Here’s the Part of Medicare Coverage That Could End Up Costing You the Most Over Time

Key Takeaways

• Medicare Part B and Part D costs can add up significantly over time, especially for those with ongoing outpatient care or expensive prescriptions.

• Supplemental costs like coinsurance, deductibles, and uncovered services make long-term budgeting essential for Medicare beneficiaries.

The Real Cost Driver: Ongoing Outpatient and Drug Coverage

Many people assume that Medicare will cover the majority of their medical costs after they turn 65. While it does provide a safety net, it is far from complete. One of the most expensive components over time is coverage under Medicare Part B and Part D.

Understanding Part B: Outpatient Services Aren’t Free

Medicare Part B covers a range of outpatient services including:

• Doctor visits

• Preventive care

• Lab tests and X-rays

• Outpatient surgeries

• Durable medical equipment

• Mental health outpatient services

You pay a monthly premium for Part B, which in 2025 is $185. In addition, you must meet the annual deductible of $257. After meeting this deductible, you typically pay 20% of the Medicare-approved amount for most services. This coinsurance can be particularly costly if you require frequent specialist visits, physical therapy, or mental health counseling.

Part B Doesn’t Cap Your Spending

Unlike most private insurance plans, Medicare Part B does not have an out-of-pocket maximum. That means there is no financial ceiling to how much you might pay in a given year. The more you use outpatient services, the more you pay. This makes it especially risky for individuals with chronic illnesses that require frequent doctor visits, diagnostic tests, or outpatient procedures.

Part D: The Hidden Costs of Prescription Drugs

Medicare Part D provides coverage for prescription medications, but it comes with multiple cost layers:

• Monthly premiums vary based on your plan

• Annual deductible (up to $590 in 2025)

• Copayments and coinsurance

The most important change in 2025 is the implementation of a $2,000 out-of-pocket cap on prescription drugs under Part D. While this is a welcome relief, many beneficiaries may still pay hundreds to reach that cap early in the year. And the cost structure resets each calendar year.

Medications Aren’t Always Fully Covered

Even with Part D, not all drugs are covered equally. Formularies vary by plan and can change yearly. Higher-tier drugs, often the most essential for chronic conditions, come with higher out-of-pocket costs. Step therapy and prior authorization requirements can delay access to necessary treatment.

Year-by-Year Build-Up of Out-of-Pocket Costs

Your Medicare expenses are not one-time events. Over a 10- or 15-year retirement, even modest annual costs can snowball into a major financial burden.

A Look at Five Years of Expenses

Assuming:

• You pay the standard Part B premium ($185/month)

• You reach the full $2,000 Part D cap each year

• You have $1,500/year in coinsurance for outpatient care

Here is what it might look like:

• Year 1: $185 x 12 + $2,000 + $1,500 = $5,720

• Year 2: $5,720

• Year 3: $5,720

• Year 4: $5,720

• Year 5: $5,720

Total over 5 years: $28,600

This does not even include additional costs like dental care, hearing aids, vision services, or long-term care, which are not covered under Original Medicare.

Medicare Doesn’t Cover Everything

Medicare has significant gaps in coverage. If you do not have additional insurance (like Medigap or a Medicare Advantage plan), these costs fall entirely on you.

Commonly Uncovered Services:

• Routine dental exams, cleanings, and dentures

• Eye exams and glasses

• Hearing aids and hearing exams

• Long-term custodial care (assisted living or nursing homes)

• Overseas medical emergencies

Planning to pay for these services out of pocket is essential. Many retirees are surprised when they find out Medicare doesn’t cover dental fillings or eyeglasses unless specific medical conditions apply.

Inflation and Income Can Affect What You Pay

Medicare is not immune to inflation. The 2025 standard Part B premium has already increased from $174.70 in 2024 to $185. Future increases are likely.

In addition, higher-income beneficiaries pay more for both Part B and Part D under Income-Related Monthly Adjustment Amounts (IRMAA). The thresholds begin at $106,000 for individuals and $212,000 for couples. These surcharges can raise monthly premiums by hundreds of dollars.

Part-Time Work or Delayed Retirement? You May Pay More

If you choose to keep working beyond age 65 or have other sources of income, you may be subject to IRMAA even if you’re not wealthy. And if you delay enrollment without creditable coverage, you could face late penalties:

• Part B late enrollment penalty: 10% for every 12-month period you delay

• Part D late enrollment penalty: 1% of the national base premium per month you delay

These penalties last for life, making the financial impact even more substantial over time.

Unpredictability of Health and Care Needs

You might be healthy now, but chronic conditions, injuries, or cognitive decline can change that quickly. The cost of managing health issues over 10 to 20 years of retirement adds up faster than most people anticipate.

The Role of Chronic Illness

Common chronic illnesses like diabetes, heart disease, COPD, arthritis, and cancer often require:

• Frequent doctor visits

• Ongoing diagnostics

• Long-term prescriptions

• Mental health support

The cumulative cost of treating just one of these conditions can multiply your annual spending under Medicare. Without a cap on Part B expenses, the longer you live with a condition, the more it drains your resources.

Cost Coordination Is Your Responsibility

Medicare does not coordinate all costs automatically. You must:

• Compare Part D plans every year during Open Enrollment (October 15 to December 7)

• Understand which doctors accept Medicare assignment

• Track how much you’ve paid toward your deductible or out-of-pocket limits

Failing to review your options or understand coverage details could lead to higher costs than necessary. Even basic oversights, like choosing a non-participating pharmacy, can result in surprise bills.

Strategies to Plan for Long-Term Costs

You don’t have to be caught off guard. Planning now can ease the burden later.

Build a Medicare Expense Budget

Create a line item for each predictable Medicare cost:

• Part B premium

• Part D premium and drug costs

• Supplemental plan premiums (if any)

• Coinsurance and copayments

• Dental, vision, and hearing expenses

• Medical travel costs (if needed)

Evaluate Whether You Need Extra Coverage

Depending on your health status and financial situation, additional coverage might be worth the cost. These plans can help limit out-of-pocket spending but come with their own trade-offs, including provider networks and plan rules.

Stay Informed During Enrollment Periods

Each year brings changes to Medicare plans. Drug formularies, cost-sharing amounts, and provider networks shift. Reviewing the Annual Notice of Change and comparing plans during open enrollment can help avoid rising costs that sneak up on you.

Hidden Costs Deserve Clear Answers

What seems like manageable premiums at first can become a major financial concern when multiplied over time. By understanding how Part B and Part D costs stack up year after year, and by factoring in what Medicare doesn’t cover, you can prepare more effectively.

Get help reviewing your options and making a personalized Medicare cost plan. Speak with a licensed agent listed on this website to go over your coverage and protect your retirement finances from escalating medical expenses.