Think Medicare Will Cover Everything? These 2025 Costs Might Surprise You

Key Takeaways

• Medicare in 2025 does not cover all your healthcare costs—unexpected expenses like long-term care, dental, and prescription drug costs can quickly add up.

• Understanding what Medicare Parts A, B, D, and optional coverage like Medigap do and do not cover is critical to avoid surprises and financial strain.

What Medicare Really Covers in 2025

At first glance, Medicare may appear to offer comprehensive coverage. But in 2025, it’s clear that it works more like a foundation—a base you may need to build on. Medicare is divided into four parts: A, B, C (Medicare Advantage), and D. Each serves a different purpose, and gaps remain even if you’re enrolled in all parts.

• Part A (Hospital Insurance): Covers inpatient care, limited skilled nursing facility care, and hospice.

• Part B (Medical Insurance): Covers doctor visits, preventive services, outpatient care, and durable medical equipment.

• Part D (Prescription Drug Coverage): Covers prescription medications, but has a deductible and cost-sharing.

• Medigap (Medicare Supplement): Optional plans that help cover out-of-pocket costs left by Parts A and B.

Even with all these in place, there are still areas Medicare doesn’t touch.

Out-of-Pocket Costs You Can’t Ignore

Medicare isn’t free. And even if you’ve worked long enough to qualify for premium-free Part A, you’ll still encounter multiple out-of-pocket expenses. Here are the main ones for 2025:

• Part A deductible: $1,676 per benefit period

• Part B premium: $185 monthly standard premium

• Part B deductible: $257 annually

• Coinsurance and copayments: 20% of Medicare-approved costs for outpatient services

• Part D deductible: Up to $590, depending on your plan

These numbers may seem manageable on paper, but the reality is different when combined with unexpected health events.

The Prescription Drug Coverage Gap Is Closed—But Costs Remain

The 2025 Medicare landscape brings good news: the infamous Part D coverage gap (donut hole) is gone. Now, you only face three phases:

1. Deductible Phase: You pay up to $590.

2. Initial Coverage Phase: Your plan shares drug costs with you.

3. Catastrophic Phase: Once you’ve paid $2,000 out of pocket, your costs drop substantially—but not to zero.

Despite the $2,000 annual cap, many people still experience financial pressure from medications not fully covered or requiring prior authorizations.

What Medicare Leaves Out Completely

Several essential healthcare services are not covered by Medicare at all in 2025. Unless you enroll in separate coverage or pay out of pocket, these could result in major expenses:

• Long-term care: Custodial care in a nursing home or assisted living is not covered.

• Dental care: Routine check-ups, cleanings, crowns, and dentures are not included.

• Vision services: Eye exams, glasses, and contact lenses are typically excluded.

• Hearing services: Hearing aids and exams are not part of standard coverage.

• Foreign travel: Medical services abroad are not covered, except in very limited situations.

Each of these services can cost thousands annually, depending on usage and location.

Hospitalization and Skilled Nursing Facility Limits

While Part A does cover hospital stays and some skilled nursing care, there are limits:

• Hospital inpatient coverage: You pay coinsurance after 60 days. By day 90, it increases significantly.

• Skilled nursing facility (SNF): Coverage is limited to 100 days per benefit period, with cost-sharing starting after day 20.

If your recovery is slow or you need extended rehab, you could face high bills once your Medicare limits are exceeded.

The Hidden Costs of Choosing the Wrong Enrollment Window

Missing deadlines can be expensive. If you don’t sign up for Medicare on time, you may pay penalties for the rest of your life:

• Part B late enrollment penalty: 10% increase in monthly premiums for every 12-month delay.

• Part D late enrollment penalty: 1% per month without creditable drug coverage.

The Initial Enrollment Period spans seven months—starting three months before your 65th birthday and ending three months after. Missing it can cost you for decades.

Annual and Lifetime Caps Don’t Exist in Medicare

Unlike many private insurance plans, Medicare has no annual or lifetime maximum out-of-pocket limits for Parts A and B. This can lead to steep expenses if you require ongoing care. In 2025:

• Medicare Advantage plans are required to cap out-of-pocket in-network costs, but that doesn’t apply if you stay with Original Medicare without a Medigap plan.

• Medigap can reduce unpredictability, but plans come with separate premiums and rules.

Coordination With Employer or Retiree Coverage May Be Confusing

If you’re still working past 65 or have retiree health benefits, Medicare interacts with other insurance in complex ways. Mistakes in coordinating benefits can result in uncovered costs or denied claims.

You need to:

• Know if your employer coverage is primary or secondary.

• Ensure you don’t drop creditable drug coverage to avoid penalties.

• Understand how retiree plans coordinate with Parts A, B, and D.

Coordination missteps often lead to denied claims or unexpected premium bills.

The True Cost of Not Having a Medigap or Advantage Plan

Relying on Original Medicare alone can leave you open to unexpected costs. Without supplemental insurance, you’re responsible for:

• 20% of outpatient services

• All Part A coinsurance beyond day 60 of hospital stay

• All skilled nursing costs after day 100

• Full cost of dental, vision, and hearing care

Many beneficiaries find that the cost of these services quickly surpasses what they would have paid in Medigap premiums.

Income-Related Monthly Adjustments (IRMAA)

Higher-income beneficiaries pay more for Parts B and D in 2025. These IRMAA surcharges are based on your Modified Adjusted Gross Income (MAGI) from two years prior:

• Single filers: Adjustments begin at $106,000

• Joint filers: Adjustments begin at $212,000

If your income exceeds these thresholds, you’ll see increased monthly premiums for Parts B and D.

Why Annual Plan Reviews Are Essential

Each year, Medicare plans may change their:

• Formularies (covered medications)

• Provider networks

• Cost-sharing structure (copays, deductibles)

Failing to review your Annual Notice of Change (ANOC) can result in keeping a plan that no longer meets your needs or budget.

Use the Annual Enrollment Period (October 15 to December 7) to make necessary updates.

Inflation’s Impact on Medicare Costs in 2025

While Medicare does adjust some cost parameters annually, general inflation continues to affect healthcare pricing:

• Physician services may charge more than Medicare approves.

• Prescription drug prices continue to rise.

• Supplemental insurance plans may raise premiums each year.

What was affordable last year may not remain so—especially for those on a fixed income.

Staying Proactive Helps Avoid Unpleasant Surprises

Medicare isn’t meant to cover every healthcare need. That’s why staying informed, reviewing your plan annually, and preparing for out-of-pocket expenses are key to protecting your health and your wallet.

Make sure you:

• Sign up on time.

• Review plan changes yearly.

• Understand what’s not covered.

• Coordinate any other insurance properly.

• Budget for dental, vision, hearing, and long-term care needs.

Take the Next Step Toward Clarity and Protection

Medicare can feel like a maze of costs, timelines, and exceptions—but you don’t have to figure it out alone. If you’re unsure whether your current plan protects you from avoidable expenses, speak to a licensed agent listed on this website for expert help.