The short answer to this question is no, Medicare Part A is not free. Although most people don't owe the monthly premium, this doesn’t mean Part A is actually free. From out-of-pocket costs to years of Medicare tax payments, there is no way to get Medicare Part A without paying something. We’ll run through exactly what these costs will be, as well as what the different options are.

What is Medicare Part A?

If you’re new to Medicare health insurance, understanding how your coverage breaks down is essential. Medicare Part A, along with Medicare Part B, is part of Original Medicare. Part A is often called hospital insurance, and it appropriately covers care that you receive in a hospital.

However, that is a bit of a simplistic description More specifically, Part A provides you with coverage while you are an inpatient. This can involve places that aren’t hospitals, like skilled nursing facilities or hospice care. On the flip side, you can also undergo a hospital stay and still be considered an outpatient, in which case you won’t receive coverage under Part A.

How much do Part A premiums cost?

Before taking a look at all of the options, let’s take a simple look at Part A costs. As a disclaimer before reading this section, note that most people will receive Part A without paying any premiums. However, those who do pay premiums will pay them as follows.

Part A monthly costs are much higher than Part B premiums. The amount will come to either $505 per month or $278 per month in 2024. The $278 premium will apply for those who paid the Medicare tax, or whose spouse paid the Medicare tax, for 30-39 quarters. Those who paid the Medicare tax for under 30 quarters will pay the full Medicare Part A monthly premium.

If you pay the Medicare tax for more quarters while you have Part A coverage, then your status will change and you will pay the new premium once you reach the relevant number of quarters.

Out-of-pocket costs with Medicare Part A

Aside from Medicare premiums, Medicare Part A also has out-of-pocket costs. Furthermore, these can be a bit more complex than most people are used to. Let’s take a look at the details.

It’s important to note that Medicare Part A uses something called a “benefit period” to calculate your costs. For most insurance plans, this is simply a year, but not for Part A. A benefit period begins the first day you receive inpatient care, and ends after you haven’t received any inpatient care for 60 days in a row. As such, you can have multiple benefit periods per year.

• The deductible for each benefit period is $1,632.
• For days 0-60 in each benefit period, you will pay nothing after you reach your deductible; Medicare will cover all medically necessary expenses.
• For days 61-90, you will pay $408 per day in that benefit period.
• For days 91 and beyond, you will begin to use your “lifetime reserve days”. These are days that do not reset after each benefit period, and each Medicare beneficiary has 60. For each lifetime reserve day, you will pay $816 per day.

After your lifetime reserve days have been used and you reach day 91 of a benefit period, you will pay all of the costs.

As you can see, Medicare is certainly not free, even if you do receive premium-free coverage.

Other costs: Late enrollment penalty

In addition to all of the costs described above, some people will also have to pay a late enrollment penalty for Medicare Part A.

The Medicare Part A late enrollment fee is a 10% increase in your monthly premium, and goes on for twice the number of years that you could have enrolled in Medicare, but didn’t.

For example, if you pay the $278 premium, but enrolled two years after your eligibility begins, then you will pay an additional $27.80 per month for four years.

There are some conditions under which you can defer your coverage without penalty. For example, if you have employer-based coverage, then you don’t have to enroll in Medicare when you first become eligible, because you will qualify for a Special Enrollment Period (SEP).

Learn 15 ways to qualify for an SEP.

How does premium-free coverage work?

As we mentioned above, the amount you pay in monthly premiums for Part A depends on how many quarters you or your spouse have paid the Medicare tax. If you have paid for 40 quarters or more (ten years) then you will receive premium-free Part A. This is usually what people refer to when they talk about Part A being “free”.

Enrolling in premium-free Part A

Most people who become eligible for Medicare and who are eligible for premium-free Part A will be automatically enrolled, because they began receiving retirement benefits at least four months before their 65th birthday. If you already receive Social Security benefits or benefits from the Railroad Retirement Board, or if you or your spouse had a Medicare-covered government job, then you are eligible for premium-free Part A.

If you receive retirement benefits, then you will be enrolled in Part A automatically. However, if you did not begin receiving retirement benefits at least four months before your birthday, you'll need to sign up - and nobody from Medicare will notify you that it's time to do so. Learn about your Initial Enrollment Period and how to sign up for Medicare.

If you're already receiving Social Security or RRB benefits and want to defer your coverage, you will have to contact your Social Security office to specifically defer your coverage. However, this usually isn’t advised, because Medicare Part A coverage will cost you nothing, and deferring can result in a late enrollment penalty. Typically, the only time it is recommended you delay enrollment in Part A is if you are still contributing to a health savings account (HSA) or because it has been less than six months since you stopped making said contributions.

Medicare Supplement Insurance

Another way to lower your costs associated with Medicare Part A is to look into Medicare Supplement Plans, also known as Medigap plans. Unlike most medical insurance plans, these plans cover out-of-pocket Medicare costs, rather than medical costs directly. This includes things like deductibles and coinsurance payments.

Medigap plans are sold by private insurance companies, so they can vary in price. However, the coverage will be standard, and medicare.gov allows you to easily compare your options. As you can see, every supplement plan offers you additional coverage for your Medicare Part A coinsurance fee after your benefits have been used up, which can be useful for some, as these costs can be high. Many Medigap plans also cover the Part A deductible, as well as other forms of inpatient care cost-sharing.

Whether or not a Medigap plan is worth it depends on how much it costs and what your needs are. However, they’re certainly useful to look into.

Other Medicare costs

In addition to the costs you will have to pay for Medicare Part A, there are plenty of other relevant costs to keep in mind as you enroll in Medicare. You will probably want Part D prescription drug coverage, which has its own costs. Additionally, if you have a Medicare Advantage plan, then your costs will be entirely different from those outlined here. Make sure to keep these other costs in mind.

Additional resources

• ClearMatch Medicare: Find a Medicare Plan
• Medicare.gov: Costs
• Social Security Administration: Extra Help