Key Takeaways

• Medicare comes with a range of out-of-pocket costs that many people don’t anticipate until they’re already enrolled.

• Understanding what Medicare does not cover can help you avoid expensive surprises and make more informed decisions.

Not All Hospital Costs Are Covered

Many assume that Medicare Part A fully covers hospital stays, but that’s not always the case. In 2025, Medicare Part A includes a $1,676 deductible for each benefit period. If your hospital stay extends beyond 60 days, you start to face daily coinsurance charges:

• Days 61-90: $419 per day

• Days 91 and beyond (using lifetime reserve days): $838 per day

After you exhaust your lifetime reserve days, you’re responsible for all costs. These expenses can add up quickly, especially during lengthy or repeated hospitalizations.

Doctor Visits and Outpatient Services Still Cost You

Part B of Medicare covers outpatient care, doctor visits, preventive services, and durable medical equipment. However, this coverage is not free. In 2025:

• The standard monthly premium is $185

• The annual deductible is $257

• You typically pay 20% coinsurance after meeting your deductible

That 20% can be significant depending on the procedure or frequency of visits. And if your provider doesn’t accept Medicare assignment, you may pay even more.

Prescription Drugs Come With Their Own Set of Costs

Medicare Part D, which covers prescription drugs, includes several out-of-pocket expenses in 2025:

• A deductible up to $590

• Cost-sharing in the initial coverage phase

• Full coverage after reaching the $2,000 annual out-of-pocket cap

While the new $2,000 cap provides some relief, costs can still pile up, especially if your medications are expensive or not on your plan’s formulary.

Late Enrollment Penalties Are Permanent

Many people delay enrolling in Medicare, often due to continued employment or lack of understanding. But missing your enrollment window can result in lifetime penalties:

• Part B Penalty: 10% increase in premiums for every 12-month period you were eligible but didn’t enroll

• Part D Penalty: 1% of the national base premium for every month you didn’t enroll, added to your monthly premium

These penalties never go away and can significantly raise your healthcare costs in retirement.

Dental, Vision, and Hearing Aren’t Included

Original Medicare does not cover routine dental care, eye exams, hearing aids, or fittings. You must pay out-of-pocket or seek additional coverage. These services can be particularly costly and are often needed as you age.

For instance:

• Routine dental cleanings, fillings, and crowns

• Annual eye exams and prescription glasses

• Hearing tests and hearing aids

Many are surprised to discover these common health needs are not covered, and private coverage or personal savings must bridge the gap.

Skilled Nursing Facility Care Has Limitations

While Medicare Part A does cover skilled nursing facility (SNF) care under specific conditions, it’s not unlimited. You must have a qualifying 3-day inpatient hospital stay, and coverage is tiered:

• Days 1-20: Fully covered

• Days 21-100: $209.50 coinsurance per day

• After 100 days: You pay all costs

Extended stays beyond this period require alternative funding sources or long-term care insurance.

Home Health Care Isn’t Always Free

Medicare covers home health care services under certain conditions, such as being homebound and requiring part-time skilled care. However, it doesn’t cover around-the-clock care, personal care (if that’s the only service you need), or household services like meal delivery or cleaning. These often fall to family caregivers or private arrangements, which can become expensive over time.

Emergency and Urgent Care Abroad Usually Isn’t Covered

If you travel internationally, you should know that Original Medicare generally does not cover health care services outside the United States. In most cases, you’ll need separate travel insurance or an emergency rider to be protected. Unexpected health issues abroad can turn into financial burdens if not planned for.

Annual Out-of-Pocket Maximums Don’t Exist in Original Medicare

Unlike many private insurance plans, Original Medicare does not have an out-of-pocket maximum. This means there’s no cap on how much you might pay for covered services in a year. If you need frequent care or have a major health issue, your costs could grow significantly. Medigap plans can help reduce some of this exposure, but they come with their own premiums and limitations.

Medigap Doesn’t Cover Everything

Medigap plans help fill in the gaps of Original Medicare by covering some deductibles, coinsurance, and copayments. But they don’t include prescription drugs, long-term care, dental, vision, or hearing. You must budget separately or obtain additional coverage for these services.

In 2025, Medigap plans are standardized, and while they ease the unpredictability of some costs, they won’t eliminate all surprises.

Coverage Changes Can Happen Annually

Medicare Advantage and Part D plans change each year. Even if you’re happy with your current plan, benefits, premiums, and provider networks may shift annually. This can affect:

• Which medications are covered

• Copayment amounts

• Whether your doctors and specialists remain in-network

Failing to review your plan during the Open Enrollment Period (October 15 to December 7) can lead to unpleasant surprises in the new year.

Observation Status Isn’t Inpatient Care

If you visit a hospital and are held under observation status rather than being formally admitted, Medicare treats this differently. It affects your coverage and out-of-pocket costs:

• You may face higher costs under Part B instead of Part A

• Observation stays don’t count toward the 3-day requirement for SNF coverage

Clarifying your status with hospital staff can help you plan and advocate for proper coverage.

IRMAA Can Make Premiums More Expensive

The Income-Related Monthly Adjustment Amount (IRMAA) increases your Part B and Part D premiums if your income exceeds certain thresholds. In 2025:

• Individuals earning over $106,000

• Couples earning over $212,000

…will pay more for their Medicare coverage. These surcharges are based on tax returns from two years prior and can surprise retirees with fluctuating or one-time income spikes.

Preventive Services Are Free—But Follow-Ups Might Not Be

Medicare covers many preventive services at no cost, such as screenings and vaccinations. However, if your provider performs additional services during a preventive visit—like diagnostic tests or follow-ups—you may be billed separately.

Understanding the difference between preventive and diagnostic care can help you anticipate potential bills.

Reviewing Your Annual Notice of Change Is Essential

Every fall, Medicare enrollees receive an Annual Notice of Change (ANOC). This document outlines any changes to your plan’s coverage, costs, and provider network for the upcoming year. Skimming or ignoring this letter can result in surprises once the new plan year starts. Make it a habit to read it thoroughly.

Financial Planning for Medicare Is a Lifelong Task

You may assume that enrolling in Medicare simplifies your healthcare finances, but that’s rarely the case. Without a clear plan, you could face:

• Unexpected out-of-pocket expenses

• Penalties that last a lifetime

• Coverage gaps that catch you off guard

A proactive approach to understanding your options, annual plan reviews, and budgeting for uncovered services is essential.

Understanding What Medicare Covers—and What It Doesn’t

Many of the most common cost surprises in Medicare stem from assumptions about what’s included. You can protect yourself by:

• Knowing what services are excluded from Original Medicare

• Factoring in premium costs, deductibles, and coinsurance

• Staying informed about yearly plan changes

• Planning for uncovered needs like dental, vision, hearing, and long-term care

If you’re unsure where to begin, now is a good time to speak with a licensed insurance agent listed on this website who can walk you through your options.