Key Takeaways:

• Medicare has hidden costs and rules that can impact your out-of-pocket spending—knowing these details can help you budget better.

• Certain enrollment mistakes can lead to lifelong penalties, so it’s crucial to sign up at the right time and understand the different parts of Medicare.

You Need To Know These Things

Medicare is an essential program for millions of Americans, providing health coverage to those 65 and older and certain younger individuals with disabilities. But while it may seem straightforward at first glance, there are many hidden details that most people don’t learn about until they’re already enrolled—sometimes when it’s too late to avoid costly mistakes. Here are three crucial aspects of Medicare that you need to know before making any decisions about your coverage.

1. Medicare Isn’t Free—And It Has More Costs Than You Think

Many people assume that once they reach 65, Medicare will cover all their healthcare expenses. Unfortunately, that’s not the case. While Medicare does provide significant coverage, you’ll still be responsible for several costs, including premiums, deductibles, and copayments.

Breaking Down the Costs of Medicare

• Medicare Part A (Hospital Insurance): If you or your spouse have worked at least 40 quarters (10 years) and paid Medicare taxes, you won’t have to pay a premium for Part A. However, there are still deductibles and coinsurance for hospital stays. In 2025, the inpatient hospital deductible is $1,676 per benefit period.

• Medicare Part B (Medical Insurance): Most people pay a standard monthly premium, which is $185 in 2025. You’ll also have a deductible of $257 and typically pay 20% of approved services after meeting your deductible.

• Medicare Part D (Prescription Drug Coverage): Part D plans have monthly premiums, a deductible (up to $590 in 2025), and copays for medications. The good news is that the catastrophic coverage phase now kicks in once you reach $2,000 in out-of-pocket drug costs, meaning you won’t pay more after hitting this limit.

Even with Medicare, you’ll need to budget for medical expenses. If you choose additional coverage, such as a Medicare Supplement plan or a Medicare Advantage plan, those come with separate costs and coverage limitations.

2. Enrolling at the Wrong Time Can Lead to Lifetime Penalties

Medicare enrollment isn’t automatic for everyone, and signing up at the wrong time can be costly. Late enrollment penalties can add up quickly, leading to higher monthly costs for the rest of your life.

Key Medicare Enrollment Periods

• Initial Enrollment Period (IEP): This is a seven-month window that begins three months before the month you turn 65, includes your birthday month, and ends three months after. Enrolling during this time ensures you avoid penalties.

• General Enrollment Period (GEP): If you miss your IEP, you can sign up between January 1 and March 31 each year. However, your coverage won’t begin until July 1, and you may have to pay penalties.

• Special Enrollment Period (SEP): If you have employer-sponsored insurance when you turn 65, you may qualify for an SEP, allowing you to delay Medicare enrollment without penalties. This period lasts for eight months after your employment or employer coverage ends.

Understanding Medicare Late Enrollment Penalties

• Part B Late Enrollment Penalty: If you don’t sign up when first eligible, you’ll pay a penalty of 10% for every 12-month period you went without coverage. This penalty lasts for as long as you have Medicare.

• Part D Late Enrollment Penalty: If you go 63 days or more without creditable prescription drug coverage, you’ll face a penalty that’s added to your monthly premium permanently.

Enrolling on time is one of the easiest ways to avoid paying more for Medicare than necessary.

3. Medicare Doesn’t Cover Everything—You’ll Need Additional Coverage

Many people are surprised to learn that Medicare doesn’t cover all medical services. Some significant gaps could leave you with high out-of-pocket costs if you don’t plan ahead.

Services That Medicare Doesn’t Cover

• Long-Term Care: Medicare doesn’t cover custodial care in nursing homes or assisted living facilities. If you need long-term care, you may have to rely on Medicaid or private insurance.

• Routine Dental, Vision, and Hearing Care: Original Medicare doesn’t cover most dental procedures, routine vision exams, or hearing aids. You may need to purchase separate plans for these services.

• Overseas Medical Expenses: If you travel outside the U.S., Medicare generally won’t cover healthcare costs, except in limited emergency situations.

• Certain Alternative Treatments: Acupuncture, chiropractic care (beyond spinal adjustments), and other holistic treatments may not be covered.

How to Fill in the Gaps

If you want more comprehensive coverage, you may need additional insurance:

• Medicare Supplement (Medigap) Plans: These plans help cover Part A and Part B out-of-pocket costs, such as copayments, coinsurance, and deductibles.

• Medicare Advantage (Part C) Plans: These plans offer bundled coverage that may include additional benefits like dental, vision, and hearing services.

• Separate Dental, Vision, and Hearing Plans: Many retirees purchase standalone policies to cover these needs.

Planning ahead can help ensure you don’t get caught off guard by unexpected medical costs.

What You Should Do Next

Medicare can be complex, but understanding these key factors can help you make informed decisions and avoid costly mistakes. As you approach eligibility, consider the following steps:

• Review your expected healthcare needs and budget.

• Learn about your enrollment periods to avoid penalties.

• Explore supplemental coverage options to fill any gaps in Medicare.

If you’re unsure about which plan best suits your needs, speak with a professional listed on this website. They can help you navigate Medicare, compare coverage options, and ensure you’re making the best choices for your healthcare and financial future.