plans vary by geography, age, and insurer, typically ranging from around $100 to over $300 per month. That expense sits on top of the Part B premium you’re already paying, so the total monthly cost of Original Medicare plus a supplement can run $300 to $500 or more before you use a single service.
One critical timing detail: Medigap insurers are required to sell you a policy without medical underwriting only during your six-month open enrollment period, which starts when you’re both 65 and enrolled in Part B. If you wait and try to buy a policy later, insurers in most states can charge more based on your health or deny you altogether. People who initially choose Medicare Advantage and later switch to Original Medicare sometimes discover they can’t get affordable Medigap coverage.
Financial Assistance If Costs Are Too High
For beneficiaries with limited income and resources, Medicare Savings Programs can cover some or all of the premiums and cost-sharing. The Qualified Medicare Beneficiary (QMB) program, for example, pays the Part A premium (if applicable), the Part B premium, and deductibles and coinsurance. Despite covering a wide range of costs, these programs have historically had low participation rates, meaning many people who qualify never enroll.6PubMed Central. Avoidance of health care services because of cost: impact of the medicare savings program
Other tiers of the program exist for people with slightly higher incomes. The Specified Low-Income Medicare Beneficiary (SLMB) program pays only the Part B premium, and the Qualifying Individual (QI) program does the same at a somewhat higher income threshold. Extra Help, also called the Low-Income Subsidy, reduces Part D drug costs. Eligibility thresholds are updated annually and vary by state, so checking with your State Health Insurance Assistance Program (SHIP) is the most reliable way to find out what you qualify for.
People who are enrolled in both Medicare and Medicaid, known as dual-eligible beneficiaries, generally have very little cost-sharing responsibility. Medicaid wraps around Medicare and covers most or all of the premiums, deductibles, and coinsurance that Medicare leaves behind. Providers are prohibited from billing QMB beneficiaries for Medicare cost-sharing, though enforcement of this protection has been uneven.
Costs That Catch People Off Guard
Beyond the premiums and standard cost-sharing, a few expenses consistently surprise new beneficiaries. Long-term custodial care, the kind provided in most nursing homes when you need help with daily activities but not skilled medical care, is not covered by Medicare at all. Many people assume Medicare will pay for nursing home stays, but the program only covers skilled nursing care for a limited period after a hospital admission, and even that requires meeting the inpatient-stay threshold.
Dental, vision, and hearing services are mostly excluded from Original Medicare. Routine eye exams, dentures, hearing aids, and most dental procedures come entirely out of pocket unless you have a Medicare Advantage plan or separate coverage that includes them. Hearing aids alone can cost several thousand dollars, and dental work can be even more expensive. These exclusions represent some of the largest uninsured costs that older adults face, and they’re the reason many people choose Medicare Advantage plans that bundle these benefits.
Foreign travel is another gap. Original Medicare generally doesn’t cover care received outside the United States, with very limited exceptions for emergencies near the Canadian or Mexican border. Some Medigap plans include a foreign travel emergency benefit, but it’s capped and limited in duration. Beneficiaries who spend extended time abroad need separate travel health insurance or should expect to pay out of pocket for any care they receive.
Part A Without Part B, and Vice Versa
You can technically enroll in Part A without Part B, or delay Part B enrollment if you have creditable employer coverage. But enrolling in Part A alone creates a real financial risk if you end up in the hospital on observation status, since that care falls under Part B. Without Part B, you’d owe the entire bill yourself.3Center for Medicare Advocacy. Hospital Observation Status
Delaying Part B enrollment when you don’t have qualifying employer coverage triggers a late enrollment penalty: your premium goes up by 10 percent for each full 12-month period you could have had Part B but didn’t sign up. That penalty is permanent, added to your premium for as long as you have Part B. For someone who delayed three years without qualifying coverage, that’s a 30 percent surcharge every month for the rest of their life. The penalty structure exists to discourage people from waiting until they get sick to enroll, but it punishes those who simply didn’t understand the rules with equal force.
Part A has a similar late enrollment penalty for people who have to pay a premium (those without enough work credits), though it affects a much smaller group. The Part A penalty is 10 percent of the premium, lasting twice the number of years you delayed.