Key Takeaways

• Medicare doesn’t cover every medical expense, and your out-of-pocket costs in 2025 could be higher than expected—even with full coverage.

• From deductibles and copayments to premiums and late enrollment penalties, hidden costs can quietly build up if you’re not paying attention.

What Medicare Covers—and What It Doesn’t

At first glance, Medicare seems like it should cover all your healthcare needs once you reach eligibility. But in 2025, like in years past, Medicare only covers certain services, leaving you responsible for many other costs.

Medicare is divided into four parts:

• Part A covers inpatient hospital care, skilled nursing facility care (short-term), hospice care, and some home health care.

• Part B covers outpatient care, doctor visits, preventive services, durable medical equipment, and more.

• Part C (Medicare Advantage) is an alternative to Original Medicare offered through private insurers, combining Parts A and B with other benefits.

• Part D helps cover prescription drugs.

Even if you are enrolled in all parts of Medicare, there are gaps that lead to unexpected out-of-pocket expenses.

You Pay a Premium—Even for “Free” Parts

Many people assume Part A is completely free, but that’s only true if you’ve paid Medicare taxes for at least 40 quarters (10 years). In 2025, if you worked fewer than 30 quarters, your Part A premium is $518/month, and if you worked 30 to 39 quarters, it’s $284/month.

Part B is never free. In 2025, the standard Part B premium is $185/month, but higher-income individuals pay more due to income-related monthly adjustment amounts (IRMAA).

If you opt for Part D or a Medicare Advantage plan, you will also pay an additional monthly premium, which varies depending on your chosen plan and income level.

Deductibles That Can Catch You Off Guard

Each part of Medicare has its own deductible:

• Part A: $1,676 per benefit period in 2025

• Part B: $257 per year

• Part D: Up to $590 annually, depending on your plan

Deductibles must be paid before Medicare starts paying its share. For Part A, you could be subject to multiple benefit periods per year, meaning you may pay the deductible more than once annually.

Cost-Sharing Adds Up Fast

Even after meeting your deductible, you still share costs with Medicare:

• Coinsurance under Part A: For hospital stays beyond 60 days, you’ll pay $419/day for days 61-90 and $838/day for lifetime reserve days.

• Skilled nursing facilities: $209.50/day for days 21-100

• Part B coinsurance: Generally 20% of the Medicare-approved amount for most services

• Part D: You’ll pay a portion of your drug costs until you reach the $2,000 out-of-pocket maximum in 2025

These costs can add up quickly, especially if you have a prolonged illness or require frequent outpatient services.

Out-of-Pocket Maximums Aren’t Universal

Unlike many private health insurance plans, Original Medicare does not have a cap on how much you could pay out of pocket in a given year. This means there’s no financial ceiling to protect you from rising expenses unless you have supplemental coverage like Medigap.

Medicare Advantage plans do have annual out-of-pocket limits. In 2025, the maximum is $9,350 for in-network services, and $14,000 for combined in-network and out-of-network services. But even with these caps, you may pay significantly more than anticipated if you frequently use services outside of your plan’s network.

Drug Costs Aren’t Fully Covered

Prescription drug costs under Part D can be confusing and expensive. In 2025, the structure has changed with the elimination of the coverage gap (donut hole), but costs can still pile up:

• You pay all drug costs until you meet the deductible (up to $590)

• Then, you pay part of the cost in the initial coverage phase

• After spending $2,000 out-of-pocket, you enter the catastrophic phase where your plan covers 100% of covered drug costs

While the new $2,000 cap offers relief, you may still spend a significant amount annually on medication, particularly if you take multiple high-cost prescriptions.

Late Enrollment Penalties Don’t Go Away

If you delay enrolling in Part B or Part D and don’t qualify for a Special Enrollment Period, you may face permanent penalties:

• Part B penalty: 10% increase in your premium for every 12 months you delay, applied for life

• Part D penalty: 1% increase in your premium for every month you go without creditable coverage, also applied for life

These penalties silently inflate your monthly costs over the long term and can’t be removed.

Services Medicare Doesn’t Cover

Some healthcare needs simply aren’t covered by Medicare in 2025, including:

• Long-term custodial care in nursing homes

• Routine dental exams, cleanings, and dentures

• Eye exams for prescription glasses

• Hearing aids and exams for fitting them

• Most care received outside the U.S.

If you need any of these services, you’ll either need to pay out of pocket or purchase separate insurance policies.

Home Healthcare Isn’t Always Free

While Medicare Part A and Part B do cover certain types of home healthcare, strict eligibility criteria apply. Services must be deemed medically necessary, provided by a Medicare-approved agency, and ordered by a physician.

If your care does not meet Medicare’s requirements—or if you need non-medical assistance such as help with bathing or dressing—you’ll likely be responsible for the full cost.

Supplemental Insurance Helps, But Costs More

Medigap policies can help cover expenses like deductibles, coinsurance, and copayments. But these policies come with their own monthly premiums, which add to your total healthcare costs.

In 2025, some beneficiaries are also enrolled in retiree health plans or Medicaid, but coordination between Medicare and these additional policies can be complex. You’ll need to track which plan pays first, and which services are covered under each.

Inflation and Premium Adjustments Year After Year

Medicare premiums, deductibles, and coinsurance amounts generally increase each year. In 2025, Part B premiums increased to $185/month from $174.70/month in 2024. Similar trends occur annually.

This means your costs today may be lower than what you’ll pay next year, even if your health remains the same. Budgeting based on current costs may leave you underprepared for future increases.

Premium Surcharges Based on Income

Your modified adjusted gross income (MAGI) from two years prior determines whether you’ll pay more for Part B and Part D. In 2025, if your 2023 income exceeded $106,000 (individual) or $212,000 (joint), you’ll face IRMAA surcharges.

These surcharges can significantly raise your monthly premiums, especially if your income was temporarily high due to a one-time event like a property sale or retirement payout.

Why It’s Easy to Miss These Costs

Many Medicare enrollees are surprised by how much they still spend. Why?

• Medicare statements can be hard to interpret

• Costs are spread across different services and timelines

• Not all expenses are predictable

• Supplemental insurance options vary by location and need

Because of these factors, even careful planners can overlook some of the ongoing and potential future costs of Medicare.

Planning Around the Quiet Costs of Medicare

Understanding these hidden costs helps you make informed decisions about your coverage. Here’s what you can do:

• Review your annual Notice of Change (ANOC) from your Part D or Medicare Advantage plan

• Estimate your yearly healthcare usage to anticipate out-of-pocket expenses

• Consider supplemental coverage if using Original Medicare

• Enroll on time to avoid lifelong penalties

• Consult a licensed agent listed on this website to evaluate your options thoroughly

These Costs Might Be Quiet—But They’re Not Invisible

Your Medicare plan may seem like a safety net, but in 2025, it’s far from a blanket solution. Gaps in coverage, escalating premiums, and increasing healthcare needs mean your expenses may grow even when you think you’re covered. Don’t let the illusion of coverage lull you into financial complacency.

To understand your full picture and prepare confidently for the years ahead, speak with a licensed agent listed on this website. They can help you explore the best available options for your needs.