If you’re turning 65 in 2025, you’re probably wondering how much Medicare will cost and what you’ll need to budget for healthcare in retirement. While Medicare is a crucial program that helps cover hospital and medical expenses, it’s not free. Understanding the different parts of Medicare and their associated costs will help you avoid unexpected expenses and make informed financial decisions.
Medicare Part A: Hospital Insurance Costs
Medicare Part A covers hospital stays, skilled nursing facilities, and hospice care. Fortunately, most people qualify for premium-free Part A as long as they have paid Medicare taxes for at least 10 years (40 quarters) while working. However, if you don’t qualify for premium-free Part A, you’ll have to pay up to $518 per month in 2025. If you worked between 30 and 39 quarters, your premium is reduced to $285 per month.
In addition to premiums, Part A has other costs:
- Hospital Deductible: $1,676 per benefit period
- Coinsurance for Hospital Stays:
- Days 1-60: $0 per day
- Days 61-90: $419 per day
- Days 91 and beyond: $838 per lifetime reserve day (up to 60 days)
Once you exceed your lifetime reserve days, you are responsible for all costs related to hospital care.
Medicare Part B: Doctor Visits and Outpatient Care
Medicare Part B covers doctor visits, preventive services, outpatient care, and some home health services. The standard monthly premium for Part B in 2025 is $185, but it may be higher for individuals with incomes above a certain threshold.
You’ll also need to pay the following:
- Annual Deductible: $257
- Coinsurance: 20% of Medicare-approved services after the deductible is met
If you don’t sign up for Part B when you first become eligible, you could face a lifetime late enrollment penalty that increases your monthly premium.
Medicare Part C (Medicare Advantage) Costs
Medicare Advantage (Part C) plans are offered by private insurance companies and often include additional benefits like vision, dental, and hearing coverage. The cost of Medicare Advantage varies by plan, but in 2025, about 67% of plans will offer $0 monthly premiums beyond what you already pay for Part B. However, some plans do charge an additional premium, and costs for copays and deductibles vary.
Medicare Part D: Prescription Drug Costs
Part D helps cover prescription drugs, but costs depend on the plan you choose. In 2025, the average Part D premium is expected to be $46.50 per month.
- Maximum Deductible: $590
- Out-of-Pocket Cap: NEW for 2025 – No Medicare recipient will pay more than $2,000 per year for prescription drugs
This new out-of-pocket cap is one of the most significant Medicare changes in years, offering relief for seniors with high medication costs.
How to Avoid Late Enrollment Penalties
One of the biggest mistakes new Medicare enrollees make is not signing up on time. If you don’t enroll when first eligible, you could face permanent penalties that increase your monthly premiums:
- Part B late enrollment penalty: An extra 10% for every 12 months you delay enrollment
- Part D late enrollment penalty: An extra 1% of the national base premium for each month you go without drug coverage
To avoid penalties, sign up during your Initial Enrollment Period (IEP), which starts three months before your 65th birthday and lasts until three months after.
Final Thoughts: How Much Will Medicare Cost You?
While Medicare helps cover many medical expenses, it’s not free. Most seniors will pay at least $185 per month for Part B and may have additional costs for Part D and Medicare Advantage plans. If you don’t qualify for free Part A, your costs could be even higher. The good news is that new cost protections in 2025, such as the $2,000 out-of-pocket cap for prescriptions, could help reduce expenses for some beneficiaries. Planning and understanding your Medicare options will ensure you get the coverage you need without unexpected costs.