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Understanding Medicare

What Medicare Will Cost You

Information about your out-of-pocket expenses — and financial help if you need it

Medicare does not cover all of your health care costs. How much you end up paying depends on several factors, including:

  • Which Medicare plans and options you choose
  • How often you go to the doctor or hospital
  • Whether you have other health insurance to cover some costs               
  • Whether you qualify for help with Medicare costs
  • Your income

Most people who qualify for Medicare don’t pay a monthly premium for Part A, which is sometimes dubbed "prepaid Medicare" because it is financed by the payroll taxes you paid while employed.

You will pay premiums for Part B, Medicare Advantage (Part C) and Medicare Prescription Drug Coverage (Part D), each of which is an optional coverage. These plans also have deductibles and copayments.

For information about current deductibles and premiums and other costs, visit or call Medicare at 800-633-4227. Some pricing information is available in AARP's article about 2011 Medicare premiums.

People with higher incomes (generally above $85,000) do pay higher Part B premiums. However, due to provisions in the new health care law, the costs of annual wellness visits and many preventive screenings are now covered in full.

Options are available to help you lower your Medicare costs. For instance, most people’s out-of-pocket charges are lower and more predictable under a Medicare Advantage plan than under Original Medicare. The downside to these plans is that they usually limit your choice of doctors and hospitals.

If your employer or union offers retiree health insurance, this insurance can help pay some of the costs that aren’t covered by Medicare. Likewise, Medicare supplemental insurance, or Medigap coverage, which is available through private insurers, can pay for some of the medical costs Medicare does not cover.

For people with low incomes, the Medicaid program can act as a Medigap plan to absorb the costs Medicare doesn’t cover. Other assistance programs and information resources include:

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Download a PDF of AARP's "Understanding Medicare" guide or request a copy by mail.

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