Even the Most Careful Planners Can Miss These Overlooked Medicare Costs That Keep Popping Up

Key Takeaways

• Many Medicare enrollees are surprised by recurring out-of-pocket costs, even after selecting a plan. These include deductibles, copayments, excess charges, and services Medicare doesn’t fully cover.

• Being aware of gaps in coverage—such as dental, vision, long-term care, and prescription drug out-of-pocket limits—can help you budget more realistically and avoid financial shocks.

Medicare’s Core Doesn’t Cover Everything

Medicare was never designed to cover 100% of your health care needs. Despite this, many retirees assume they will stop paying out-of-pocket once they enroll. In 2025, Medicare still consists of multiple parts, and each comes with its own expenses.

Original Medicare includes:

• Part A (Hospital Insurance): Covers inpatient hospital stays, skilled nursing facilities, hospice, and some home health services.

• Part B (Medical Insurance): Covers outpatient care, doctor visits, preventive care, and medical supplies.

Both Part A and B leave room for recurring costs, and many of them are frequently underestimated.

Part A Expenses You Might Miss

You might assume Part A is free if you worked at least 40 quarters. That is true for the premium, but other costs still apply:

• Inpatient deductible: $1,676 per benefit period in 2025.

• Hospital coinsurance: $419/day for days 61 through 90; $838/day for lifetime reserve days.

• Skilled nursing facility care: First 20 days are free, but days 21 through 100 cost $209.50 per day.

These amounts reset per benefit period, not per calendar year. That distinction can catch people off guard if they’re hospitalized more than once in a year.

Part B Costs That Keep Adding Up

Part B is the portion that covers most of your routine medical care, but it comes with its own set of regular payments:

• Monthly premium: $185 in 2025 (higher if you fall into IRMAA brackets).

• Annual deductible: $257.

• Coinsurance: After the deductible, you usually pay 20% of Medicare-approved amounts.

Even though 20% may sound manageable, it can grow quickly if you require multiple tests, outpatient surgeries, or physical therapy over several months.

Late Enrollment Penalties Can Haunt You

Medicare has strict enrollment periods. If you delay enrolling in Part B or Part D without creditable coverage, you may face permanent penalties:

• Part B penalty: 10% added to your premium for each full 12-month period you delayed.

• Part D penalty: 1% of the national base premium multiplied by the number of months delayed.

These penalties are not one-time charges. They are added to your monthly premium for the rest of your life.

Prescription Drug Costs Don’t Stop With a Plan

Even if you enroll in Medicare Part D for prescription drugs, you still face various costs:

• Deductible: Up to $590 in 2025.

• Cost-sharing: You’ll pay part of the cost for each prescription until your total out-of-pocket spending hits $2,000.

• Formulary gaps: Some medications may not be covered or may require prior authorization.

You can enter the catastrophic phase after spending $2,000 out of pocket in 2025, at which point your plan covers 100% of covered drugs, but getting to that point can still cost you significantly throughout the year.

Vision, Dental, and Hearing Are Mostly Excluded

Original Medicare does not cover most dental, vision, or hearing services. These are not luxury extras but essential health care for many older adults.

• Dental: No coverage for cleanings, fillings, or dentures.

• Vision: No routine eye exams or eyeglasses.

• Hearing: No coverage for hearing exams or hearing aids.

Out-of-pocket costs for these services can easily run hundreds or thousands of dollars annually.

Medical Devices and Durable Equipment Add Up

Medicare Part B covers durable medical equipment (DME), but you still pay 20% after meeting your deductible. Items in this category include:

• Walkers and wheelchairs

• Oxygen equipment

• CPAP machines

These aren’t one-time purchases. Equipment may need repair or replacement, which can increase your costs over time.

Excess Charges by Providers

If your doctor doesn’t accept Medicare assignment, they can charge up to 15% more than the Medicare-approved amount. This is known as an “excess charge.”

You’re responsible for paying this extra amount, and it’s entirely legal. You can avoid this by confirming whether a provider accepts Medicare assignment before scheduling an appointment.

Physical Therapy and Mental Health Costs Accumulate

While Medicare covers both physical therapy and mental health services, you often pay 20% coinsurance after your deductible. Repeated sessions can result in steady costs each month.

In 2025, Medicare continues to cover services provided by:

• Psychiatrists

• Psychologists

• Clinical social workers

• Newly added: mental health counselors and marriage and family therapists

These additions increase access but may also lead to rising out-of-pocket expenses for recurring therapy sessions.

Long-Term Care Is Not Covered

Medicare only pays for skilled nursing care for a limited time following a qualifying hospital stay. It does not cover long-term custodial care:

• Nursing home stays not linked to rehabilitation

• Assisted living facilities

• Home care for non-medical support (like bathing or dressing)

These services must be paid for privately or through long-term care insurance. Some retirees mistakenly believe Medicare handles these costs.

Emergency Room and Ambulance Fees

You may be charged a copayment or coinsurance for emergency room visits, plus 20% of the Medicare-approved amount for ambulance transportation.

While these situations are unpredictable, they aren’t uncommon, and even one emergency can cost hundreds of dollars out-of-pocket.

Observation vs. Admission Confusion

If you’re held for “observation” rather than being officially admitted during a hospital stay, Medicare Part A may not cover your services. Instead, you may be billed under Part B.

This can affect whether your stay qualifies for coverage of follow-up care in a skilled nursing facility. It can also result in higher out-of-pocket charges due to the 20% coinsurance under Part B.

Home Health Care Isn’t Always Free

While Medicare covers some home health care services, it doesn’t cover them indefinitely. Coverage requirements include:

• Must be homebound

• Services must be part of a doctor-approved care plan

Once you no longer meet criteria or the care becomes custodial in nature, you may have to pay out-of-pocket.

Annual Out-of-Pocket Spending Limits Don’t Exist in Original Medicare

One of the most surprising realities of Original Medicare is that it does not have an annual out-of-pocket maximum.

That means:

• There’s no cap on how much you could pay for covered services

• Frequent hospital visits, therapies, or specialist appointments can continue to generate bills

If you’re enrolled in a Medicare Supplement (Medigap) plan or Medicare Advantage plan, you may have annual limits, but Original Medicare alone does not protect you from unlimited cost exposure.

Timing Your Coverage Matters

The timing of your enrollment affects costs in several ways:

• Initial Enrollment Period: Lasts 7 months (3 before, month of, and 3 after your 65th birthday).

• General Enrollment Period: January 1 to March 31, with coverage starting July 1. This can leave gaps if you missed initial enrollment.

• Special Enrollment Periods: Available for specific life events, such as retiring or losing employer coverage.

Delays in signing up or not understanding your eligibility can cause you to miss key deadlines and pay more long-term.

Services Requiring Prior Authorization or Not Covered

Certain services, even when medically necessary, may require prior authorization or may not be covered:

• Advanced imaging (like MRI or CT scans)

• Genetic testing

• Some outpatient surgeries

Denials can result in full cost responsibility unless successfully appealed.

Why Planning Ahead Still Leaves Gaps

Even if you compare plans and enroll on time, your total costs will vary year to year due to:

• Health changes and new diagnoses

• Annual increases in Medicare premiums and deductibles

• Drug formulary updates that affect medication pricing or availability

This variability means that what seemed affordable one year can become costly the next, especially if you haven’t accounted for inflation or growing medical needs.

What You Can Do About It

Being proactive can reduce your financial risk:

• Review your Annual Notice of Change (ANOC) every fall

• Consider supplemental coverage options

• Make sure your providers accept Medicare assignment

• Ask about generic drug alternatives

• Track out-of-pocket expenses monthly

These strategies won’t eliminate costs entirely but can help you avoid being blindsided by recurring or increasing expenses.

It’s Time to Reassess Your Medicare Strategy

You can do everything right—enroll on time, choose a plan carefully, stay in-network—and still find yourself facing bills that strain your retirement budget. Medicare covers a lot, but not everything. Knowing what costs can sneak up on you in 2025 is the first step in building a better plan.

Speak with a licensed agent listed on this website to make sure your coverage aligns with your health needs and financial expectations.