“Covered” does not mean “free”
Medicare pays a large share of eligible medical expenses, but beneficiaries may still owe premiums, deductibles, copayments, and coinsurance. They may also pay the full cost of services Medicare does not cover.
For retirees living on a fixed income, the most important lesson is this: do not build a health-care budget around the Part B premium alone.
The four kinds of costs
- A premium is the amount paid to keep coverage active.
- A deductible is the amount paid before coverage begins paying its share.
- Coinsurance is a percentage of the approved cost.
- A copayment is a fixed amount charged for a service or drug.
Part A costs in 2026
About 99 percent of Medicare beneficiaries do not pay a Part A premium because they or a spouse paid Medicare taxes for at least 40 quarters, generally 10 years. People who must buy Part A pay either $311 or $565 per month in 2026, depending on their Medicare-tax work history.
The Part A hospital deductible is $1,736 per benefit period, not per calendar year. A new benefit period can begin after a beneficiary has been out of a hospital or skilled nursing facility for 60 consecutive days. Therefore, someone can owe the Part A deductible more than once in one year.
For a covered inpatient hospital stay in 2026:
- Days 1–60: $0 daily coinsurance after the deductible.
- Days 61–90: $434 per day.
- Days 91–150: $868 per lifetime reserve day.
- After day 150: the beneficiary pays all costs.
For a qualifying skilled nursing facility stay, days 1–20 have $0 daily coinsurance, days 21–100 cost $217 per day, and the beneficiary pays all costs after day 100. This is limited skilled care—not open-ended nursing-home coverage.
Part B costs in 2026
The standard Part B premium is $202.90 per month. The yearly deductible is $283. After the deductible, beneficiaries generally pay 20 percent of the Medicare-approved amount for covered Part B services when the provider accepts assignment.
Original Medicare has no annual out-of-pocket maximum for Part A and Part B services. That is one reason some people add Medigap or choose Medicare Advantage, which has a yearly limit for covered Part A and Part B services.
Higher income can raise Part B and Part D premiums
Social Security generally uses modified adjusted gross income from the tax return filed two years earlier. Therefore, 2026 IRMAA is generally based on 2024 income.
The following 2026 Part B amounts apply per beneficiary:
| 2024 MAGI—individual return | 2024 MAGI—joint return | 2026 monthly Part B premium |
| $109,000 or less | $218,000 or less | $202.90 |
| Over $109,000–$137,000 | Over $218,000–$274,000 | $284.10 |
| Over $137,000–$171,000 | Over $274,000–$342,000 | $405.80 |
| Over $171,000–$205,000 | Over $342,000–$410,000 | $527.50 |
| Over $205,000–under $500,000 | Over $410,000–under $750,000 | $649.20 |
| $500,000 or more | $750,000 or more | $689.90 |
Married people who lived together during the tax year but filed separately face different thresholds. In 2026, MAGI above $109,000 and below $391,000 produces a $649.20 monthly Part B premium; MAGI of $391,000 or more produces a $689.90 premium.
A retirement, reduction in work, divorce, marriage, annulment, or death of a spouse may justify asking Social Security to use more recent income information. Form SSA-44 is commonly used for qualifying life-changing events.
Part D costs in 2026
Part D premiums, formularies, deductibles, pharmacies, and copayments vary by plan. No Part D plan may have a deductible above $615 in 2026. For covered Part D drugs, annual out-of-pocket spending is capped at $2,100 in 2026. Premiums and the cost of noncovered drugs generally do not count toward that cap.
Readers should compare plans using the exact names, dosages, and quantities of their medicines. A low-premium plan can be expensive if a medicine is not covered, placed on a high tier, or restricted by prior authorization.
Medicare Advantage and Medigap costs
Medicare Advantage costs vary by county and plan. A plan may advertise a $0 additional premium, but the beneficiary must continue paying Part B. Review primary-care and specialist copayments, inpatient charges, drug costs, dental limits, network rules, and the medical maximum out-of-pocket amount.
Medigap has a separate private premium. It can reduce unpredictable Part A and Part B cost sharing, but it generally does not cover routine dental care, routine vision, hearing aids, long-term care, or outpatient prescription drugs.
Create three health-care budgets
Instead of one estimate, prepare three:
- Normal year: premiums, routine visits, regular prescriptions, dental, vision, and hearing expenses.
- Difficult year: imaging, therapy, specialist care, outpatient surgery, or hospitalization.
- Worst covered year: the Medicare Advantage maximum out-of-pocket amount, or a high-use Original Medicare year with applicable Medigap benefits.
Include expenses that are easy to forget: transportation, caregiver help, noncovered drugs, overseas care, dental work, eyeglasses, and hearing aids.
Help is available
Medicare Savings Programs may help eligible people pay Part A or Part B premiums and, in some cases, deductibles and cost sharing. Extra Help can reduce Part D expenses. Eligibility rules and state treatment of income and resources vary, so readers should apply even if they are uncertain.
Bottom line
The real cost of Medicare is the total of premiums plus what you pay when you use care. A plan should be evaluated for a healthy year and a difficult year—not only by the price shown in an advertisement.
-Phan Trần Hương-
Editorial Note:
Medicare is not one policy, one bill, or one decision. It is a collection of benefits, deadlines, costs, and private-plan choices that can affect a retiree for years. This eight-part Huutri.org series is designed to help older adults, spouses, adult children, and caregivers understand the questions they should ask before enrolling or receiving care.
The figures in this series are for 2026. Medicare costs and private-plan benefits can change each year. Readers should verify current information at Medicare.gov, Social Security, their plan, or their local State Health Insurance Assistance Program (SHIP).
This series is for general education. It is not medical, legal, tax, or insurance advice.
Sources and further reading