Key Takeaways

• Medicare doesn’t cover everything, and unexpected bills often come from the gaps you didn’t even know were there.

• Planning ahead, understanding coverage limits, and coordinating care can help you avoid costly surprises in 2025.

The Truth Behind Medicare’s Surprise Expenses

You may have signed up for Medicare expecting it to cover most, if not all, of your healthcare needs in retirement. While Medicare is a powerful health insurance program, many people discover too late that it doesn’t shield you from all costs. In fact, unexpected medical bills are one of the most common—and shocking—realities facing beneficiaries.

Understanding where these costs come from and how to reduce the risk of surprise charges is essential. In 2025, the rules, premiums, and coverage limits make this even more important.

What Medicare Covers—and What It Doesn’t

At its core, Medicare is broken down into four parts:

• Part A: Covers inpatient hospital care, skilled nursing facility care, hospice, and some home health care.

• Part B: Covers outpatient services, doctor visits, preventive care, and some medical supplies.

• Part C: Also known as Medicare Advantage, offered by private insurers as an alternative to Original Medicare.

• Part D: Covers prescription drugs.

Even with all four parts, you may still face uncovered expenses.

The Gaps That Lead to Sticker Shock

Many beneficiaries assume Medicare pays 100% of their medical bills. But each part of Medicare has specific cost-sharing rules:

• Deductibles: In 2025, the Part A deductible is $1,676 per benefit period. Part B carries a $257 annual deductible.

• Coinsurance: After meeting the deductible, you typically pay 20% of the cost for Part B services. Hospital stays past 60 days under Part A include daily coinsurance charges.

• Out-of-Pocket Maximums: Original Medicare has no annual out-of-pocket maximum, meaning there’s no cap on your share of costs.

This structure creates several points where costs can suddenly escalate.

Unexpected Hospital Costs

Hospital bills can be one of the biggest sources of surprise. Here’s why:

• Observation Status: If you’re in the hospital but classified as an outpatient under “observation,” Part A won’t cover your stay. Part B applies instead, leaving you with a potentially large bill.

• Skilled Nursing Facility Rules: You must have a 3-day inpatient hospital stay (not including observation) to qualify for SNF coverage. If not, you pay the full cost out-of-pocket.

Prescription Drug Costs in 2025

Medicare Part D provides drug coverage, but it isn’t unlimited. You’re subject to:

• Annual Deductible: Up to $590 in 2025.

• Tiered Copays: Drugs are grouped into tiers, with higher costs for non-preferred or specialty medications.

• Out-of-Pocket Cap: For 2025, once you reach $2,000 in out-of-pocket spending, catastrophic coverage kicks in and you pay nothing more for covered drugs.

However, many people hit that $2,000 quickly due to chronic conditions or specialty drugs.

Ambulance and Emergency Costs

Emergency services often lead to surprise bills because of coverage limitations:

• Air Ambulances: Often out-of-network and not fully covered under Original Medicare.

• Ground Ambulances: Medicare only covers medically necessary trips to the nearest appropriate facility. If it’s not deemed necessary, you’re responsible for the cost.

Foreign Travel and Medicare

Medicare typically does not cover healthcare services outside the United States, except in very limited circumstances. If you travel abroad and need care, you’ll likely be footing the bill unless you have separate travel insurance or a plan that includes foreign coverage.

Why Out-of-Network Charges Still Happen

If you’re enrolled in a Medicare Advantage plan, it may have a limited provider network. Visiting a doctor or facility outside this network can result in:

• Full Charges: You may be responsible for the entire bill.

• Higher Copays: Out-of-network services may involve higher coinsurance or deductibles.

You may also encounter prior authorization requirements or limits on out-of-network emergencies.

Home Health and Long-Term Care Surprises

Medicare provides limited coverage for:

• Home Health Care: Only covers part-time or intermittent skilled nursing and therapy.

• Custodial Care: Long-term care, like help with bathing or dressing, is not covered.

These services are often assumed to be included but end up as large out-of-pocket expenses when needed.

Preventive Services vs Diagnostic Tests

Preventive services, like screenings, are usually covered in full. But when a screening becomes diagnostic, costs apply:

• Example: A routine colonoscopy becomes diagnostic if a polyp is removed.

• Result: You’re billed under Part B with a 20% coinsurance.

Knowing how your appointment is categorized helps prevent billing surprises.

Coordination of Benefits Gone Wrong

If you have more than one type of insurance, coordination of benefits can fail. For instance:

• Incorrect Billing: If Medicare is not billed as the primary payer when it should be, you could receive a bill for services it should have covered.

• Delayed Payments: Resulting in collection notices before the error is corrected.

Always confirm with each provider how your coverage is layered.

Late Enrollment Penalties Still Apply in 2025

If you don’t sign up for Medicare on time:

• Part B Penalty: Adds 10% to your premium for each 12-month period you were eligible but didn’t enroll.

• Part D Penalty: Accrues for every month you go without creditable drug coverage.

These penalties are ongoing and can significantly increase your costs each year.

How to Prepare and Protect Yourself

Being proactive is your best defense against surprise Medicare bills. Here’s how:

• Review Your Coverage Annually: Medicare plans change every year. Know your deductible, copays, and coverage limits.

• Understand Your Benefits: Read the Annual Notice of Change and Evidence of Coverage documents sent each fall.

• Ask Questions: Before undergoing any procedure, ask if it’s covered, whether prior authorization is needed, and if the provider is in-network.

• Keep Records: Maintain written confirmations of coverage, referrals, and billing details.

When in Doubt, Talk to a Licensed Agent

Medicare is complex. There’s no one-size-fits-all plan, and the cost of misunderstanding it can be thousands of dollars. Whether you’re new to Medicare or reviewing your coverage for 2025, it pays to have expert guidance.

A licensed agent listed on this website can help you:

• Evaluate your current plan for hidden costs

• Compare other options suited to your health needs

• Identify opportunities to reduce exposure to surprise bills

Don’t wait until an unexpected bill lands in your mailbox. Reach out today to make sure you’re covered the way you think you are.