What Are the Costs Associated with Medicare? A Simple Breakdown for When You’re Turning 65

What Are the Costs Associated with Medicare? A Simple Breakdown for When You’re Turning 65

We get this question a lot:

"Is Medicare free?"

Short answer: Part of it is — but not all of it.

As you turn 65 and become eligible for Medicare, it’s important to understand what costs you can expect. Knowing this upfront helps you avoid surprises and budget confidently for the road ahead.

Let’s break it down in plain terms.

Medicare Part A: Hospital Insurance

Most people don’t pay a premium for Part A, as long as you (or your spouse) paid Medicare taxes while working for at least 10 years.

That’s the good news.

But there are out-of-pocket costs when you use Part A, such as:

• A deductible (over $1,600 as of 2025) before coverage kicks in

• Daily coinsurance if you’re hospitalized for more than 60 days

• Costs for skilled nursing care or hospice (after certain limits)

So while there’s no monthly premium for most, Part A isn’t completely “free” if you need to use it.

Medicare Part B: Medical Insurance

This is where the monthly premium kicks in.

Most people pay a standard premium ($185/month in 2025), but it could be higher based on your income.

With Part B, you’ll also have:

• An annual deductible

• 20% coinsurance for most outpatient services, after the deductible is met

Part B covers things like doctor visits, outpatient care, lab work, preventive screenings, and more.

Medicare Part D: Prescription Drug Coverage

Part D is optional, but if you need prescription coverage (most people do), you’ll need to enroll in a standalone Part D plan or choose a Medicare Advantage plan that includes drug coverage.

Costs vary by plan, but in general, you can expect:

• A monthly premium (average is about $30–$40)

• A deductible (some plans have one, some don’t)

• Copays or coinsurance depending on your medications

Optional Costs: Medicare Advantage or Medigap

If you want extra coverage beyond Original Medicare (Parts A and B), you can choose between:

• A Medicare Advantage Plan (Part C): usually has lower premiums, but you’ll pay more out-of-pocket when you use services

• A Medicare Supplement Plan (Medigap): higher monthly premium, but fewer out-of-pocket costs — especially helpful if you travel often or see specialists

These plans are provided by private insurance companies, so costs vary depending on the plan, provider, and your zip code.

A Final Thought

Medicare costs can be manageable — especially when you plan ahead and choose the right coverage for your needs.

If you're turning 65 soon and want help sorting through your options, we’re here to guide you every step of the way. We’ll help you understand the true costs, avoid penalties, and find a plan that fits both your health needs and your budget.