Key Takeaways:

• Medicare is more complex than many realize, with various rules, costs, and coverage gaps that can impact your retirement planning.

• Understanding the lesser-known aspects of Medicare can help you avoid unexpected costs and coverage limitations when you need healthcare the most.

1. Medicare Doesn’t Cover Everything You Might Expect

Many people assume Medicare covers all healthcare expenses, but that’s not the case. Original Medicare (Parts A and B) covers hospital stays, doctor visits, and medical procedures, but it doesn’t include routine dental, vision, hearing, or long-term care. If you need dentures, hearing aids, or assistance with daily living activities, you’ll need additional coverage or pay out of pocket.

2. You May Still Have Out-of-Pocket Costs

Even with Medicare, you’ll have expenses such as deductibles, copayments, and coinsurance. In 2025, the Medicare Part A hospital deductible is $1,676 per benefit period, while Part B has a standard annual deductible of $257. Additionally, you typically pay 20% of approved Part B services after meeting the deductible. Without additional coverage, these costs can add up quickly.

3. Late Enrollment Penalties Can Last a Lifetime

If you don’t sign up for Medicare on time, you may face permanent penalties. For example, if you don’t enroll in Part B during your Initial Enrollment Period (IEP) and don’t have creditable coverage, your premium increases by 10% for every 12-month period you go without coverage. This penalty never goes away and could significantly increase your monthly costs over time.

4. Your Income Can Affect How Much You Pay for Medicare

Medicare premiums aren’t the same for everyone. If your modified adjusted gross income (MAGI) is above a certain threshold, you’ll pay an Income-Related Monthly Adjustment Amount (IRMAA) for Part B and Part D. In 2025, IRMAA applies if your income exceeds $106,000 for individuals or $212,000 for married couples filing jointly. The higher your income, the more you’ll pay for Medicare.

5. The Medicare Part D Coverage Gap Has Been Eliminated—But Costs Still Exist

Previously, Medicare Part D had a coverage gap (commonly called the ‘donut hole’), where beneficiaries had to pay a higher percentage of prescription drug costs. In 2025, this gap has been eliminated, and there’s now a $2,000 cap on out-of-pocket costs. However, costs can still add up before reaching the cap, so it’s important to review your Part D plan each year.

6. Medicare Advantage Plans Have Maximum Out-of-Pocket Limits

Unlike Original Medicare, which has no out-of-pocket cap, Medicare Advantage (Part C) plans must have an annual maximum out-of-pocket (MOOP) limit. For 2025, the MOOP is $9,350 for in-network services and $14,000 for combined in-network and out-of-network care. Once you reach this limit, the plan covers 100% of covered services for the rest of the year.

7. You Can Change Medicare Plans Every Year

Many people think they’re stuck with their Medicare plan once they enroll, but you can make changes during specific periods. The Medicare Open Enrollment Period runs from October 15 to December 7 each year, allowing you to switch between Original Medicare and Medicare Advantage or change your Part D plan. There’s also a Medicare Advantage Open Enrollment Period from January 1 to March 31, during which you can switch to another Medicare Advantage plan or return to Original Medicare.

8. Medicare Covers Preventive Services—But Not All Screenings Are Free

Medicare offers many preventive services, including screenings for cancer, diabetes, and heart disease. Some services, like flu shots and annual wellness visits, are covered at no cost. However, not all preventive tests are completely free—you may have copayments or coinsurance for certain diagnostic screenings. Always check whether a service is fully covered or if you’ll have out-of-pocket costs.

9. Medicare Enrollment Isn’t Automatic for Everyone

While some people are automatically enrolled in Medicare (such as those receiving Social Security benefits before turning 65), others must enroll themselves. If you aren’t collecting Social Security benefits, you’ll need to sign up for Medicare during your Initial Enrollment Period (IEP), which begins three months before your 65th birthday and ends three months after. Missing this window can result in coverage delays and penalties.

What This Means for Your Medicare Planning

Knowing these lesser-known facts about Medicare can help you make informed decisions about your healthcare in retirement. Reviewing your options each year, budgeting for out-of-pocket costs, and understanding enrollment rules can prevent costly surprises down the road.

For help navigating your Medicare choices, speak with a licensed agent listed on this website. They can answer your questions and guide you toward a plan that fits your needs.