The costs that appear on every Medicare budget
- Part B monthly premium — usually withheld from Social Security.
- Part A deductible — charged per benefit period, not per year.
- Part B annual deductible, then 20% coinsurance with no cap under Original Medicare alone.
- Part D premium, deductible & tiered copays.
- Your Medicare Advantage or Medicare Supplement premium, if you have one.
IRMAA: the income surcharge
If your modified adjusted gross income from two years ago exceeds the threshold, Social Security adds an Income-Related Monthly Adjustment Amount to your Part B & Part D premiums. Because it looks back two years, a one-time event — selling a house, a Roth conversion, a severance payout — can raise your premiums later. If your income has since dropped because of a life-changing event such as retirement, divorce or a spouse's death, you can request a reconsideration using form SSA-44.
The Part D out-of-pocket cap
Part D now includes a hard annual cap on what you pay out of pocket for covered drugs. Once you reach it, you pay nothing for covered Part D drugs for the rest of the calendar year. Plans must also offer a Medicare Prescription Payment Plan that spreads your yearly drug costs into level monthly installments — helpful if you face a large bill in January.
Help paying for Medicare
- Extra Help (Low-Income Subsidy) reduces Part D premiums, deductibles & copays.
- Medicare Savings Programs can pay your Part B premium & sometimes more.
- Medicaid, for those who qualify, works alongside Medicare as secondary coverage.
- State Pharmaceutical Assistance Programs & manufacturer assistance for specific drugs.
Costs Medicare does not cover
- Long-term custodial care.
- Most routine dental, vision & hearing care under Original Medicare.
- Most care received outside the United States.
- Cosmetic procedures & most alternative therapies.
Frequently asked questions
Why did my Part B premium go up when my income didn't change?+
IRMAA uses your tax return from two years earlier. A one-time capital gain, retirement account conversion, or property sale in that year can raise your premium even though your current income is lower. File SSA-44 if a qualifying life-changing event caused the drop.
Does Medicare have an annual out-of-pocket maximum?+
Original Medicare by itself does not. Medicare Advantage plans must have one, & a Medicare Supplement effectively limits your exposure by covering most of your share of Original Medicare costs.
For educational purposes only. Alliance Global Insurance Group is not affiliated with or endorsed by Medicare.gov or the U.S. government. Plan availability, costs & rules vary by county & change annually — confirm details with a licensed advisor or at Medicare.gov.