Why Medicare Part A Still Comes With Big Costs Even Though It’s “Free”

Key Takeaways

• Medicare Part A is often described as “premium-free,” but that doesn’t mean it’s entirely free. In 2025, it still includes major out-of-pocket expenses that can catch you off guard.

• If you’re hospitalized, you could face a sizable deductible, daily coinsurance for extended stays, and no coverage at all past certain limits. Understanding these thresholds can help you prepare financially.

The Basics: What Medicare Part A Covers

Medicare Part A is one part of Original Medicare. It primarily covers inpatient care, which includes:

• Hospital stays

• Skilled nursing facility care (short-term)

• Hospice care

• Some home health care (under specific conditions)

Most people become eligible for Medicare at age 65 and do not pay a monthly premium for Part A if they or their spouse worked and paid Medicare taxes for at least 40 quarters (10 years). This is often referred to as “premium-free Part A.”

But this label can be misleading. While you may not owe a monthly premium, Part A can still leave you with significant medical bills.

The 2025 Part A Deductible Isn’t Small

Every time you’re admitted to the hospital as an inpatient, Medicare Part A requires you to pay a deductible before coverage begins. In 2025, that deductible is $1,676 per benefit period.

A benefit period starts the day you’re admitted and ends when you haven’t received inpatient hospital or skilled nursing care for 60 consecutive days. If you’re readmitted after 60 days, a new benefit period begins, and you must pay the full deductible again.

This isn’t an annual deductible. You could pay it more than once in a year depending on how many times you’re hospitalized.

Daily Coinsurance Adds Up Quickly

Even after meeting the Part A deductible, your out-of-pocket costs don’t stop. If you stay in the hospital for more than 60 days during a single benefit period, daily coinsurance kicks in.

Here’s what you’re responsible for in 2025:

• Days 1–60: $0 coinsurance after the deductible

• Days 61–90: $419 per day

• Days 91 and beyond: $838 per day, using your lifetime reserve days (up to 60 total)

• Beyond lifetime reserve days: All costs

This can be a huge financial burden if you have a lengthy hospital stay or require multiple admissions throughout the year.

Skilled Nursing Facilities Are Not Free Either

Part A also covers skilled nursing facility (SNF) care, but only under certain conditions:

• You must have a qualifying hospital stay of at least three days as an inpatient (not under observation status).

• You must enter the SNF within 30 days of hospital discharge.

• The care must be medically necessary.

If these conditions are met, Medicare Part A provides coverage as follows:

• Days 1–20: $0 coinsurance

• Days 21–100: $209.50 per day in 2025

• Days 101 and beyond: All costs

People often assume SNF stays are fully covered, but the cost sharing after 20 days adds up quickly if you’re not prepared.

Hospice Care May Still Incur Some Costs

Part A also pays for hospice care if your provider certifies that you’re terminally ill and expected to live six months or less. While most hospice costs are covered, you might still pay:

• Up to $5 for each prescription related to symptom control or pain relief

• 5% of the Medicare-approved amount for inpatient respite care

These costs are minimal compared to hospital stays, but they’re still part of the Part A equation.

Home Health Care: Limited and Conditional

Part A covers some home health services if you meet eligibility requirements, including:

• Being homebound

• Needing part-time skilled nursing care or therapy

• Having a doctor certify your plan of care

There is typically no coinsurance for Part A-covered home health services, but durable medical equipment (like wheelchairs or walkers) is covered under Part B and can cost you 20% of the approved amount.

So while this aspect of Part A seems less costly, it often intersects with Part B cost-sharing rules.

What Happens If You Don’t Qualify for Premium-Free Part A?

Not everyone gets Part A without a monthly premium. If you worked fewer than 40 quarters under Social Security, you may need to buy into Part A:

• If you worked 30–39 quarters: $284/month in 2025

• If you worked fewer than 30 quarters: $518/month in 2025

To buy Part A, you must also enroll in Part B, which has its own monthly premium and deductible. So your monthly costs can increase significantly if you don’t qualify for premium-free Part A.

Medicare Doesn’t Cover Everything

Even with Part A, some hospital-related expenses are not covered:

• Private-duty nursing

• Personal comfort items (like TV or phone)

• A private room (unless medically necessary)

• Blood (unless replaced or covered under other rules)

Also, if you’re in the hospital for observation and not formally admitted as an inpatient, Part A won’t cover your stay. Instead, those services fall under Part B, and you may face different cost-sharing terms.

Why You Need to Pay Attention to Benefit Periods

A common misunderstanding is assuming Medicare Part A’s deductible and coinsurance apply annually. In reality, benefit periods can reset multiple times in one year.

Imagine being hospitalized in January and again in April, with 60 days of no inpatient care between those stays. You would face the $1,676 deductible twice. This distinction can result in hundreds or thousands of dollars in added expenses if you experience frequent hospital admissions.

Understanding how benefit periods work is essential for financial planning.

You May Still Want Additional Protection

Because Part A doesn’t cover all inpatient costs, many people explore options that help limit out-of-pocket exposure, including:

• Supplemental insurance

• Employer or union coverage

• Medicaid (for those who qualify based on income and assets)

These options can provide extra coverage for costs that Part A doesn’t pay, but you’ll need to evaluate them based on your eligibility, budget, and preferences.

Timing Also Affects When Coverage Begins

If you sign up for Medicare during your Initial Enrollment Period but not in your birth month or earlier, your Part A coverage may not begin immediately. This delay could leave you temporarily uncovered, especially if you need inpatient care and don’t have other insurance.

In most cases, enrolling before your 65th birthday month ensures Part A begins on the first day of that month. But if you enroll after that, coverage may be delayed by one to three months.

Late enrollment in Part A (if you don’t qualify for premium-free coverage) can also result in a penalty. This penalty increases your premium by 10% for twice the number of years you delayed enrollment.

Financial Planning Starts with Realistic Expectations

When you hear Medicare Part A is “free,” that refers only to the monthly premium for those who meet the work history requirement. It doesn’t include:

• The per-benefit period deductible

• Daily hospital and SNF coinsurance

• Charges beyond coverage limits

• Potential late penalties for delayed enrollment

You need to factor these into your retirement budget to avoid surprises. Hospital stays, in particular, can lead to costs of several thousand dollars even with Part A coverage.

Get Help Understanding What You’re Signing Up For

Medicare isn’t simple, and Part A’s structure can be more complex than it seems at first glance. If you’re preparing for retirement or helping someone else transition into Medicare, don’t assume that coverage is automatic or cost-free.

There are enrollment rules, coverage conditions, and timelines that influence what you’ll pay. For the most accurate advice tailored to your situation, it’s best to speak with a licensed agent listed on this website.