Key Takeaways

• Even with Medicare coverage, you can face significant out-of-pocket expenses in retirement that many people don’t plan for.

• Costs such as late enrollment penalties, income-related surcharges, dental and vision services, and long-term care are often overlooked until they become financial burdens.

You Have Medicare, But That Doesn’t Mean You’re Covered for Everything

Many people step into retirement assuming Medicare will cover all their healthcare expenses. While Medicare does offer robust coverage for hospital stays, doctor visits, and prescription drugs, it has important limitations. If you’re not prepared for these gaps, the resulting costs can catch you off guard and strain your retirement budget.

In 2025, retirees are increasingly facing bills for services they assumed were covered. Some costs arise from coverage exclusions, while others are the result of timing or income-related surcharges. Understanding these unexpected Medicare expenses is crucial if you want to plan realistically for retirement.

1. Monthly Premiums Aren’t Just for Part B

It’s widely known that Medicare Part B comes with a monthly premium. In 2025, the standard Part B premium is $185. However, that’s just one of several premiums retirees may face:

• Part A Premiums: If you didn’t work at least 40 quarters (10 years), you may owe up to $518/month for Part A.

• Part D Premiums: These vary by plan, but even the base plans have a monthly cost. Higher-income beneficiaries pay more due to Income-Related Monthly Adjustment Amounts (IRMAA).

• Medicare Advantage and Medigap: If you opt for one of these private options to help with cost-sharing or get extra benefits, expect additional monthly premiums.

These premiums add up quickly and can take a noticeable chunk out of a fixed retirement income.

2. IRMAA Charges Can Add Hundreds More Each Month

If your income in retirement is higher than expected, you may be subject to IRMAA surcharges on both Part B and Part D premiums. For 2025, these surcharges kick in if your modified adjusted gross income (MAGI) from 2023 exceeds $106,000 (individuals) or $212,000 (couples).

These income-related charges can range from $69.90 to over $419 per month on top of your standard Part B premium. The same applies to Part D IRMAA, which can add another $12.90 to $81 monthly depending on your income bracket.

Many retirees find themselves paying these surcharges unexpectedly, especially if they:

• Take large required minimum distributions (RMDs)

• Sell appreciated assets

• Convert traditional IRAs to Roth IRAs

Understanding how your income affects Medicare costs is essential to avoid surprises.

3. Penalties for Late Enrollment Never Go Away

Timing matters. If you miss your initial enrollment window for Medicare, you can face permanent penalties:

• Part B Late Enrollment Penalty: If you delay Part B without creditable coverage, you’ll pay a 10% penalty for every 12-month period you were eligible but not enrolled. This penalty is added to your premium for life.

• Part D Late Enrollment Penalty: If you go more than 63 days without creditable prescription drug coverage, you’ll pay a penalty equal to 1% of the national base premium times the number of months you delayed.

These penalties stick with you as long as you have Medicare. In many cases, people don’t realize they delayed coverage improperly until the charges show up.

4. Dental, Vision, and Hearing Costs Often Shock Retirees

Original Medicare doesn’t cover routine dental care, eye exams for glasses, or hearing aids. If you need:

• Dentures or crowns

• Cataract surgery with lens replacement

• Hearing tests and hearing aids

…you’ll be paying out of pocket unless you have a supplemental policy that includes these benefits.

In 2025, dental and hearing procedures can cost thousands of dollars per year. Medicare Advantage plans may include these services, but coverage limits often apply. Many retirees are surprised to learn they either have limited coverage or none at all for these essential needs.

5. Long-Term Care Isn’t Covered by Medicare

One of the most costly and overlooked expenses in retirement is long-term care. Medicare only covers short-term skilled nursing under specific conditions — typically following a hospital stay and for up to 100 days.

If you need help with basic daily activities like bathing, eating, or dressing on a long-term basis, Medicare does not cover these custodial services. Options include:

• Paying out of pocket

• Purchasing long-term care insurance earlier in life

• Applying for Medicaid (if you meet income and asset limits)

Without advance planning, long-term care can quickly erode retirement savings.

6. Hospital and Skilled Nursing Facility Costs Can Add Up Fast

Even with Medicare Part A, you’re still responsible for cost-sharing in 2025:

• $1,676 deductible for each hospital benefit period

• Daily coinsurance of $419 for days 61–90 in the hospital

• $838 per day for lifetime reserve days

• $209.50/day coinsurance for skilled nursing facility stays (days 21–100)

Multiple hospitalizations or an extended recovery period can result in thousands of dollars in out-of-pocket costs, especially if you don’t have a supplemental policy or if you exceed the covered limits.

7. Prescription Drug Costs After the $2,000 Cap Can Still Be Complex

In 2025, Medicare Part D now includes a $2,000 annual out-of-pocket cap for prescription drugs. While this is a major improvement, it doesn’t mean you won’t face other costs:

• Deductibles up to $590 must be paid first

• Tiered copayments for medications still apply

• Non-covered drugs or drugs requiring prior authorization may cost more or be denied

Also, not every plan covers the same drugs. If your medications fall outside your plan’s formulary, you might have to pay the full cost.

8. Emergency and Out-of-Network Costs Surprise Many Travelers

Medicare generally doesn’t cover healthcare outside the U.S. If you travel internationally or even between states, you may face:

• Emergency room copays of $100–$150

• High out-of-network coinsurance if using providers outside your plan’s service area

• No coverage abroad under Original Medicare, unless under very specific circumstances

Supplemental insurance or Medicare Advantage plans may offer some protection, but limits and exclusions apply. Retirees who travel frequently should evaluate their options carefully.

9. Home Health Services Aren’t Always Free

While Medicare covers some home health services, it must be medically necessary and ordered by a physician. Coverage is limited to skilled services, not ongoing personal care.

In 2025, many retirees find themselves needing home assistance that Medicare won’t cover, such as:

• Help with bathing and cooking

• Transportation to doctor’s visits

• Ongoing supervision

These services often require out-of-pocket payment or support from family caregivers.

10. Cost-Sharing for Specialist Visits and Procedures

Many assume Medicare will fully cover specialist visits and surgeries. While Part B covers 80% of approved costs after the deductible ($257 in 2025), you’re still responsible for:

• 20% coinsurance for doctor visits, outpatient surgeries, physical therapy, and durable medical equipment

• No annual cap on spending under Original Medicare unless you have supplemental coverage

If you see multiple specialists or undergo procedures, the costs can accumulate quickly.

Planning for the Unexpected Costs That Come With Medicare

Medicare is a strong foundation for retirement healthcare, but it’s not complete. Unless you take steps to fill the gaps and understand the cost-sharing responsibilities, you may face bills you didn’t anticipate. Many of these costs are hidden in exclusions, penalties, or surcharges that don’t become clear until after retirement begins.

To better protect yourself:

• Enroll in Medicare on time to avoid penalties

• Understand how income affects your premiums

• Review your prescription drug coverage annually

• Consider supplemental coverage if you want to reduce out-of-pocket expenses

• Anticipate the need for long-term or home-based care

Taking proactive steps now can reduce the chances of surprise medical bills later.

Be Informed Before the Bills Arrive

If you’re already enrolled in Medicare or planning to retire soon, now is the time to evaluate your healthcare plan. Don’t wait until the expenses show up to realize there were gaps in your coverage.

Review your coverage options carefully. Speak with a licensed agent listed on this website to assess your needs, understand your benefits, and avoid unexpected costs in retirement.