Key Takeaways

• Even after timely enrollment, Medicare enrollees often face high monthly costs due to premiums, deductibles, copays, and services not fully covered.

• Understanding each part of Medicare and how it interacts with supplemental coverage, prescription drugs, and income-related adjustments can help you better anticipate and manage ongoing expenses.

You Enrolled Correctly, So Why Are the Bills Still High?

You met the deadlines, filled out the forms, and made the right choices. So why does your monthly budget still feel squeezed by healthcare costs under Medicare? The answer lies in how Medicare is structured. While it’s designed to provide coverage in retirement, it’s not free and often doesn’t cover 100% of your healthcare expenses.

Medicare Isn’t One Single Plan

Many new enrollees assume that Medicare is a complete health insurance package. But Medicare is actually made up of several parts, each with different costs, limitations, and coverage rules:

Part A: Hospital Insurance

• Generally premium-free if you worked and paid Medicare taxes for at least 10 years.

• In 2025, you pay a deductible of $1,676 per benefit period.

• After 60 days in the hospital, daily coinsurance applies: $419 for days 61–90, and $838 for lifetime reserve days.

• Skilled nursing facility care comes with its own costs: $209.50 per day from days 21–100.

Part B: Medical Insurance

• Has a standard monthly premium of $185 in 2025.

• Requires an annual deductible of $257.

• After that, you typically pay 20% of Medicare-approved costs.

Part B covers doctor visits, lab tests, outpatient care, preventive services, and durable medical equipment. But those 20% coinsurance amounts can add up quickly.

Part D: Prescription Drug Coverage

• You must enroll separately and pay a monthly premium.

• Plans vary in cost and coverage, and in 2025, the deductible is capped at $590.

• Once you reach $2,000 in out-of-pocket drug costs, your plan covers 100% for the rest of the year.

Income-Based Adjustments Can Raise Your Costs

Even if you’re only enrolled in Parts B and D, you may be surprised to see higher premiums if your income exceeds certain thresholds. This is due to the Income-Related Monthly Adjustment Amount (IRMAA).

In 2025, IRMAA kicks in if your modified adjusted gross income (MAGI) was above $106,000 (individual) or $212,000 (joint) based on your 2023 tax return. That means your premiums for Part B and D could be significantly higher than the base amounts.

What Medicare Doesn’t Cover

A large part of the financial burden comes from what Medicare doesn’t cover:

• Dental care: Cleanings, fillings, dentures, and root canals are not included.

• Vision care: Routine eye exams and glasses or contact lenses are excluded unless linked to a medical condition.

• Hearing aids: You must pay for exams and hearing aids out-of-pocket unless you have other coverage.

• Long-term care: Nursing home care for custodial purposes is not covered.

Many retirees are surprised when they have to pay for these services entirely on their own or through a separate insurance plan.

Supplemental Coverage May Not Eliminate All Costs

If you enrolled in a Medigap policy or another form of supplemental insurance, you might have expected to reduce your out-of-pocket costs dramatically. While this is often true, these plans come with their own monthly premiums. And some services may still require copays or coinsurance.

Also, some supplemental plans do not include prescription drug coverage, so you may still have to purchase a standalone Part D plan.

High Healthcare Utilization Means Higher Costs

Even with Medicare, your out-of-pocket costs are directly tied to how often you use the healthcare system:

• Frequent doctor visits result in repeated 20% coinsurance payments under Part B.

• Multiple prescriptions can push you toward the $2,000 Part D cap sooner, which helps eventually, but requires significant spending upfront.

• Hospital stays and outpatient surgeries can result in bills due to deductibles and coinsurance.

Many people in their mid-60s to 80s experience higher healthcare usage, which compounds these costs month after month.

Late Enrollment Penalties Add Up

Although you enrolled on time, it’s worth noting that those who didn’t face penalties that never go away. For reference:

• The Part B penalty adds 10% to your premium for every full 12-month period you could have had Part B but didn’t.

• The Part D penalty adds 1% of the national base premium for every uncovered month.

These penalties apply for as long as you’re enrolled. While this may not be your case, it’s a contributing factor for many retirees facing unusually high bills.

Copayments and Coinsurance Are Ongoing

Some costs don’t come monthly but occur as you use services:

• Primary care visit: You pay 20% of the allowed charge after meeting your Part B deductible.

• Specialist visit: Typically higher costs apply.

• Emergency room visit: Copays and facility charges can quickly reach hundreds of dollars.

• Outpatient services: Lab work, X-rays, and diagnostic imaging often result in separate bills.

So even if your monthly premium feels affordable, one or two unexpected visits can tilt your monthly budget.

Medicare Advantage Isn’t Free of Costs Either

Some people opt for Medicare Advantage (Part C) to simplify coverage. While these plans often roll Part A, B, and D into one, they are still not free:

• You still pay your Part B premium.

• You may face copays for almost every service.

• Out-of-pocket maximums can be as high as $9,350 (in-network) in 2025.

• Some plans require prior authorization for services, which can delay care or result in unexpected denials.

Many Medicare Advantage enrollees underestimate the cost-sharing involved until they begin using services regularly.

Annual Changes in Costs

Each year, Medicare adjusts its premiums, deductibles, and cost-sharing figures. In 2025:

• Part A deductible increased to $1,676.

• Part B premium rose to $185 and the deductible to $257.

• Part D deductible increased to $590, though the $2,000 out-of-pocket cap helps provide relief once met.

These annual increases mean your expenses may rise even if your health status and usage stay the same.

Retiree Healthcare Expectations vs. Reality

Many people enter retirement expecting Medicare to function like employer-sponsored insurance. But Medicare doesn’t cap out-of-pocket expenses under Original Medicare (unless you have supplemental coverage). Plus, costs for prescriptions, preventive care, and durable medical equipment vary widely.

You may have also assumed that enrolling at age 65 would guarantee low-cost coverage for the rest of your life. While Medicare provides protection from catastrophic healthcare expenses, it’s not designed to fully absorb routine medical costs.

How You Can Plan Better Going Forward

To make Medicare more manageable, consider these steps:

• Review your plan annually: The Annual Enrollment Period runs from October 15 to December 7. Compare coverage and costs each year.

• Estimate your yearly usage: Knowing how often you visit doctors or fill prescriptions can help you choose the most cost-effective plan.

• Use preventive services: These are often free under Part B and can help reduce long-term healthcare expenses.

• Track your drug costs: If you’re nearing the $2,000 cap, ask your provider about generic alternatives.

• Review income and IRMAA impact: Reducing your modified adjusted gross income (MAGI) might lower your premium tiers in future years.

Medicare Coverage Can Help—but It Doesn’t Cover Everything

You’ve done the right thing by enrolling in Medicare when you became eligible. But understanding the cost structure is just as important as signing up. From premiums and deductibles to the fine print on coinsurance and what’s excluded, Medicare requires active management.

If you’re feeling overwhelmed by the bills, it may be time to get a second opinion on your current coverage.

Speak with a licensed agent listed on this website to review your existing benefits and discuss ways to improve your Medicare cost strategy for the year ahead.