Americans 65 and older rely on Medicare for the healthcare coverage they need. But even though most people are entitled to Medicare benefits, they don't come without cost. In fact, if you don't plan for healthcare expenses under Medicare, you'll get a nasty shock when you approach retirement.

In particular, the various parts of Medicare coverage impose a wide variety of different costs for participants to pay. Whether you face deductibles, co-payments, premiums, or other expenses, being on Medicare requires some financial planning in order to make sure you can cover your costs. The following sections take a look at Medicare and what you'll have to pay for it in 2020.

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Hospital coverage under Medicare Part A

Most Medicare participants get their hospital insurance coverage under Medicare Part A without having to pay any additional premium. As long as you or your spouse paid Medicare payroll taxes and earned 40 quarters of qualifying employment, then Part A is premium-free.

But workers with shorter careers might have to pay for hospital coverage. Those with 30 to 39 quarters of employment will pay $252 in monthly premiums, while those with fewer than 30 quarters will owe $458 per month. Those numbers are up $12 and $21, respectively, from 2019 levels.

Moreover, if you end up in the hospital or needing other inpatient care, then you'll have to bear some costs for those expenses. Below, you can see the different expenses associated with Medicare Part A:

Medicare Charge

2020 Cost (Change From 2019)

Hospital deductible

$1,408 (up $44)

Co-insurance for days 61-90 of hospital stay

$352 (up $11)

Co-insurance for days 91 and beyond of hospital stay using lifetime reserve days

$704 (up $22)

Co-insurance for skilled nursing facility stays

$176 (up $5.50)

Data source:

Medical coverage under Medicare Part B

Medicare Part B, which covers outpatient services like doctor visits, works differently from hospital coverage. Part B participants pay premiums, with the monthly premium for most people in 2020 set to go up to $144.60. That's up by $9.10 per month from 2019 levels, which is a fairly high boost compared with recent years.

But those who have higher income levels can end up paying extra surcharges for their Part B coverage on top of the regular amount. As you can see, the added monthly costs can be considerable for those with extremely high incomes.

Income Level for Individual Taxpayers*

Income Level for Joint Filers

Added Monthly Charge for Part B Premium

$87,000 to $109,000

$174,000 to $218,000


$109,000 to $136,000

$218,000 to $272,000


$136,000 to $163,000

$272,000 to $326,000


$163,000 to $500,000

$326,000 to $750,000


More than $500,000

More than $750,000


Source: * Excludes married persons filing separately if they lived together at any time during the year.

If you're married filing separately, there are two numbers to consider. Those making $87,000 to $413,000 pay the $318.10 surcharge, while those making more than $413,000 pay $347 extra.

On top of these monthly premiums, Part B also imposes a deductible of $198, which is $13 higher than it was for 2019. Once you've paid that initial amount, you're typically responsible for 20% of your outpatient costs, with Medicare taking care of the remaining 80%.

Medicare Advantage plan coverage

Medicare participants have the option to get a Medicare Advantage plan rather than using Parts A and B. Private insurers offer Advantage plans to eligible participants, and they typically provide comprehensive coverage than includes not only hospital and medical services but also prescription drug coverage. The costs of these plans vary widely, with more-comprehensive plans typically charging higher premiums. The trade-off is that you might have to use certain networks of medical providers under a Medicare Advantage plan, limiting your choices for healthcare professionals beyond what traditional Medicare does.

Prescription drug coverage under Medicare Part D

Even if you're part of traditional Medicare, you can also sign up for a prescription drug plan under Medicare Part D. Private insurers are also behind Part D plans, and again, they have considerable flexibility to charge monthly premiums based on the services they provide.

In addition, high income individuals have to pay surcharges for monthly premiums for Part D coverage as well. The table below gives the details:

For Individuals With This Income:

Or Joint Filers With This Income:

The Part D Premium Surcharge in 2020 Is:

$87,000 to $109,000

$174,000 to $218,000


$109,000 to $136,000

$218,000 to $272,000


$136,000 to $163,000

$272,000 to $326,000


$163,000 to $500,000

$326,000 to $750,000


More than $500,000

More than $750,000


Data source: Note: Married persons filing separately who lived together at any time during the year pay $70 if their income is $87,000 to $413,000, or $76.40 if their income is more than $413,000.

Making ends meet

The challenges of living on a fixed income are tough for Medicare participants. 2020's cost increases for Medicare are somewhat harsher than they were in 2019, and that could make it even harder on those struggling to make ends meet.