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Medicare is not free. Many people are surprised to learn they have to pay a premium for Part B coverage. The standard cost is now $202.90 a month, up 9.7% from 2025. Part D prescription drug coverage also comes with a premium cost.
But the expenses don't end there. If you want to know more about where you stand financially, learn about the additional ways that Medicare could cost you in 2026.
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The Part B deductible adds another cost
Just as with other types of health insurance, Medicare coverage includes deductibles that enrollees must pay out of pocket.
Fortunately, these are relatively low. In 2026, the deductible is $283. However, that is up $26 from 2025. This is an added cost that many folks are unaware of before they enroll.
You'll still pay 20% coinsurance for many Part B services
Once you have paid your deductible, you will still owe 20% in coinsurance costs for each service Medicare covers.
To make matters worse, there is no annual cap on these costs under Original Medicare. To qualify for a cap, you will either need to purchase a supplemental Medigap policy or switch to a Medicare Advantage policy.
High-income retirees pay higher Medicare premiums
If your income is high during retirement, you might be required to pay more in Medicare premium costs.
The government adds the income-related monthly adjusted amount (IRMAA) as an additional premium charge for those whose modified adjusted gross income crosses certain thresholds. In 2026, the thresholds are:
- Individuals: Above $109,000
- Married filing jointly: Above $218,000
IRMMA surcharges apply to Medicare Part B and Part D. Also, there is a two-year lookback period. That means 2024 income determines 2026 surcharges.
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Part D prescription drug costs
Medicare Part D covers prescription costs. In 2026, the national base beneficiary premium is $38.99.
In addition, after you pay your deductible — which tops out at $615 — you will have a 25% coinsurance obligation until you reach $2,100 in out-of-pocket costs. That is up from $2,000 in 2025.
Once you hit the cap, catastrophic coverage kicks in, and you won't owe additional money on drugs that Part D covers.
Medicare Advantage still has high out-of-pocket limits
Medicare Advantage — also known as Medicare Part C — has out-of-pocket maximums that limit how much you might pay for care in a year. However, the maximums are pretty high.
In 2026, the in-network out-of-pocket maximums are $9,350. On the bright side, this is actually $100 lower than it was in 2025.
Hospital stays can trigger major Part A costs
Medicare Part A covers hospital stays. For most people, this coverage comes with no premium.
But that doesn't mean you won't pay any costs related to Part A. For starters, Part A coverage has a deductible of $1,736.
In addition, you may be on the hook for extra costs if you have a long hospital stay. Here is how much you might have to pay:
- Days 61–90: $434 daily
- Days 91–150: $868 daily, while using your 60 lifetime reserve days
After you pass day 150, you are responsible for paying all costs related to your hospital stay.
Medigap can reduce costs, but adds another premium
To cover the gaps left by Medicare coverage, many enrollees purchase what is known as a Medigap policy. This type of coverage helps you pay for things such as co-payment, co-insurance, and deductibles.
Medigap plans vary in terms of how much they cost and can average anywhere from roughly $30 a month to more than $600 a month, largely depending on where you live.
Medigap plans also have out-of-pocket maximums. For Medigap Plan K, the maximum is $8,000. For Medigap Plan L, the maximum is $4,000.
Programs can help lower Medicare costs
As you can see, Medicare is far from free. Some people run up high bills that they struggle to pay.
Fortunately, help is available. The individual states run what are known as Medicare Savings Programs (MSPs) that help people with limited resources pay Part B premiums. In some cases, these programs cover additional costs.
There are four types of MSPs, and they all help with different aspects of Medicare and have different eligibility requirements.
In addition, the Extra Help program can help cover the cost of Medicare Part D premiums, copayments, and deductibles.
Bottom line
There is sometimes a large gap between what people expect to pay for Medicare and what it actually costs. Understanding that this gap exists is important if you want to eliminate some money stress during retirement.
Building a realistic Medicare cost estimate into your retirement budget is essential, not optional. If you need assistance, the State Health Insurance Assistance Program offers one-on-one Medicare counseling.
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