Key Takeaways
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Medicare costs in 2025 include premiums, deductibles, and out-of-pocket expenses that vary by coverage type. Understanding these numbers can help you plan realistically for your healthcare budget.
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Even with Medicare, not everything is covered. You could still face bills for services Medicare doesn’t include, late enrollment penalties, and coverage gaps.
What You Pay to Get Started with Medicare
Enrolling in Medicare doesn’t mean you get free healthcare. In fact, understanding what you pay right from the start is essential to avoid surprises later.
Medicare Part A: Hospital Insurance
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Premiums: Most people pay no monthly premium for Part A if they or their spouse paid Medicare taxes for at least 40 quarters. If you haven’t met that threshold, the premium in 2025 is $518 per month for fewer than 30 quarters or $284 per month for 30 to 39 quarters.
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Deductible: In 2025, you pay $1,676 per benefit period before Medicare starts covering your inpatient hospital care.
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Coinsurance:
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Days 1–60: $0 (after deductible)
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Days 61–90: $419 per day
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Days 91 and beyond: $838 per day for each lifetime reserve day (up to 60 days in your lifetime)
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Medicare Part B: Medical Insurance
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Premium: The standard monthly premium for Part B in 2025 is $185. Higher earners pay more based on income.
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Deductible: You must pay $257 each year before Medicare begins paying.
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Coinsurance: Once you meet the deductible, you typically pay 20% of the Medicare-approved amount for most doctor services, outpatient therapy, and durable medical equipment.
The Services Medicare Covers
Medicare provides broad coverage, but it’s not all-inclusive.
Covered Services Under Part A and B
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Inpatient hospital stays
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Skilled nursing facility care (up to 100 days per benefit period)
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Home health care
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Hospice care
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Doctor visits
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Lab tests and diagnostic services
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Preventive services (like flu shots and screenings)
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Durable medical equipment
Not Covered by Original Medicare
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Routine dental and vision care
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Hearing aids and exams
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Prescription drugs (covered separately under Part D)
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Long-term custodial care
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Overseas healthcare
To get coverage for some of these, you’ll need to explore separate plans or pay out of pocket.
What You Still Owe Even with Coverage
Just because Medicare pays for many services doesn’t mean you won’t have to pay anything out of pocket. In fact, many costs catch people off guard.
Out-of-Pocket Maximums
Original Medicare does not have a cap on out-of-pocket spending. That means there is no limit to what you could pay for Part A and B services in a calendar year.
Late Enrollment Penalties
If you miss your initial enrollment window (which starts three months before your 65th birthday, includes your birth month, and ends three months after), you could face penalties:
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Part B Penalty: An extra 10% of the monthly premium for each full 12-month period you were eligible but didn’t sign up. This penalty lasts as long as you have Part B.
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Part D Penalty: Calculated as 1% of the national base premium times the number of months you went without coverage. This also lasts for life.
Prescription Drug Costs in 2025
Medicare Part D covers prescription drugs, but it comes with its own cost structure.
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Maximum Deductible: In 2025, this is $590.
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Annual Out-of-Pocket Cap: A new $2,000 limit applies in 2025. Once you reach this cap, your drug costs are fully covered for the rest of the year.
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Monthly Premiums: Vary by plan and location but average around $46.50 in 2025.
Keep in mind that skipping Part D enrollment when first eligible can result in lifelong penalties unless you have creditable coverage elsewhere.
Coordination with Other Coverage
If you have other insurance, like through a spouse or retiree plan, Medicare usually coordinates benefits. But that doesn’t mean all costs are eliminated.
Employer or Retiree Plans
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These plans may pay after Medicare or cover what Medicare does not.
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They often include drug coverage but must meet the standards of “creditable coverage” to avoid Part D penalties.
FEHB and TRICARE
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Federal Employee Health Benefits (FEHB) plans generally work well with Medicare.
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TRICARE for Life acts as a secondary payer to Medicare, covering most remaining costs.
Understanding how these plans integrate can prevent double billing or denied claims.
High-Income Surcharge: IRMAA
Medicare adjusts Part B and D premiums based on income. This Income-Related Monthly Adjustment Amount (IRMAA) applies if your income from two years ago was above certain thresholds.
For 2025:
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Single filers: Threshold starts at $106,000
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Married filing jointly: Threshold starts at $212,000
The higher your income, the more you pay monthly for Part B and Part D.
What About Supplemental Insurance?
Medicare Supplement Insurance (often called Medigap) is designed to fill the gaps in Original Medicare, but these policies come at an extra monthly premium.
What Medigap Typically Covers
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Part A and B coinsurance
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Skilled nursing facility care coinsurance
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Part A deductible
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Foreign travel emergency care (in limited amounts)
What It Doesn’t Cover
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Long-term care
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Prescription drugs
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Dental, vision, or hearing care
You must have both Part A and Part B to purchase a Medigap policy, and the best time to buy is during your Medigap Open Enrollment Period (6 months after you turn 65 and enroll in Part B). If you delay, you may face medical underwriting.
What You Might Skip But Later Regret
Many people try to cut costs early in retirement, but skipping certain coverage can lead to expensive consequences.
Delaying Part D
Even if you don’t take many medications now, skipping Part D exposes you to lifelong penalties and unprotected drug expenses in the future.
Declining Supplemental Coverage
Without a Medigap or Advantage plan, you have no ceiling on out-of-pocket costs with Original Medicare.
Not Signing Up During the Right Window
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Initial Enrollment Period (IEP): Surrounds your 65th birthday
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Special Enrollment Periods (SEPs): Triggered by events like retirement or losing group coverage
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General Enrollment Period (GEP): January 1 to March 31 (coverage starts July 1)
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Annual Enrollment Period (AEP): October 15 to December 7 (to change Part D or Advantage plans)
Missing these can lock you into insufficient coverage for months or years.
What Medicare Still Doesn’t Pay For
Even with all parts in place, Medicare won’t cover everything. You should expect to pay fully out of pocket for the following unless you have supplemental plans:
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Long-term custodial care (such as nursing homes or home aides not tied to skilled care)
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Most dental procedures and dentures
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Routine eye exams and glasses
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Hearing aids and related exams
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Care received while traveling abroad
Planning for these uncovered services is essential for a complete healthcare budget.
Understanding the Full Picture
Medicare in 2025 provides valuable protection but comes with layers of costs and decisions. While premiums and deductibles are predictable, your real expenses depend on how much healthcare you use, which plans you select, and how well you plan ahead.
Being proactive during enrollment periods and understanding the trade-offs can help you control costs without sacrificing care.
Get Help Before You Commit
Medicare decisions carry long-term consequences. Whether you’re approaching 65, already enrolled, or helping a family member, it’s wise to have expert support.
Speak with a licensed agent listed on this website to:
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Compare plan types and costs
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Avoid late enrollment penalties
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Understand your out-of-pocket responsibilities
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Coordinate benefits with employer or retiree coverage
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Decide if a supplemental plan is right for you
