Whether you are new to Medicare or have been enrolled for a while, you might be surprised by some of the out-of-pocket costs you encounter for your health care. Medicare covers a lot, but it does not cover everything. Out-of-pocket expenses can vary greatly depending on your income, the type of coverage you have, the doctors you see and what services you have done. It also matters if you enrolled on time and avoided late penalties. Understanding what Medicare expects you to pay will help you avoid unexpected financial burdens.
Original Medicare Part A and B
Premiums, deductibles, and coinsurances for Original Medicare change every year. Here’s what to expect for 2025.
Medicare Part A (Hospital Insurance) 2025
Premium: If you or your spouse worked 10 plus years Part A is free. If you don’t qualify for premium free Part A you will have to pay either $285 or $518 per month, depending on the amount of time you worked.
Deductible: $1,676 for each inpatient hospital benefit period. There is no limit to the number of benefit periods you can have in a year.
Coinsurance: Varies with location and length of stay. For a hospital stay:
- Days 1-60: $0 after you pay your Part A deductible
- Days 61-90: $419 per day
- Days 91-150*: $838 per day *Known as “lifetime reserve days” because Medicare will only pay for these extra days once in your lifetime
- Out-of-pocket maximum: None
Medicare Part B (Medical Insurance) 2025
Premium: The standard Part B premium for most beneficiaries will be $185 per month, an increase from $174.70 in 2024. It can be higher based on your income. It could also be higher if you did not enroll on time and must pay a late penalty.
Deductible: $257 per year
Coinsurance: 20% of the cost of covered services, after deductible is met. This includes Part B drugs which are typically administered by injection or infusion in a doctor’s office or outpatient setting.
Medicare beneficiaries with Original Medicare must be sure to see healthcare providers that accept Medicare to be covered for services.
Medicare Supplement Plans
Also known as Medigap, these plans are designed to help cover the expenses not paid by Original Medicare A and B. They are sold by private insurance carriers. There are 10 different plans plus two high deductible plans, each offering different levels of coverage.
Premiums: Monthly premiums can vary greatly depending on the plan you choose, the insurance carrier and your location. Not all plans are available in all areas. Depending on the state you live in, if you did not enroll in a Medigap plan when you were first eligible in the six months after turning 65, you could pay more or be denied coverage altogether.
Medicare Advantage Part C Plans
Medicare Advantage (MA) plans are sold by private insurers and are required to cover everything Original Medicare covers. Many plans offer extra benefits such as dental, hearing, vision, and wellness benefits. Most MA plans also include Part D drug coverage. You still need to pay your Part B premium when you have an MA plan.
Cost Sharing: MA plans have cost sharing that includes monthly premiums, deductibles, copays, and coinsurances. These vary by insurer and the type of plan selected. You must use healthcare providers in the plan’s network unless you have out of network coverage. You will pay more to see doctors outside the network. It’s important to understand how your plan works and know your plan’s specific benefits.
Out-of-Pocket Maximum: Each year the government puts a cap on out-of-pocket spending. In 2025 the out-of-pocket maximum will be capped at $9,350, an increase from $8,850 in 2024. Part D cost sharing does not count toward this amount.
Part D Prescription Drug Coverage
If you have a Medicare Advantage plan with Part D, your coverage is included in your monthly premium. If you have Original Medicare, you need a stand-alone Part D plan. These plans are sold by private insurers.
For stand-alone plans:
Premiums: Vary by plan. There are late enrollment penalties for those who did not enroll during their Initial Enrollment Period.
Deductible: Varies by plan, but no more than $590 in 2025, an increase from $545 in 2024.
Coinsurance and copays: Varies by plan
Regardless of what type of Part D coverage you have, you need to be aware that every insurer has their own unique drug formulary and tiers which will determine which drugs are covered and what you will pay. It’s important to review the formulary each year for any changes.
In 2025 the Part D coverage gap, also known as the donut hole, will be eliminated. There will be a $2,000 out of pocket spending cap on all part D drugs. This means once your deductible, copays and coinsurance amounts you have paid total $2,000, your covered medications will be paid in full by your insurance carrier.
Also, in 2025 CMS will implement the Medicare Prescription Payment Plan. This voluntary opt-in program will allow you to spread your Part D medication costs out over the year in monthly payments, protecting Medicare beneficiaries with expensive drugs from incurring high costs in any given month that they may find difficult to afford. You can enroll in the payment plan through your insurance carrier. It is not retroactive, so if you want your medications to be covered in January, you must enroll in December.
There Are Programs to Help with Costs
There are several programs available to help people with limited income and resources pay for their health care costs. These include Medicare Savings Programs, Extra Help and your state’s pharmacy assistance program.
If you are struggling with costs and need help finding affordable healthcare coverage, Healthcare Educators can help. Please contact us today.