The Costs of Medicare Don’t End When You Enroll—They Keep Increasing as You Get Older

Key Takeaways

• Medicare costs don’t stop once you enroll. Premiums, deductibles, and out-of-pocket expenses increase over time, especially as your healthcare needs grow with age.

• Staying ahead of these costs requires annual review, possible coordination with other coverage like Medicaid or supplemental insurance, and expert guidance.

Medicare Is Not a One-Time Cost

Many people assume that once they enroll in Medicare, their healthcare costs are mostly taken care of. While Medicare certainly provides important financial protection, it doesn’t mean the end of healthcare spending. In fact, your costs may increase steadily each year you age into retirement. Understanding where and how these increases happen is the first step in protecting yourself financially.

Premiums That Keep Going Up

Medicare premiums are not fixed for life. Each year, you may see changes in the amount you pay, especially for Part B and Part D.

Part B Premiums

• In 2025, the standard Part B premium is $185 per month.

• This figure is subject to annual adjustments based on Medicare’s projected healthcare spending.

• If your income increases, even slightly, you may be subject to Income-Related Monthly Adjustment Amounts (IRMAA), which can substantially raise your monthly premium.

Part D Premiums

• Part D premiums vary by plan but are also adjusted annually.

• Like Part B, higher-income beneficiaries may pay an IRMAA for Part D as well.

• These premiums also tend to increase with inflation and rising drug costs.

Part A Premiums (If Applicable)

• Most people don’t pay a premium for Part A because they paid Medicare taxes for at least 40 quarters.

• However, if you don’t meet that requirement, your monthly premium in 2025 could be as high as $518.

Deductibles and Cost-Sharing Grow Over Time

Even if you manage your premiums, deductibles and cost-sharing can become a growing financial burden.

Part A Deductibles

• The inpatient hospital deductible is $1,676 per benefit period in 2025.

• This amount has increased almost every year. In 2024, it was $1,632.

Part B Deductibles

• The annual deductible for Part B is $257 in 2025.

• Once met, you pay 20% coinsurance for most services, which can add up quickly if you need frequent outpatient care.

Part D Deductibles

• The maximum deductible for Part D plans in 2025 is $590.

• This amount is reset annually and often increases.

The Financial Impact of Chronic Illness and Aging

As you grow older, you’re more likely to need routine care, specialist visits, hospitalizations, durable medical equipment, and prescription drugs. Each of these comes with a share of cost.

• Frequent outpatient visits mean you’ll repeatedly pay 20% coinsurance under Part B.

• Extended hospital stays could mean paying multiple Part A deductibles within a single year.

• Long-term medication needs can push you toward the Part D out-of-pocket cap, now set at $2,000 for 2025.

If you have a chronic illness, you might also need services like:

• Physical therapy

• Mental health counseling

• Home health care

• Skilled nursing facility care

These services may come with co-pays, limited coverage periods, or strict conditions for eligibility.

IRMAA Costs Can Surprise You in Retirement

Income-related premium adjustments (IRMAA) are one of the most misunderstood Medicare costs. Even moderate increases in your income could shift you into a higher bracket.

• IRMAA is based on your Modified Adjusted Gross Income (MAGI) from two years prior.

• If you withdraw from retirement accounts, sell property, or receive unexpected income, your Medicare costs may jump unexpectedly.

• In 2025, the first IRMAA threshold starts at $106,000 for individuals and $212,000 for couples.

Inflation and Policy Changes Affect Costs

Each year, the Centers for Medicare & Medicaid Services (CMS) evaluates healthcare costs and adjusts premiums, deductibles, and income brackets. This means:

• You might pay more each year, even if your income stays the same.

• Cost-of-living increases in Social Security benefits may be offset or erased entirely by higher Medicare costs.

• Proposed policy changes can also impact costs, especially if Congress adjusts funding formulas or cost-sharing structures.

Additional Services That Aren’t Fully Covered

Even though Medicare offers a solid base of coverage, many healthcare services you may need later in life are either not covered or only partially covered.

These include:

• Dental care: Routine cleanings, dentures, and extractions are not covered.

• Vision care: Eye exams and glasses are not covered unless tied to a medical condition.

• Hearing aids: Medicare does not pay for hearing exams or devices.

• Long-term care: Custodial care in a nursing home is not covered under Medicare.

As these needs increase with age, so does the risk of significant out-of-pocket spending unless you plan accordingly.

Annual Review Is Critical to Avoid Overpaying

Every year from October 15 to December 7, Medicare Open Enrollment gives you a chance to reevaluate your plan choices. Ignoring this period could mean you end up with coverage that no longer fits your needs or costs more than it should.

Key tasks during this period:

• Review your Part D plan to ensure it still covers your medications.

• Compare options for supplemental coverage if you have Original Medicare.

• Check for plan changes like new deductibles, copay structures, or provider networks.

Coordination with Other Coverage May Help

To reduce growing Medicare expenses, you may consider pairing your Medicare benefits with other options:

• Medicaid: If your income and assets fall below certain levels, Medicaid may help pay premiums and cost-sharing.

• Employer or retiree plans: Some employers offer post-retirement health coverage that works with Medicare.

• Supplemental insurance: Also known as Medigap, these policies help cover out-of-pocket costs but come with additional premiums and eligibility rules.

Each of these options requires careful comparison of benefits and costs, and they may change as you age or your financial situation evolves.

The Hidden Cost of Not Getting Help

Many people either overpay or underinsure themselves because they don’t fully understand how Medicare works. Costs can spiral when you:

• Miss enrollment deadlines

• Choose plans without understanding network limits

• Overlook how much you’ll pay out-of-pocket

• Ignore how your income affects your premiums

Working with a licensed agent can help you:

• Navigate plan comparisons

• Optimize your benefits

• Avoid costly mistakes

Planning Ahead Can Ease the Burden

You can’t avoid aging, but you can prepare for the cost increases that come with it. Build Medicare expenses into your retirement budget and:

• Track your annual healthcare spending to identify trends

• Anticipate upcoming medical needs

• Create a savings cushion for uncovered services

• Use preventive services to avoid future costs

Healthcare is one of the fastest-growing expenses in retirement, and failing to plan for increasing Medicare costs can jeopardize your long-term financial security.

How to Take Control of Medicare Costs in Retirement

Rising Medicare costs don’t mean you’re powerless. With annual planning, informed decisions, and expert help, you can take steps to control what you pay and protect your finances.

• Monitor changes in premiums and deductibles every year.

• Stay aware of how your income affects your Medicare costs.

• Explore supplemental options and evaluate whether you need to change plans.

• Reach out for personalized guidance if your healthcare or financial needs change.

If you’re unsure about your Medicare costs or how they may rise as you get older, speak with a licensed agent listed on this website. They can help you understand your current options and prepare for what’s ahead.