What You’ll Pay for Medicare in 2025

Introduction

Medicare is a critical healthcare safety net for older Americans, covering significant portions of medical expenses. However, it doesn’t cover everything, and costs can add up quickly. For 2025, there are notable changes in Medicare costs, from premiums to deductibles. Whether you’re planning for retirement or already enrolled, this guide will help you understand the costs and optimize your healthcare budget.

This article is based on insights from Suze Orman, a bestselling author, financial advisor, and host of the Women & Money Podcast. Suze is renowned for her expertise in personal finance, retirement planning, and guiding individuals toward financial independence.

Understanding Medicare Costs in 2025

Medicare Part B Costs

Medicare Part B covers outpatient services such as doctor visits and medical tests. In 2025, the standard monthly premium is $185, up from $174.70 in 2024.

• Applies to individuals with income below $106,000 or couples earning less than $212,000.
• Higher-income brackets face increased premiums based on their modified adjusted gross income (MAGI).

In addition, the Part B deductible will be $257. After meeting this deductible, Medicare covers 80% of eligible expenses, with enrollees responsible for the remaining 20%.
💡 Tip: A Medigap policy can help cover these out-of-pocket costs for Original Medicare enrollees.

Medicare Part A Costs and Coverage

Medicare Part A, which covers inpatient hospital care, is premium-free for most enrollees who have paid Medicare taxes for at least 10 years. However, the hospital deductible will rise to $1,676 in 2025, covering the first 60 days of hospitalization. Additional costs include:

• $419 daily coinsurance for days 61–90.
• Skilled nursing care: After 20 days in a skilled nursing facility, enrollees pay $209.50 per day for days 21–100. Beyond 100 days, coverage ends.

💡 Consider Medigap: Supplemental plans can help offset these expenses for Original Medicare users.

Prescription Drug Coverage (Part D)

To cover prescription drugs, Medicare enrollees need a separate Part D plan or a Medicare Advantage plan that includes drug coverage. In 2025:

• Average monthly premium: $40.
• Out-of-pocket cap: A new $2,000 limit on covered prescription drug expenses offers financial relief.

Medicare Advantage Plans

Medicare Advantage plans provide an alternative to Original Medicare, often including additional benefits like dental and vision coverage. However, these plans have maximum out-of-pocket limits:

• $9,350 for in-network care.
• $14,000 for out-of-network care.

📹 Watch: Difference Between Original Medicare and Medicare Advantage

How to Manage Medicare Costs in 2025

1. Optimize with Medigap

Medigap plans help reduce out-of-pocket expenses for Original Medicare enrollees, covering costs such as Part B coinsurance and Part A deductibles.

2. Leverage Health Savings Accounts (HSAs)

If you are still working, contribute to an HSA to build a tax-advantaged fund for healthcare expenses in retirement.

3. Compare Plans During Open Enrollment

Review and compare Medicare plans during the annual open enrollment period to ensure you have the most cost-effective coverage for your needs.

4. Budget for Healthcare Inflation

Annual cost increases in Medicare premiums and deductibles are common. Build these increases into your budget to avoid financial strain.

FAQs About Medicare Costs in 2025

1. What are the key changes to Medicare costs in 2025?
Key changes include a rise in the Part B premium to $185, the Part A deductible to $1,676, and a new $2,000 cap on prescription drug expenses.

2. Does Medicare cover all healthcare costs?
No, Medicare covers a significant portion but leaves gaps, such as 20% of outpatient costs and additional deductibles for hospital stays.

3. What are the benefits of Medigap insurance?
Medigap reduces out-of-pocket expenses for Original Medicare enrollees, covering deductibles, copayments, and coinsurance.

4. Can I use an HSA to pay for Medicare premiums?
Yes, you can use HSA funds to pay Medicare Part B, Part D, and Medicare Advantage premiums, but not for Medigap premiums.

5. How do Medicare Advantage and Original Medicare differ?
Medicare Advantage plans often have lower upfront costs but may include network restrictions, while Original Medicare provides greater provider flexibility without an out-of-pocket limit.

Conclusion

Understanding and preparing for Medicare costs in 2025 is essential for making informed financial decisions in retirement. By staying educated about premiums, deductibles, and out-of-pocket limits, you can take proactive steps to manage your healthcare expenses and avoid surprises.

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