Key Takeaways

• Medicare Part B premiums, deductibles, and potential penalties can quickly add up, especially if you delay enrollment.

• The real cost of Medicare Part B goes beyond just the monthly premium—it includes IRMAA surcharges, out-of-pocket costs, and coordination with other coverage.

What You’re Really Paying For With Medicare Part B

When you sign up for Medicare Part B in 2025, you’re paying for much more than a medical insurance card. Part B covers essential outpatient services, but the costs you take on—both expected and unexpected—can be significant. To make informed decisions, you need a full picture of what you’re responsible for once you’re enrolled.

Monthly Premiums: The First Cost You Notice

For most beneficiaries in 2025, the standard monthly premium for Medicare Part B is $185. However, this amount may be higher depending on your income from two years prior. Medicare uses your modified adjusted gross income (MAGI) from your 2023 tax return to determine your 2025 premium. If your income exceeds certain thresholds, you’ll pay what’s called an Income-Related Monthly Adjustment Amount (IRMAA).

The IRMAA structure includes five income brackets, and surcharges can increase your premium by several hundred dollars per month. These higher rates apply to individuals with income above $106,000 and couples above $212,000.

Deductibles You Can’t Avoid

In 2025, the annual deductible for Part B is $257. You must pay this amount out-of-pocket before Medicare starts covering your services. This deductible applies to services such as:

• Doctor visits

• Outpatient medical services

• Durable medical equipment

• Preventive care (in some cases)

Once your deductible is met, Medicare typically covers 80% of the approved amount for services, and you’re responsible for the remaining 20%—with no out-of-pocket cap.

Coinsurance and Copayments Add Up

After meeting your deductible, you’ll still be responsible for a 20% coinsurance on most services. And if your doctor does not accept Medicare assignment, you could pay up to 15% more in what’s known as an “excess charge.” These charges are legal in some states and can significantly increase your costs, especially for frequent or specialized care.

You may also face copayments for outpatient procedures, hospital outpatient services, and certain diagnostic tests. These payments are on top of your monthly premiums and annual deductible.

Penalties for Late Enrollment: A Cost That Never Goes Away

If you delay signing up for Part B and don’t qualify for a Special Enrollment Period, you may have to pay a late enrollment penalty. This penalty increases your monthly premium by 10% for every 12-month period you could have had Part B but didn’t sign up.

Here’s the kicker: This penalty doesn’t go away. You pay it for as long as you have Part B, which could mean decades of increased costs.

For example, if you delayed enrollment for three full years without creditable coverage, your premium could be 30% higher—for life.

IRMAA Surcharges: Income-Based Surprise

The Income-Related Monthly Adjustment Amount (IRMAA) is one of the least expected costs for new enrollees. If your income was higher two years ago, your premiums may be adjusted upward.

The IRMAA brackets in 2025 start at $106,000 for individuals and $212,000 for joint filers. These surcharges can bring your monthly premium well over the base rate. They are reassessed annually based on your IRS tax return.

If your income has recently dropped due to retirement or another life event, you can file a request to have your IRMAA reconsidered. But without that adjustment, you’re stuck paying more.

Out-of-Pocket Costs With No Cap

Medicare Part B does not have a maximum out-of-pocket limit. That means there’s no ceiling on what you might spend in a year for coinsurance, copayments, or services not fully covered.

This is different from many other types of health coverage, which often limit how much you can be charged annually. With Part B, your risk of high out-of-pocket costs remains year after year.

Services Part B Doesn’t Cover

While Part B covers a wide range of services, it does not cover everything. You’re responsible for 100% of the cost for:

• Prescription drugs (unless given in a clinical setting)

• Long-term care (custodial care)

• Dental services

• Vision exams and eyeglasses

• Hearing aids

Many people supplement their coverage to help manage these exclusions, but that adds another layer of cost.

How Coordination With Other Coverage Affects Your Costs

If you have additional insurance—like retiree coverage, union benefits, or Medicaid—how it coordinates with Part B can either reduce or increase your costs.

In some cases, your other coverage may act as primary and pay first, reducing your out-of-pocket costs. In other scenarios, Medicare pays first, and your secondary insurance may only cover what Medicare doesn’t—if anything.

Understanding your coordination of benefits is crucial. Misunderstanding it can result in unpaid claims or redundant premiums.

Medicare Advantage Isn’t a Free Pass

Even if you opt into a Medicare Advantage plan, you must still pay the Part B premium. Medicare Advantage may offer additional coverage, but it comes with its own cost-sharing structure that varies by plan. These plans do not eliminate the base cost of Part B; they add their own layer on top.

Also, Medicare Advantage plans often operate within specific networks and geographic regions, which can restrict your choice of providers and access to care.

Timelines That Impact Your Bottom Line

• Initial Enrollment Period (IEP): Starts 3 months before your 65th birthday, includes your birthday month, and ends 3 months after. Enroll during this period to avoid penalties.

• General Enrollment Period (GEP): Runs from January 1 to March 31 each year. Coverage begins in July. You may face late penalties if you sign up during this time.

• Special Enrollment Period (SEP): Available if you had employer coverage past age 65. Lasts 8 months after employment ends. No penalties if you enroll during this window.

Missing these enrollment windows directly impacts your future costs. Being proactive is your best financial strategy.

Don’t Overlook the Real Impact of Part B

While the base cost of Medicare Part B may seem manageable, the hidden expenses—penalties, surcharges, and uncovered services—can turn it into one of your most significant healthcare costs. The more you understand before enrolling, the more control you’ll have over your financial future.

If you want help reviewing your options or understanding how your other coverage fits into this, speak to a licensed insurance agent listed on this website.