Key Takeaways
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Medicare is not entirely free at age 65, and the out-of-pocket costs can be significant depending on your coverage choices and income.
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Understanding premiums, deductibles, coinsurance, and additional coverage needs is essential to avoid unexpected financial burdens.
You May Not Pay a Premium for Part A—But It’s Not Free
When you turn 65 and qualify for Medicare, many people assume that everything is covered automatically. That’s not how it works.
If you or your spouse worked and paid Medicare taxes for at least 10 years (40 quarters), you won’t owe a monthly premium for Medicare Part A. But that’s where the idea of “free” ends.
Medicare Part A has:
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A deductible of $1,676 per benefit period in 2025.
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Daily coinsurance costs for extended hospital stays (starting at $419/day after day 60).
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Additional charges for skilled nursing facility care after day 20.
If you didn’t pay into Medicare for the required time, Part A costs $518 per month in 2025 if you have fewer than 30 quarters, or $284 per month if you have between 30 and 39 quarters.
Part B Always Comes with a Premium
Unlike Part A, Medicare Part B isn’t free for anyone. In 2025, the standard monthly premium is $185, and that’s just the starting point. If your income is above certain thresholds, you may owe more due to the Income-Related Monthly Adjustment Amount (IRMAA).
You’re also responsible for:
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An annual deductible of $257.
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20% coinsurance on most doctor visits, outpatient services, durable medical equipment, and lab work.
There is no cap on how much you might spend out of pocket under Part B alone.
Prescription Drug Coverage Is Not Built-In
Medicare Part D, which covers prescription drugs, must be added separately if you want drug coverage. And just like the other parts, it isn’t free.
In 2025:
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The maximum annual deductible is $590.
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You’ll pay coinsurance or copayments until you reach $2,000 out-of-pocket, after which catastrophic coverage kicks in.
You can’t skip Part D without consequences. If you don’t enroll when first eligible and don’t have other creditable coverage, you could face a lifetime late enrollment penalty.
Most People Add Supplemental Coverage—And That Costs More
Original Medicare doesn’t cover everything. It excludes dental, vision, hearing aids, long-term care, and many other essentials. That’s why most people choose to add supplemental insurance to protect against large bills.
You might consider:
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A Medicare Supplement plan (Medigap), which helps cover deductibles, coinsurance, and copayments.
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A Medicare Advantage plan, which combines Parts A and B and usually includes Part D, but comes with its own out-of-pocket structure and network limitations.
Neither type of supplemental coverage is free. Monthly premiums and cost-sharing can add up, especially if you need frequent care or choose a broader provider network.
Medicare Doesn’t Cover Long-Term Care
One of the most expensive types of care—long-term custodial care in a nursing home or at home—is not covered by Medicare. It only covers short-term skilled nursing after a hospital stay and only under strict conditions.
This means:
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If you need help with daily activities (like dressing or bathing) over the long term, you’ll need to pay out of pocket or rely on Medicaid if you qualify.
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Many people turn to long-term care insurance or spend down their assets to access assistance.
Delaying Enrollment Can Trigger Penalties
Waiting to sign up for Medicare can cost you.
If you don’t enroll in Part B during your Initial Enrollment Period (IEP)—which begins three months before you turn 65 and ends three months after—you may face a penalty:
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The penalty is 10% for each full 12-month period you could have had Part B but didn’t.
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This penalty is permanent and added to your monthly premium.
The same applies to Part D. If you delay drug coverage, the penalty is 1% of the national base beneficiary premium for each month you go without it, and it continues for as long as you have Part D.
Income Affects How Much You Pay
Medicare isn’t one-size-fits-all when it comes to costs. Higher-income beneficiaries pay more through IRMAA for both Part B and Part D.
In 2025:
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If your income exceeds $106,000 (individual) or $212,000 (joint), you’ll pay more.
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The surcharges increase in tiers based on your modified adjusted gross income (MAGI).
Your income from two years ago (2023) determines your 2025 premiums.
You’ll Still Need to Budget for Routine Care
Original Medicare doesn’t include:
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Dental cleanings or dentures
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Eye exams or glasses
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Hearing tests or hearing aids
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Foot care (unless medically necessary)
That means you’ll need to either pay out of pocket or find a supplemental plan that covers these services. Even preventive care, like regular screenings, might come with associated lab or facility fees not covered under preventive service exemptions.
Out-of-Pocket Costs Can Add Up Quickly
While Original Medicare doesn’t have a yearly out-of-pocket maximum, supplemental plans often include a cap. But without one, your annual costs could include:
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Premiums for Part B, Part D, and any supplemental coverage
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Hospital deductibles and coinsurance
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20% of all outpatient care
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Full cost of uncovered services
It’s not uncommon for retirees to spend thousands per year on healthcare, depending on their needs and coverage.
Planning Matters More Than Ever in 2025
The Medicare landscape has changed, and it continues to evolve. In 2025:
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The Part D out-of-pocket cap offers relief to those with high drug costs, but the deductible and premium still apply.
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Medicare Advantage plans may come with lower premiums but stricter provider networks, prior authorization requirements, and cost-sharing rules that catch people off guard.
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Standard Medicare offers broad provider access, but greater out-of-pocket risks unless you buy Medigap.
Planning ahead—before age 65—is crucial. It gives you time to understand:
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Which parts you need
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When to enroll
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How much you’ll pay
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Whether your providers accept Medicare
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What’s missing from your coverage
What You Can Do to Stay Ahead
To avoid unpleasant surprises, take the following steps:
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Review your enrollment timeline: Know when your Initial Enrollment Period starts and ends.
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Estimate your healthcare budget: Include premiums, copays, and uncovered services.
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Check provider participation: Confirm that your preferred doctors and hospitals accept Medicare.
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Understand your prescription drug needs: Compare formularies and pharmacy networks.
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Look beyond the premiums: Consider the cost of deductibles, coinsurance, and service restrictions.
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Consult a professional: A licensed agent can help match your healthcare needs and financial situation with the right Medicare coverage.
Preparing for Medicare Means Preparing for the Costs
Medicare at 65 is a major milestone, but it’s not the end of your healthcare planning. Many people are caught off guard by how much they still owe even after enrolling.
By getting informed early, comparing your options, and asking the right questions, you’ll set yourself up for better protection, more predictable costs, and fewer surprises.
To make sure you’re on the right track, reach out to a licensed agent listed on this website. They can walk you through the process, explain what you’re missing, and help you make confident decisions about your Medicare coverage.
