Key Takeaways
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While Medicare provides essential coverage, it doesn’t eliminate all health care expenses. Some of the most significant costs are not in the premiums—but in what comes after.
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Understanding the out-of-pocket costs, coverage gaps, and supplemental charges can help you prepare for what Medicare doesn’t fully cover.
Why Medicare Costs Aren’t as Straightforward as They Seem
If you’re approaching Medicare eligibility, or already enrolled, you’ve likely been told about the monthly premiums for Part B or the deductible for Part A. But what many people aren’t prepared for is that these are just the beginning. In 2025, Medicare comes with a variety of hidden or overlooked costs that can take a significant bite out of your retirement budget.
Medicare is structured to provide basic coverage—but not complete coverage. You’re still responsible for deductibles, coinsurance, and services Medicare doesn’t cover. And depending on how you use your benefits, the real costs may not surface until later in the year.
1. Medicare Part A Hospital Costs Can Pile Up
Most people don’t pay a monthly premium for Medicare Part A if they’ve worked and paid taxes long enough. But that doesn’t mean hospitalization is free.
In 2025:
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The inpatient hospital deductible is $1,676 per benefit period.
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After 60 days in the hospital, you pay $419 per day.
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If your stay extends past 90 days, you start using lifetime reserve days, with a coinsurance of $838 per day.
For skilled nursing facilities, after 20 days, you’ll pay $209.50 per day through day 100.
These costs can hit hard if you’re hospitalized multiple times within a year, as each benefit period restarts the deductible clock.
2. Medicare Part B: Premiums, Deductibles, and 20% Coinsurance
In 2025, the standard Part B monthly premium is $185, and the annual deductible is $257. But one of the most burdensome parts of Part B is the 20% coinsurance for outpatient care after your deductible is met.
This applies to:
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Doctor visits
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Durable medical equipment
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Outpatient procedures
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Diagnostic tests
There’s no out-of-pocket maximum under Original Medicare, which means these costs can keep adding up if you require ongoing care or specialist visits.
3. Prescription Drug Costs Under Part D
As of 2025, the Medicare Part D landscape has changed. There is now a $2,000 cap on annual out-of-pocket drug costs, which eliminates the catastrophic phase from prior years. While this cap provides relief, many people still face significant expenses leading up to that threshold.
Here’s how the 2025 Part D structure works:
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Deductible phase: Up to $590 (depending on your plan)
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Initial coverage phase: You pay a share of costs, usually via copayments or coinsurance
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Out-of-pocket cap: Once your total spending reaches $2,000, your costs drop to 0% for the rest of the year
Even with this protection, frequent or high-cost prescriptions can still result in substantial outlays early in the year.
4. Medicare Doesn’t Cover Long-Term Care
One of the most financially devastating gaps in Medicare is its lack of coverage for long-term care. Medicare covers skilled nursing facility care only for short-term recovery—not custodial care.
This includes services such as:
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Help with daily activities (eating, bathing, dressing)
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Long-term assisted living
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Nursing home residency beyond short rehabilitation
The average cost of long-term care can reach several thousand dollars per month, and Medicare won’t help cover it unless it qualifies under specific, short-term recovery conditions. Planning for this gap is crucial.
5. Dental, Vision, and Hearing—Mostly Excluded
Medicare doesn’t typically cover routine dental, vision, or hearing care. That includes:
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Eye exams for glasses or contacts
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Dental cleanings, fillings, or dentures
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Hearing aids and exams
Some supplemental plans offer limited benefits for these services, but many people end up paying out-of-pocket unless they secure additional coverage. In retirement, when these services often become more necessary, the lack of built-in coverage can lead to steep expenses.
6. Late Enrollment Penalties
If you don’t sign up for Medicare when you’re first eligible, you could face lifetime penalties on your premiums.
For example:
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Part B: You may pay a 10% penalty for each 12-month period you delayed enrollment, added to your monthly premium for as long as you have Part B.
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Part D: A 1% penalty per month without creditable drug coverage, calculated based on the national base premium.
These penalties are avoidable, but they’re still one of the costliest surprises for people who don’t understand the enrollment rules or delay coverage due to misinformation.
7. Out-of-Pocket Maximums Only Apply in Certain Plans
Original Medicare doesn’t have an annual out-of-pocket limit, meaning your cost-sharing never truly ends. Only certain types of Medicare coverage, such as Medicare Advantage or Medigap plans, offer out-of-pocket maximums to help control expenses.
Without such protection, prolonged illness or extensive outpatient treatment could drain your retirement savings more quickly than anticipated.
8. Travel-Related Expenses
Medicare generally doesn’t cover care outside the U.S., with very limited exceptions. If you travel frequently or spend part of the year abroad, your Medicare coverage may not follow you.
This could mean:
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Paying out-of-pocket for emergency services while overseas
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Facing coverage gaps during international travel
Some people purchase separate travel health policies to bridge this gap, but that adds an extra cost not typically discussed in Medicare planning.
9. Home Health Care Isn’t Always Covered Fully
Medicare does cover home health services—but only under specific conditions. To qualify, you must:
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Be homebound
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Require skilled nursing or therapy services
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Have an established plan of care from a doctor
Even then, coverage can be limited. Non-skilled assistance like help with bathing, dressing, or meal preparation isn’t covered. This distinction can leave you with unplanned costs if you rely on home support during recovery or chronic illness.
10. Income-Related Surcharges
If your income exceeds certain thresholds, you may face Income-Related Monthly Adjustment Amounts (IRMAA). These surcharges apply to both Part B and Part D premiums.
For 2025, IRMAA begins at these income levels (based on 2023 tax returns):
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Individuals: Above $106,000
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Couples (joint filing): Above $212,000
These adjustments can increase your monthly premiums by hundreds of dollars. And if your income fluctuates year-to-year, you might find yourself unexpectedly in a higher premium tier.
11. High Costs for Non-Medicare Services
Even if a service seems medical, it may not be covered by Medicare. Examples include:
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Routine foot care
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Cosmetic surgery
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Acupuncture (except for specific chronic conditions)
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Massage therapy
Understanding what Medicare doesn’t cover is just as important as knowing what it does. The cost of one or two uncovered services can be surprisingly high, especially if you’re unaware until after the bill arrives.
12. Coordination with Other Insurance Can Be Tricky
If you have retiree insurance, TRICARE, or employer coverage, coordinating it with Medicare can be confusing. Mistakes in coordination could lead to unexpected bills or denied claims. You may end up paying for services that you believed were covered under one plan but actually required Medicare to be primary.
Timely and accurate coordination between your coverages is essential to avoid paying more than you should.
What to Keep in Mind for 2025 and Beyond
Health care needs tend to increase as you age. And in 2025, with inflation impacting medical service rates, even Medicare-covered services can end up costing more than you expect. That’s why preparation is essential. Know what Medicare does—and does not—cover, and consider working with a licensed insurance agent to explore supplemental options that may align with your needs.
Plan Now So You’re Not Surprised Later
Medicare offers a strong foundation of coverage, but it doesn’t cover everything. From hospital costs and outpatient coinsurance to services like dental and long-term care, there are many ways your out-of-pocket costs can rise quickly.
Understanding these costs upfront allows you to make more informed decisions about your coverage, savings, and supplemental protections. If you’re unsure about your plan or think you may face high out-of-pocket costs, speak with a licensed insurance agent listed on this website. Getting help now could save you thousands later.
