- Medicare isn’t free but is prepaid throughout your life through the taxes you pay.
- You may not have to pay a premium for Medicare Part A, but you may still have a copay.
- What you pay for Medicare depends on how long you worked, how much you make now, and what programs you choose.
- Comparing Medicare plans can help you choose the best options for your individual situation.
Medicare isn’t free; however, not everyone will pay a basic premium. There are different Medicare programs, and some are optional. The amount you pay depends on the programs you choose, and how much of your life was spent working and paying into the Medicare system through your taxes.
While Medicare isn’t exactly free, many people won’t pay a monthly premium for basic care. Medicare is a federal health insurance program that you qualify for at age 65 or with certain health problems or disabilities. You pay into the Medicare system throughout your working life as part of your taxes and reap the benefits of these contributions later in life or if you are diagnosed with a disability.
Keep reading to find out what aspects of the program are included in your “free” coverage and what options may cost you more.
There are several different Medicare programs or parts, with each serving different health needs. Each of these programs have different monthly costs in the form of premiums, copayments, and deductibles.
While people may consider some of these programs and services “free,” they are actually entitlement programs that you pay for throughout your working years. If you have no monthly premium for a Medicare program, it’s because you already invested in that program. However, not everyone receives these services at no cost.
Medicare Part A seems “free,” but it’s one of those benefits you have actually paid for through the taxes you paid during your working years. Many people will pay no monthly premium for Medicare Part A, which covers inpatient hospital and nursing home care, as well as hospice and some home healthcare services. Exact costs for Part A depend on your situation and how long you worked.
You will pay no monthly premium for Medicare Part A if you are older than age 65 and any of these apply:
- You receive retirement benefits from Social Security.
- You receive retirement benefits from the Railroad Retirement Board.
- You or your spouse worked for the government and received Medicare coverage.
You may also qualify for premium-free Medicare Part A if you are under age 65 and any of these apply:
- You have received Social Security disability benefits for 24 months.
- You have received Railroad Retirement Board disability benefits for 24 months.
- You have end stage renal disease.
If you do not quality for premium-free Medicare Part A, you will pay a premium based on the number of quarters you worked in your lifetime.
How Medicare Part A premiums are determined
|Amount of time worked|
(and paid into Medicare)
|Monthly premium in 2020|
|30 quarters (360 weeks)||$458|
|30-39 quarters (360-468 weeks)||$252|
While Part A covers your inpatient care and some home health needs, you will also need to have Part B coverage for other medical visits and preventive care.
There are a number of disabilities that qualify for premium-free coverage under Medicare Part A. The Social Security Administration defines which disabilities qualify you for premium-free Medicare Part A, but generally medical issues that are expected to last for more than a year or result in death are eligible for these benefits.
Medicare Part B is the federal healthcare insurance program that covers outpatient services like doctor visits and preventive care. It does not offer a premium-free option like Part A. Monthly premiums are charged based on your income level, but not everyone receives a bill for their premium.
Your Medicare Part B premium will be automatically deducted from your monthly benefits check if you receive any of the following:
- Social Security benefits
- payments from the Railroad Retirement Board
- payments from the Office of Personnel Management
For those who do pay a Part B premium, charges vary based on your income level. Annual income from 2018 is used to calculate what you will pay in 2020.
How Medicare Part B premiums are determined
|Individual annual income||Couple’s annual income||Monthly premium|
Some Medigap plans cover the costs of the Medicare Part B deductible. However, in 2015 a law was passed (the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA)) that made it illegal for Medicare Supplement plans (Medigap) to pay for part B deductibles for new enrollees beginning in 2020. While people who already had a plan that paid this premium keep their coverage, as of January 1, 2020, new Medicare enrollees cannot sign up for supplement plans that pay for the Part B premium.
Medicare Part C (Medicare Advantage) plans are private insurance plans that combine the aspects of both Medicare Part A and Medicare Part B, plus other services. Private companies receive funding from Medicare, so some plans may still offer “free” or reduced monthly premiums. Specific premium costs vary by plan. There are a variety of service options, coverage types, and prices for Medicare Part C plans. Some even cover services like eye exams, dental care, hearing aids, and fitness programs.
Plans that offer no monthly premiums may still have other costs, though, like copays, coinsurance, and deductibles. Most plans, however, include out-of-pocket maximums. Medicare offers an online tool to compare costs and services included with Medicare Advantage plans offered in your area.
Medicare Part D covers prescription medications and is paid through premiums and other fees. Medicare Advantage plans may include prescription coverage, but you will still be responsible for a portion of your medication costs. Premium costs vary by area and plan, and you can work with your physician to make sure the medications you are prescribed are included in the drug list (called a formulary) that is approved by Medicare. If your medication is not on the approved list, your physician can ask for an exception or choose a different medication.
Medigap (Medicare Supplement) policies are available through private insurance companies. They are not free but may help you save money on other Medicare program costs. Some Medigap plans, like C and F, used to cover Medicare Part B deductibles. This won’t change for people who already have these plans, but people new to Medicare after Jan. 1, 2020 will no longer be able to buy these plans.
Medicare offers an online tool to find Medigap programs in your area. You can compare premium costs and what copays and deductibles apply. Medigap benefits kick in after basic Medicare programs like Part A and Part B coverage is exhausted.
Medicare coverage is complex, and there are a lot of considerations that are unique to your situation. There are no totally “free” Medicare programs. How long you worked, how much you make, and how much you can afford to pay as a deductible before your benefits kick in are all factors involved in calculating your Medicare costs. While there are some programs that offer low or “free” premiums, compare plans and consider all the costs involved, including deductibles, copayments, and coinsurance.