Key Takeaways
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Medicare Part A and Part B might look simple on the surface, but understanding what each part actually covers—and what it doesn’t—is essential to avoid costly surprises.
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Many people misunderstand enrollment timelines, late penalties, and how Medicare works with other coverage, which can affect your access to care and out-of-pocket costs.
Understanding the Basics of Medicare Part A and Part B
Medicare in 2025 continues to be the foundation of health insurance for Americans aged 65 and older, and for those under 65 with qualifying disabilities. At its core, Medicare is divided into different parts, with Part A and Part B forming “Original Medicare.”
Part A: Hospital Insurance
Part A covers inpatient hospital care, skilled nursing facility care, hospice, and some home health care. Most people qualify for premium-free Part A if they or their spouse paid Medicare taxes for at least 10 years.
Part B: Medical Insurance
Part B covers doctor visits, outpatient care, preventive services, and durable medical equipment. Unlike Part A, Part B always comes with a monthly premium and an annual deductible.
But while these definitions seem straightforward, the confusion often starts when you look at how coverage actually works in real life.
1. Enrollment Timelines Are Not Automatic for Everyone
Many people assume that enrollment into Medicare happens automatically at age 65. This is true only if you are already receiving Social Security benefits before turning 65. If not, you must actively sign up during your Initial Enrollment Period (IEP).
The IEP begins three months before your 65th birthday, includes your birthday month, and ends three months after. Missing this window can lead to late enrollment penalties and delays in coverage.
In 2025, penalties for late Part B enrollment continue to accrue at 10% for each 12-month period you were eligible but didn’t enroll, and they apply for as long as you have Part B.
2. The Medicare Part A and B Coverage Gaps Catch People Off Guard
Many assume Medicare covers everything, but that’s not the case.
Part A Coverage Gaps:
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Deductibles: In 2025, the Part A deductible is $1,676 per benefit period.
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Coinsurance: After 60 days in a hospital, you pay daily coinsurance. For example, $419 per day for days 61-90 and $838 per day for days 91-150 (lifetime reserve days).
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Skilled Nursing Facility (SNF): Only covered after a 3-day inpatient hospital stay, and only up to 100 days. After 20 days, daily coinsurance of $209.50 applies.
Part B Coverage Gaps:
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Deductible: The annual deductible is $257 in 2025.
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Coinsurance: You generally pay 20% of the Medicare-approved amount for most services.
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No Out-of-Pocket Limit: Unlike many private insurance plans, Original Medicare doesn’t cap your out-of-pocket expenses.
Understanding these limits helps you prepare for what you might owe.
3. Preventive Care Is Covered—But Only If You Follow the Rules
Part B covers many preventive services like cancer screenings, flu shots, and wellness visits. But the services must meet Medicare guidelines:
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The provider must accept Medicare assignment.
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The frequency of tests must align with Medicare schedules (e.g., a mammogram is covered once every 12 months).
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Some tests may be fully covered, while others come with coinsurance if not classified as preventive.
If the service is diagnostic rather than preventive, you might owe more.
4. Coordination with Other Insurance Can Be Confusing
If you still have job-based insurance at age 65, you might wonder whether to enroll in Medicare.
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If your employer has 20+ employees, your group coverage remains primary, and you can delay Part B without penalty.
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If your employer has fewer than 20 employees, Medicare becomes primary, and delaying Part B can lead to coverage gaps and penalties.
Also, if you have retiree insurance or COBRA, those don’t count as active coverage, so you should not delay Medicare enrollment.
Understanding the coordination rules is crucial to avoiding unexpected bills.
5. Hospital Observation vs. Inpatient Status Matters More Than You Think
You might think being in a hospital means you’re admitted, but not always. If you are under “observation status,” Medicare considers it outpatient care, which falls under Part B.
Why this matters:
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Skilled Nursing Facility (SNF) Coverage: Medicare only covers SNF if you’ve had a 3-day inpatient hospital stay. Observation doesn’t count.
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Costs: You could pay more out-of-pocket because Part B cost-sharing applies.
Always ask the hospital about your admission status to avoid confusion.
6. Traveling Can Limit Your Medicare Coverage
Medicare Part A and B generally do not cover health services outside the United States, with very limited exceptions. This can be a surprise for people planning retirement travel.
Some of the rare exceptions include:
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Needing emergency care in Canada while traveling the most direct route between Alaska and another U.S. state.
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Receiving care in a foreign hospital that is closer to your residence than the nearest U.S. facility.
But routine care abroad is not covered.
7. Medicare Doesn’t Cover Prescription Drugs Under Parts A or B
Many assume their medications will be covered, but that’s not true under Original Medicare.
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Part A may cover medications only during inpatient stays.
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Part B covers very limited outpatient drugs, usually those administered in a clinical setting (e.g., chemotherapy, infusion drugs).
You need to enroll in a separate drug plan (Part D) if you want regular prescription coverage.
8. Signing Up for Part B Later Could Cost You Even if You Don’t Need It Yet
People often delay Part B if they’re healthy or think they won’t need it right away. But unless you have qualifying job-based coverage, that delay means you’ll pay a lifetime late enrollment penalty and might have to wait until the General Enrollment Period (January 1 to March 31) to sign up.
In that case, your coverage won’t begin until July 1, leaving you with a gap in coverage.
9. Home Health Care Has Strict Requirements
While Medicare does cover some home health services, coverage is only provided if:
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You are homebound.
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You need part-time or intermittent skilled care.
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You have a plan of care from a Medicare-approved provider.
Even then, personal care or 24-hour care is not covered.
10. Medicare Only Covers Medically Necessary Services
Original Medicare covers only services that are considered medically necessary. This excludes:
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Cosmetic procedures
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Most dental care
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Eye exams for glasses
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Hearing aids
Understanding what is not covered is just as important as knowing what is.
Final Thoughts on Avoiding Confusion With Medicare A and B in 2025
Medicare Part A and B are vital to your healthcare in retirement, but they don’t work like traditional insurance plans you might be used to. Knowing when to enroll, what’s covered, and where the gaps are can save you from making decisions that impact your health and wallet.
If you still have questions or need help personalizing your Medicare choices, reach out to a licensed agent listed on this website for professional advice.
