The Average Cost of Medicare in 2021

• by Christian Worstell
• March 25, 2021
• Reviewed by John Krahnert

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How much does Medicare cost in 2021? It’s a simple question with a complex set of answers.

This guide details the average costs of each part of Medicare in 2021. This includes:

• Original Medicare (Part A and Part B)
• Medicare Advantage plans (Part C)
• Stand-alone Medicare prescription drug plans (Part D)
• Medicare Supplement Insurance plans (Medigap).

What will Medicare Part A cost in 2021?

Medicare Part A is hospital insurance. It covers some of your costs when you are admitted for inpatient care at a hospital, skilled nursing facility and some other types of inpatient facilities.

Part A can include a number of costs, including premiums, a deductible and coinsurance.

2021 Part A premiums

There are two important things to keep in mind about Part A premiums:

• Most people qualify for premium-free Part A.
  To qualify for premium-free Part A, you or your spouse must have worked and paid Medicare taxes for the equivalent of 10 years (40 quarters). Those 40 quarters do not have to be consecutive.
  
  
• If you pay a premium for Part A, your premium could be up to $471 per month in 2021.
  If you paid Medicare taxes for only 30-39 quarters, your 2021 Part A premium will be $259 per month. If you paid Medicare taxes for fewer than 30 quarters, your premium will be $471 per month.

2021 Part A deductible

If you are admitted to a hospital for inpatient treatment, Medicare Part A helps cover your hospital costs once you reach your Medicare Part A deductible. The Part A deductible is $1,484 per benefit period in 2021.

The Medicare Part A deductible is not annual — you could potentially need to meet this deductible more than once in a given year.

2021 Part A coinsurance

After you meet your Part A deductible, you may be required to pay Part A coinsurance for extended hospital stays.

For the first 60 days of your hospital stay, you aren’t required to pay Part A coinsurance.

But beginning on day 61 of your stay in 2021, you’re required to make a Medicare Part A coinsurance payment of $371 per day through day 90. After your 90^th day in the hospital, you must pay $742 per day for up to 60 more days in 2021.

Those 60 “lifetime reserve days” do not reset annually. They can only be used once.

Beyond that, you are responsible for all costs.

Part A also requires coinsurance for hospice care and skilled nursing facility care.

• Part A hospice care coinsurance or copayment
  Medicare Part A requires a copayment for prescription drugs used during hospice care. You might also be charged a 5 percent coinsurance for inpatient respite care costs.
  
  
• Skilled nursing facility care coinsurance
  Medicare Part A requires a coinsurance payment of $185.50 per day in 2021 for inpatient skilled nursing facility stays longer than 20 days. You are responsible for all costs after day 101 of an inpatient skilled nursing facility stay.
  
  Skilled nursing care is based on benefit periods like inpatient hospital stays.

What is the cost of Medicare Part B for 2021?

Medicare Part B covers medical insurance benefits and includes monthly premiums, an annual deductible, coinsurance and other potential costs.

2021 Part B premiums

The standard monthly premium for Medicare Part B is $148.50 per month in 2021.

Some Medicare beneficiaries may pay more or less per month for their Part B coverage. The Part B premium is based on your reported income from two years ago (2019).

People who had higher income in 2019 may pay higher Part B premiums, which is called the IRMAA (Income-related Monthly Adjustment Amount).

The 2021 Part B premium breakdown is below.

2021 Part B deductible

You must meet your Part B deductible before Part B pays its share of most covered services (the deductible doesn’t apply to certain preventative services), for example:

• Most doctor services
• Outpatient therapy
• Durable medical equipment (DME)

The 2021 Part B deductible is $203 per year.

2021 Part B coinsurance or copayment

Once you meet your Part B deductible for the year, you typically pay 20 percent of the Medicare-approved amount for services that are covered by Part B.

Part B late enrollment penalty

If you don’t sign up for Medicare Part B when you’re first eligible, you may be required to pay a late enrollment penalty.

The Part B late enrollment penalty is as much as 10 percent of the Part B premium for each 12-month period that you were eligible to enroll but did not.

For example, if you waited three years after your Initial Enrollment Period to sign up for Medicare Part B, your late enrollment penalty could be 30 percent of the Part B premium.

You will continue to owe this penalty for as long as you remain enrolled in Medicare Part B.

As mentioned above, the 2021 standard premium for Part B is $148.50 per month. If you owe the standard Medicare Part B premium but sign up for Part B a year after you were initially eligible, the late enrollment fee can add another $14.85 per month to your Part B premium.

Part B excess charges

If you receive services or items covered by Medicare Part B from a health care provider who does not accept Medicare assignment (meaning they do not accept Medicare as full payment), they reserve the right to charge you up to 15 percent more than the Medicare-approved amount.

These additional costs are called Medicare Part B excess charges, and they can potentially add up to thousands of dollars.

How much does Medicare Advantage cost per month?

In 2021, the average monthly premium for Medicare Advantage plans with prescription drug coverage is $33.57 per month.¹

Depending on your location, $0 premium plans may be available in your area.

Medicare Part C, also known as Medicare Advantage, is sold by private insurance companies. Medicare Advantage offer the same benefits that are covered by Original Medicare, and most Medicare Advantage plans include additional benefits that Original Medicare doesn’t cover.

Because Medicare Advantage plans are sold by private insurance companies, plan costs (such as coinsurance, copayments and deductibles) can vary based on location, carrier, benefits offered and more.

Find out the average cost of Medicare Advantage plans in your state.

Medicare Advantage Special Needs Plans (SNP) may have lower costs

A Medicare Special Needs Plan (SNP) is a type of Medicare Advantage plan that is designed specifically for someone with a particular disease or financial circumstance.

Many Medicare SNPs cover most of the qualified health care costs for beneficiaries. All SNPs must include prescription drug coverage.

Some Medicare SNPs are designed for people who are dual-eligible, meaning they are eligible for both Medicare and Medicaid. These plans are commonly called Dual-Eligible Special Needs Plans (DSNP).

Medicare Advantage Special Needs Plans can also cater more specifically to the needs of people with specific medical conditions, such as: 

• Dependence issues with alcohol or other substances
• Autoimmune disorders
• Cancer
• Cardiovascular disorders
• Chronic heart failure
• Dementia
• Diabetes mellitus
• End-stage liver disease
• End-Stage Renal Disease (ESRD) that requires dialysis
• Severe hematologic disorders
• HIV/AIDS
• Chronic lung disorders
• Strokes

Some SNPs can also be available to people who live in a long-term care facility such as a nursing home.

Medicare Advantage plans have an out-of-pocket spending max

When you enroll in a Medicare Advantage plan, you can ask about your specific policy’s out-of-pocket spending limit.

Original Medicare does not include an out-of-pocket spending limit. While it’s not common, you could potentially be responsible for thousands of dollars in out-of-pocket costs if you only have Original Medicare coverage and require extensive medical care throughout the year.

What is the average cost of Medicare Part D prescription drug plans?

In 2021, the average monthly premium for a Medicare Part D plan is $41.64 per month.¹

Medicare Part D plan provide coverage solely for prescription medications. Part D plan costs may vary based on your plan and your location.

Learn about the average cost of Part D plans in your state.

You can also compare Part D plans available where you live and enroll in a Medicare prescription drug plan online in as little as 10 minutes when you visit MyRxPlans.com.²

Depending on your income, you may be required to pay a higher Part D premium. As with Medicare Part B premiums, this adjusted amount is called the IRMAA (Income-related Monthly Adjustment Amount).

If you are required to pay a higher Part D premium, it will be based on your reported income from two years ago (2019).

Medicare Part D deductible

Medicare Part D plans cannot have a deductible of more than $445 per year in 2021.

Some Medicare Part D plans have a $0 deductible. In 2021, the average Part D deductible is $342.97 for the year.¹

Medicare Part D “donut hole” coverage gap costs

Medicare Part D prescription drug plans and some Medicare Advantage plans have what is known as a “donut hole” or “coverage gap,” which is a temporary limit on how much a Prescription Drug Plan will pay for prescription drug costs.

As of 2020, Part D beneficiaries pay 25 percent of the cost of brand name and generic drugs during the coverage gap until reaching catastrophic coverage spending limit.

What is the average cost of Medicare Supplement Insurance (Medigap)?

The average premium paid for a Medicare Supplement Insurance (Medigap) plan in 2019 was $125.93 per month.³

It’s important to note that each type of Medigap plan offers a different combination of standardized benefits. Plans with fewer benefits may offer lower premiums.

Other factors such as age, gender, smoking status, health and where you live can also affect Medigap plan rates.

Medicare Supplement Insurance plans help pay for some of the out-of-pocket expenses you’ll face when you use Medicare Part A and Part B benefits. Medigap plans are sold by private insurance companies.

These costs can include certain Medicare deductibles, coinsurance, copayments and other charges.

There are 10 different Medigap plans available in most states. You can use the chart below to compare the costs that each type of Medigap plan may cover.

Medigap plans and Medicare Advantage plans are not the same thing. You cannot have a Medigap plan and Medicare Advantage plan at the same time.

Read additional medicare costs guides to learn more about Medicare costs and how they will affect you.

Compare Medicare Advantage plan costs in your area

A licensed insurance agent can help you compare the Medicare Advantage plans that are available where you live. You can compare benefits, coverage and the costs of each plan and then choose the right fit for your needs.

Or call 1-800-557-6059 1-800-557-6059 TTY Users: 711 to speak with a licensed insurance agent. We accept calls 24/7!

Learn more about Medicare enrollment

• How much does Medicare cost by state?
• Does Medicare cost change by income level?
• How do I cancel Medicare?
• What is Medicare Easy Pay?
• How do I enroll in a Medicare Advantage plan?
• What is a Special Enrollment Period?
• What is a Medicare Special Needs Plan?
• How does Medicare work with other forms of coverage?
• What is a 5-star Medicare Advantage plan?

¹ MedicareAdvantage.com's The Best States for Medicare in 2021 report. (Oct. 27, 2020).

² 10-minute claim is based solely on the time to complete the e-application if you have your Medicare card and other pertinent information available when you apply. The time to shop for plans, compare rates, and estimate drug costs is not factored into the claim. Application time could be longer. Actual time to enroll will depend on the consumer and their plan comparison needs.

³ TZ Insurance Solutions LLC internal sales data, 2019. This data is based on the Medicare Supplement Insurance policies TZ Insurance Solutions LLC has sold. It is not a comprehensive national average of all available Medicare Supplement Insurance plan premiums.