Key Takeaways

• Medicare costs in 2025 go far beyond your monthly premiums; deductibles, copayments, coinsurance, and prescription drug costs all play a significant role in what you pay out-of-pocket.

• Understanding how Medicare Parts A, B, D, and supplemental coverage interact can help you better plan for ongoing and unexpected healthcare expenses.

Why Monthly Premiums Are Only One Piece of the Puzzle

It’s common to focus on the monthly premium when you think about the cost of Medicare. While that premium is important, it’s just the beginning. In 2025, you also face deductibles, coinsurance, and other costs that may not be immediately visible. These can add up fast and significantly impact your total annual healthcare spending.

Medicare isn’t a single plan. It’s a system made up of multiple parts, and each part brings its own financial considerations.

What You Pay for Hospital Coverage (Part A)

Most people don’t pay a monthly premium for Part A because they worked and paid Medicare taxes for at least 40 quarters. But that doesn’t mean Part A is free. Here’s what else you may need to cover:

• Inpatient hospital deductible: $1,676 per benefit period

• Coinsurance for hospital stays:

  • Days 1–60: $0 (after deductible)

  • Days 61–90: $419 per day

  • Days 91 and beyond: $838 per day (using lifetime reserve days)

• Skilled nursing facility care: $0 for the first 20 days, then $209.50 per day for days 21–100

These costs can stack up quickly if you’re admitted to the hospital multiple times in a year or have a long recovery period.

The Monthly Premium and More: Medical Coverage (Part B)

In 2025, the standard Part B premium is $185 per month. However, the real story is in the added costs:

• Annual deductible: $257

• Coinsurance: Generally 20% of the Medicare-approved amount for most outpatient services

You’ll face these expenses each time you visit the doctor, get lab work, receive physical therapy, or undergo diagnostic testing. If you need frequent outpatient care, these 20% costs can exceed your monthly premium by a wide margin.

Also, higher-income beneficiaries pay more for Part B based on income thresholds. This Income-Related Monthly Adjustment Amount (IRMAA) can significantly increase your premium if your modified adjusted gross income (MAGI) from two years ago exceeds certain limits.

Drug Coverage in 2025: A Major Shift

Part D, Medicare’s prescription drug benefit, has changed in 2025. One of the most impactful updates is the new $2,000 annual cap on out-of-pocket drug costs. This is great news for many, but it doesn’t mean the costs go away entirely.

You’re still responsible for:

• Monthly premiums (set by the plan, not standardized like Part A or B)

• Annual deductible: Up to $590

• Copayments and coinsurance: These vary by drug tier and plan specifics until you hit the $2,000 cap

There’s also the option in 2025 to spread your out-of-pocket drug costs throughout the year with the Medicare Prescription Payment Plan. But if you don’t enroll, you might have to pay thousands of dollars at once when filling a high-cost medication.

Don’t Forget Supplemental Coverage Costs

To protect yourself from unpredictable or high out-of-pocket expenses, many Medicare beneficiaries choose supplemental insurance. This includes Medigap (Medicare Supplement Insurance) or other employer-sponsored plans.

Supplemental insurance helps pay for what Original Medicare doesn’t cover—like coinsurance, deductibles, and even foreign travel emergencies. But these plans aren’t free. You’ll need to budget for:

• Monthly premiums (varies widely based on plan type, coverage level, and location)

• Additional out-of-pocket expenses depending on the policy’s coverage structure

Even with a supplemental plan, you may still face limits or exclusions. Always review the fine print.

The Cost of Late Enrollment Penalties

If you delay enrolling in Medicare without qualifying for a Special Enrollment Period, you could face late enrollment penalties that last as long as you have Medicare.

• Part B penalty: 10% increase in premium for each 12-month period you were eligible but didn’t enroll

• Part D penalty: 1% of the national base premium multiplied by the number of full months you went without coverage

These penalties can cost you hundreds of dollars per year, every year. They’re avoidable, but many people still get caught by surprise.

Services Medicare Doesn’t Cover

In addition to the costs Medicare shares with you, there are some services Medicare doesn’t cover at all. You’ll have to pay the full cost of these unless you have other coverage:

• Dental care and dentures

• Routine vision and eyeglasses

• Hearing aids and exams

• Long-term custodial care (non-medical care for daily activities)

• Cosmetic surgery and most alternative therapies

These gaps mean your total annual health expenses could be much higher than anticipated if you need care in one of these categories.

How Income Can Influence What You Pay

If your income exceeds certain thresholds, you’ll pay more for Parts B and D due to IRMAA. The 2025 IRMAA thresholds start at $106,000 for individuals and $212,000 for joint filers based on 2023 income.

Depending on your income tier, your Part B premium could increase by hundreds of dollars per month. Similarly, Part D premiums rise with higher income, even though they’re set by individual plans.

This makes retirement income planning essential. Roth conversions, timing of withdrawals, and other tax strategies can help manage your MAGI and avoid sudden jumps in premiums.

Medicare Advantage and Out-of-Pocket Limits

If you choose to enroll in a Medicare Advantage plan (Part C), you typically get an out-of-pocket maximum for covered services. In 2025, that limit is $9,350 for in-network services and $14,000 for combined in- and out-of-network services.

While that may provide peace of mind, you must still account for:

• Monthly premiums (in addition to Part B)

• Deductibles, copayments, and coinsurance

• Plan rules that affect access to providers or referrals

These limits apply only to Medicare-covered services. Supplemental benefits offered by plans, like dental or vision, may have separate rules, caps, or costs.

Annual Planning and the Importance of Review

Every fall from October 15 to December 7, you have the opportunity to review your Medicare choices during Open Enrollment. It’s critical to compare plan costs and benefits each year, especially if:

• Your health needs have changed

• Your income has shifted

• Your prescriptions are different

Even a small change in your medications or preferred doctors can lead to major changes in cost. Don’t just auto-renew your plan without checking the updated details.

Your Costs Can Change Over Time

Just because a plan works for you in 2025 doesn’t mean it will in 2026. Premiums, deductibles, drug formularies, and provider networks can all shift from year to year. Your income may also change, pushing you into a different IRMAA bracket.

Make Medicare planning a yearly habit. Doing so can help you avoid surprise costs and ensure you’re getting the best value for your needs.

Thinking Beyond the Premium

The real cost of Medicare in 2025 is about much more than what you pay monthly. When you factor in deductibles, coinsurance, drug costs, and services not covered, your annual expenses can be significant.

To fully understand what you might owe throughout the year, take a close look at each component:

• Part A hospital costs

• Part B outpatient and doctor visit costs

• Part D drug coverage and new out-of-pocket cap

• Supplemental or Advantage plan rules

• Income-related premium adjustments

Planning ahead, keeping your income in check, and reviewing your coverage each year can help you stay in control of your Medicare costs.

A Closer Look Helps You Avoid Costly Surprises

Medicare offers essential healthcare coverage, but the total financial responsibility often catches people off guard. The best way to prepare is by educating yourself on what isn’t immediately visible in your monthly premium.

For personal help evaluating your coverage and reducing out-of-pocket risk, speak with a licensed agent listed on this website.