Key Takeaways

• Your monthly Medicare premium is just the start. In 2025, deductibles, copayments, and cost-sharing can quickly add up to thousands in annual expenses, depending on the services you use.

• Understanding the breakdown of Medicare Part A, Part B, Part D, and Medicare Advantage cost structures can help you prepare for out-of-pocket surprises and avoid costly missteps.

The Monthly Premium Is Just the Entry Fee

When you enroll in Medicare, it may seem like your healthcare coverage is finally taken care of. However, many are shocked to learn how much more they pay beyond the monthly premium. While you might be familiar with the standard premium for Medicare Part B in 2025 ($185/month), that figure is only the beginning of your potential annual costs.

You are still responsible for deductibles, copayments, coinsurance, and potentially high out-of-pocket expenses depending on the type of services and prescriptions you require throughout the year.

Part A and the Hospital Bills You Didn’t Expect

Medicare Part A covers inpatient hospital care, but that doesn’t mean your stay is cost-free. As of 2025, here’s what you pay if you don’t have supplemental coverage:

• Deductible: $1,676 per benefit period (not annual). A benefit period starts the day you are admitted and ends after 60 consecutive days without inpatient care.

• Coinsurance:

  • Days 1–60: $0 (after deductible)

  • Days 61–90: $419 per day

  • Days 91–150 (lifetime reserve days): $838 per day

  • Beyond lifetime reserve: You pay all costs

Also, if you need skilled nursing facility care:

• First 20 days: $0

• Days 21–100: $209.50 per day

• After 100 days: All costs fall on you

You can see how a single extended hospitalization can quickly erode your savings if you aren’t prepared.

Part B and the 20% That Never Goes Away

While Part B covers outpatient care, doctor visits, and durable medical equipment, you still shoulder a major portion of the cost:

• Annual Deductible: $257 in 2025

• Coinsurance: After the deductible, Medicare typically pays 80%, and you pay the remaining 20% of the Medicare-approved amount.

This 20% might sound manageable, but it has no cap. That means if your outpatient procedures or therapies cost tens of thousands, your 20% share continues climbing.

Routine services like:

• X-rays

• Lab tests

• Physical therapy

• Ambulance rides

• Surgeries performed outside of inpatient hospital settings

can all lead to significant bills when you pay 20% out of pocket.

Prescription Drugs and the Disappearing Cap

Medicare Part D is designed to help cover prescription drug costs, but it still includes:

• Annual Deductible: Up to $590 in 2025 (plans can charge less)

• Copayments or Coinsurance: Vary depending on drug tiers and formulary

• Out-of-Pocket Cap: Set at $2,000 annually as of 2025

This new cap eliminates the old coverage gap (donut hole), but hitting that $2,000 threshold can still come faster than expected if you take specialty medications or multiple brand-name prescriptions.

And while the $2,000 cap is a major relief, you still must pay up front until you reach that level, unless your plan includes cost-spreading features. Even then, this does not include Part B medications administered in outpatient settings, which are billed differently.

Medicare Advantage: Trade-Offs Behind the Simplicity

Medicare Advantage (Part C) may bundle services and offer lower premiums or added perks, but the cost-sharing structure varies widely. In 2025, every plan must provide coverage that’s at least equivalent to Original Medicare, but that doesn’t guarantee your out-of-pocket costs will be lower.

Typical considerations include:

• Copayments: Set amounts for doctor visits, specialists, urgent care, or hospitalization. These can differ from plan to plan.

• Coinsurance: A percentage of costs, especially for hospital stays or complex procedures.

• Annual Out-of-Pocket Maximum: Capped at $9,350 for in-network care in 2025

• Network Restrictions: Costs are often much higher for out-of-network providers or services, especially in PPO or HMO plans

And many Medicare Advantage plans still require you to pay the standard Part B premium in addition to other plan-specific costs.

Surprise Bills That Catch You Off Guard

Even with all the above accounted for, you may still run into expenses that surprise you. These can include:

• Observation Status: If you’re in the hospital under observation, not formally admitted, Part B applies instead of Part A. That means higher outpatient costs instead of the inpatient coverage you expected.

• Excess Charges: If you see a provider who doesn’t accept Medicare assignment, they can charge up to 15% more than the Medicare-approved rate, which you must pay.

• Non-Covered Services: Medicare doesn’t cover everything. Items like routine dental care, eye exams for glasses, hearing aids, custodial long-term care, or overseas medical care must be paid out-of-pocket unless you have additional coverage.

• Late Enrollment Penalties: If you delay enrolling in Part B or Part D without credible coverage, you may face permanent monthly penalties added to your premium.

Supplemental Coverage Isn’t Free Either

To help cover the many gaps in Original Medicare, many people turn to Medigap plans. While these can cover some or all of your Part A and Part B out-of-pocket expenses, including coinsurance and deductibles, they require monthly premiums that can increase with age or inflation.

Also, Medigap plans do not cover:

• Prescription drugs (you’ll still need a Part D plan)

• Dental, vision, or hearing

• Long-term custodial care

Some beneficiaries are surprised to learn that even after paying for both Medicare and Medigap, they may still need to budget for services these policies don’t touch.

Planning Ahead: What to Track in 2025

Every year, Medicare cost figures are updated. In 2025, here’s what you need to be watching closely:

• Part B Premium: $185/month (standard)

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

• Part B Deductible: $257 annually

• Part D Deductible: Up to $590 depending on plan

• Part D Out-of-Pocket Cap: $2,000 annually

• Medicare Advantage MOOP (in-network): $9,350 maximum

• Skilled Nursing Coinsurance: $209.50/day (Days 21–100)

• Excess Charges: Up to 15% above Medicare-approved amount

Review these figures at the start of the year and compare them with your expected healthcare needs, especially if you have chronic conditions or use specialty medications.

What You Can Do Right Now

To better manage your Medicare expenses:

• Review Your Plan Annually: During the October 15–December 7 Open Enrollment Period, compare your current plan with others based on premiums, drug formularies, provider networks, and cost-sharing.

• Estimate Your Total Annual Cost: Consider premiums, deductibles, copayments, and the services you’re likely to need.

• Avoid Penalties: Enroll in Parts B and D on time unless you have other creditable coverage.

• Check for Extra Help or State Assistance: Some programs help lower-income beneficiaries pay premiums or reduce prescription costs.

• Explore Cost-Spreading Options: Some plans or pharmacies offer ways to break large prescription costs into monthly payments.

Healthcare Security Isn’t Automatic with Medicare

It’s a common misconception that Medicare will handle all your medical costs once you’re enrolled. But in 2025, the reality is more complex. Between premiums, deductibles, coinsurance, and uncovered services, you may still face thousands in annual costs. These expenses can escalate further with unexpected hospitalizations or high-cost medications.

If you want to avoid financial shocks later in the year, now is the time to review your coverage, understand your liabilities, and adjust your plan or supplemental coverage accordingly.

For help with this process, speak to a licensed agent listed on this website. They can walk you through the cost structures and coverage options suited to your health and financial situation.