Key Takeaways

• Medicare covers many healthcare expenses, but there are significant gaps that can leave you with high out-of-pocket costs—especially for hospital stays and long-term care.

• Understanding what Medicare doesn’t pay for in 2025 is just as important as knowing what it does. These gaps can impact your finances if not planned for in advance.

The Promise and the Reality of Medicare Coverage

Medicare provides a foundational layer of healthcare coverage for individuals aged 65 and older, as well as younger individuals with certain disabilities. While it offers significant protection, the truth is that Medicare does not cover everything. The illusion of being fully insured often crumbles when a hospital stay or extended care is required.

You may assume that once you enroll in Medicare, you’re financially shielded from most healthcare expenses. However, many beneficiaries are surprised to find out how many services involve deductibles, coinsurance, copayments, and outright exclusions.

Hospital Stays Aren’t Fully Covered

Medicare Part A, often called hospital insurance, covers inpatient hospital care. But this coverage has boundaries.

• In 2025, the Part A deductible is $1,676 per benefit period. A benefit period starts the day you are admitted and ends 60 days after you’re discharged.

• After day 60, you begin paying daily coinsurance: $419 per day for days 61–90, and $838 per day for lifetime reserve days (days 91–150).

• Once you use all 60 of your lifetime reserve days, you are responsible for all costs after day 150.

If you require multiple hospital stays in a year, these costs can add up quickly. And because the benefit period resets, the deductible may apply more than once in a calendar year.

Observation Status: A Costly Technicality

One of the most misunderstood Medicare gaps involves how your hospital stay is classified. If you’re under observation rather than formally admitted, you may not qualify for certain post-hospital benefits.

• Observation status is considered outpatient care, even if you’re in a hospital bed overnight.

• This can impact your ability to receive skilled nursing facility (SNF) care afterward. Medicare Part A only covers SNF if you’ve had three consecutive days as an inpatient.

• Under observation, you might be billed under Part B, leading to higher out-of-pocket expenses.

Doctor Bills Add Up Under Part B

Medicare Part B covers outpatient care, including doctor visits, preventive screenings, and diagnostic tests. However, Part B includes:

• A monthly premium (standard premium is $185 in 2025).

• An annual deductible of $257.

• Coinsurance, typically 20% of the Medicare-approved amount for most services.

That 20% coinsurance can be financially straining, especially if you need frequent visits to specialists, physical therapy, or outpatient procedures. Medicare also doesn’t limit your out-of-pocket costs annually—unless you have other coverage.

Prescription Drug Gaps Still Exist

In 2025, Medicare Part D introduces a $2,000 cap on out-of-pocket drug expenses, offering more predictability. But there are still coverage gaps you need to watch for:

• Not all medications are covered. Some drugs may require prior authorization or are subject to step therapy.

• Even though catastrophic coverage begins after hitting the $2,000 cap, you still have to reach that point before full coverage kicks in.

• Deductibles can be as high as $590 before your plan starts paying for medications.

Many people find themselves juggling multiple medications and facing delays or denials due to formulary restrictions.

Skilled Nursing and Long-Term Care Are Major Exclusions

Many people assume that Medicare covers nursing home or long-term care stays. This is a costly misunderstanding.

• Medicare covers skilled nursing facility (SNF) care only after a qualifying 3-day inpatient hospital stay and only if it’s deemed medically necessary.

• Coverage is limited to 100 days per benefit period: the first 20 days are fully covered, and for days 21–100, you pay $209.50 per day.

• After 100 days, you are responsible for all costs.

Importantly, Medicare does not cover custodial care, which includes help with bathing, dressing, eating, and other activities of daily living in a long-term care setting.

Dental, Vision, and Hearing: Gaps That Impact Quality of Life

Original Medicare does not include routine care for your teeth, eyes, or ears—services that are vital to your day-to-day health and independence.

• Dental: No coverage for cleanings, fillings, extractions, dentures, or implants.

• Vision: No coverage for routine eye exams, glasses, or contact lenses.

• Hearing: No coverage for hearing exams for fitting hearing aids or the devices themselves.

You may need to seek supplemental coverage or pay entirely out-of-pocket for these important services.

Emergency and International Coverage

Medicare may not provide the level of emergency care coverage you expect, especially if you travel.

• Original Medicare typically doesn’t cover healthcare outside the United States.

• Emergency services in foreign countries are generally not included unless specific exceptions apply.

• Even within the U.S., ambulance services and emergency room visits come with copayments and coinsurance under Part B.

If you plan to travel, consider how these gaps could impact your access to care during unexpected situations.

Mental Health Care Coverage Is Limited

Mental health services are partially covered under Medicare, but there are limits you need to be aware of:

• Inpatient psychiatric hospital care is capped at 190 days total for your lifetime.

• Outpatient therapy is covered under Part B, but subject to the 20% coinsurance after you meet the annual deductible.

• Not all psychologists or therapists accept Medicare.

This means ongoing mental health support could result in substantial out-of-pocket spending if alternative arrangements aren’t made.

What Happens Without a Cap on Costs?

Unlike many private plans, Original Medicare does not have a yearly out-of-pocket maximum. This means there’s no upper limit on what you may have to pay for medical care in any given year.

Without a spending cap, prolonged illnesses, chronic conditions, or a year with multiple hospitalizations can lead to serious financial risk. Beneficiaries often underestimate how exposed they are without a supplemental policy or additional coverage.

Planning Ahead for These Gaps

Understanding these gaps is only part of the equation. You also need to plan around them. Many people turn to other coverage options to protect themselves, such as employer retirement coverage or additional insurance options approved by Medicare.

Questions to consider:

• Have you accounted for potential long-term care expenses?

• Do you have coverage for dental, vision, and hearing?

• Will you be able to afford your medications if you reach the $2,000 cap?

• Can your budget handle 20% coinsurance for high-cost procedures?

In 2025, preparing for Medicare coverage gaps means looking at your health history, income, and risk tolerance, then determining the coverage strategy that offers protection beyond what Medicare alone provides.

Gaps Aren’t Inevitable—But Awareness Is Essential

Medicare continues to be a powerful tool for ensuring healthcare access in retirement. But it’s not a one-size-fits-all solution. By learning about and addressing the gaps in Medicare coverage, you can take steps to safeguard both your health and your finances.

Don’t assume coverage is automatic or comprehensive. Instead, review your personal health needs and reach out to a licensed agent listed on this website to explore your options for additional protection. Your future self will thank you.