Medicare Coverage Guide 2025: What’s Covered, What’s Not, and How to Choose

Navigating healthcare in retirement can feel overwhelming, and nothing brings more confusion than Medicare.

Between the alphabet soup of Parts A, B, C, and D, plus Medigap and Advantage plans, it’s easy to wonder: What does Medicare actually cover—and what will I need to pay for myself?

The truth is, Medicare provides a strong foundation for healthcare in retirement, but it’s not comprehensive.

Knowing what’s covered, what’s excluded, and what supplemental options exist can save you thousands of dollars and countless headaches.

This complete Medicare coverage guide breaks down the essentials: hospital coverage (Part A), outpatient care (Part B), Medicare Advantage (Part C), prescription drugs (Part D), and common gaps.

You’ll also learn about enrollment timelines, costs, and how to choose between Medigap and Advantage. By the end, you’ll understand how to make Medicare work for your health and your budget.

Article Highlights

• Medicare is divided into four main parts: Part A (hospital), Part B (outpatient), Part C (Advantage), and Part D (prescription drugs).
• Gaps exist. Medicare doesn’t cover dental, vision, hearing aids, or long-term care.
• Medigap and Advantage plans help fill those gaps.
• Enrollment deadlines matter. Missing them can lead to penalties.
• Budgeting is key. Premiums, deductibles, and out-of-pocket limits vary depending on your plan choices.

What Is Medicare?

Purpose and Eligibility

Medicare is a federal health insurance program designed for people age 65 and older. It also covers certain younger individuals with disabilities or conditions like End-Stage Renal Disease (ESRD).

It’s not tied to income or assets. It’s a universal program meant to ensure seniors and people with qualifying conditions have access to healthcare.

Eligibility typically begins the month you turn 65, but you can qualify earlier under special circumstances.

Unlike employer-based insurance, Medicare is individual coverage. Spouses need their own enrollment.

Who Needs It

If you’re approaching retirement, chances are you’ll need Medicare. Even if you still work at 65, many employers require you to enroll.

For those without other insurance, Medicare becomes the primary source of coverage. And because healthcare costs tend to rise with age, Medicare is not optional — it’s essential.

Medicare Part A Coverage

Hospital Services

Part A is often referred to as “hospital insurance.”

It covers inpatient hospital care, including semi-private rooms, meals, general nursing, and medications provided during your stay. It also pays for care in critical access hospitals, rehabilitation facilities, and psychiatric hospitals (up to 190 days lifetime).

Example: If you’re hospitalized for pneumonia, Part A pays for your room, meals, nursing, and medications while you’re there. However, personal items like phone or TV service are not covered.

Skilled Nursing

Part A also includes coverage for skilled nursing facility (SNF) care, but with strict conditions.

You must have been admitted to a hospital for at least three consecutive days, and your SNF care must be for the same condition treated in the hospital.

Coverage is limited: the first 20 days are covered in full, days 21–100 require coinsurance, and beyond 100 days you’re responsible for all costs.

Costs and Premiums

Most retirees qualify for premium-free Part A if they or their spouse worked 40+ quarters paying Medicare taxes.

If not, premiums can be as high as $518 per month (2025). The deductible is $1,676 per benefit period, meaning you could pay it more than once per year if you’re hospitalized multiple times.

Example Case Study: Mary’s Hospital Stay
Mary, age 67, is hospitalized for pneumonia. She stays five nights, then spends 15 days in a skilled nursing facility for rehab. Part A covers her inpatient hospital stay and the first 20 days of rehab. But if she stayed longer, she’d owe coinsurance.

Mary learns Part A helps with short-term care, not long-term custodial care.

Medicare Part B Coverage

Outpatient Care

Part B is your medical insurance. It covers doctor visits, outpatient services, physical therapy, durable medical equipment (like wheelchairs), ambulance services, lab tests, X-rays, and mental health counseling.

Example: If you break your wrist and visit an orthopedic doctor, have X-rays taken, and receive a cast, Part B covers 80% of the Medicare-approved costs after your deductible.

Preventive Services

Part B emphasizes prevention. It covers annual wellness visits, mammograms, colonoscopies, flu and COVID vaccines, cardiovascular screenings, and diabetes prevention programs. Preventive care is free as long as you use providers who accept Medicare.

Costs and Premiums

The standard Part B premium in 2025 is $185/month. Higher-income retirees pay more due to IRMAA.

The annual deductible is $257. After meeting it, Medicare pays 80% of covered services; you’re responsible for the remaining 20%, with no cap unless you buy Medigap.

Case Study: David’s Outpatient Care
David, 70, sees his cardiologist, has a stress test, and uses a CPAP machine. He pays the $257 deductible, then 20% coinsurance on visits and equipment.

Without Medigap, his share adds up, making supplemental coverage attractive.

Medicare Part C (Advantage Plans)

How It Works

Medicare Advantage (Part C) is offered by private insurers approved by Medicare. Instead of using Original Medicare, you enroll in an Advantage plan that combines Parts A & B, often with Part D.

These plans function like HMOs or PPOs. You’ll usually need to use a network of doctors and hospitals. Out-of-network care may be costly or uncovered.

Benefits Beyond Original Medicare

Advantage plans often add extras not included in Original Medicare:

• Dental, vision, and hearing benefits
• Wellness perks like SilverSneakers or telehealth
• Transportation and over-the-counter allowances

Pros and Cons

• Pros: Lower premiums, added benefits, bundled simplicity
• Cons: Restricted networks, prior authorizations, possible higher out-of-pocket if you need major care

Case Study: Linda’s Advantage Plan
Linda, 66, chose a $0 premium HMO Advantage plan.

She loves SilverSneakers and dental benefits, saving money on hearing aids. But when she needed an out-of-network specialist, her bills skyrocketed.

Linda enjoys perks but learns Advantage limits provider freedom.

Medicare Part D (Prescription Drugs)

What’s Covered

Part D covers prescription drugs, which Original Medicare excludes. Each plan has a formulary, with generics cheapest, preferred brands costlier, and specialty drugs highest.

Formularies

Check your prescriptions against the formulary each year. Formularies can shift, meaning a drug covered affordably this year may cost much more next year.

Costs and Gaps

• Premiums: Average about $37/month in 2025
• Deductibles: Up to $590/year
• Starting in 2025, the Part D donut hole is eliminated. Instead, once your out-of-pocket prescription drug costs reach $2,000, you enter the catastrophic coverage phase — and pay nothing for covered medications for the rest of the year.

What Medicare Does Not Cover

Original Medicare leaves significant gaps:

• Dental and Vision: No cleanings, exams, dentures, or glasses.
• Hearing Aids: Not covered; often $1,000–$5,000 per pair.
• Long-Term Care: Medicare won’t cover assisted living or custodial care, which can cost $9,500/month in nursing homes.

Retirees often add Advantage plans, standalone dental/vision coverage, or long-term care insurance to fill these gaps.

Medigap and Supplemental Insurance

Medigap fills in Original Medicare’s 20% coinsurance and deductibles. Plans (A–N) are standardized. Premiums run $120–$300/month.

Medigap vs Advantage

Medigap works well if you want broad access and predictable bills; Advantage works if you want lower costs and perks.

Medicare Enrollment Periods

Timing is everything with Medicare. Missing deadlines can cost you.

Initial Enrollment

Your Initial Enrollment Period (IEP) is a 7-month window: 3 months before the month you turn 65, your birthday month, and 3 months after. If you miss this window and don’t have qualifying coverage elsewhere, you may face lifetime penalties.

Example: If you delay Part B without employer coverage, you’ll pay a 10% higher premium for every 12 months you were eligible but didn’t enroll.

Open Enrollment

Every year from October 15 to December 7, you can:

• Switch from Original Medicare to Advantage (and vice versa).
• Change Advantage plans.
• Add, drop, or switch Part D plans.

Changes take effect on January 1 of the following year.Late Enrollment Penalties

Special Enrollment Periods (SEP)

You may qualify for an SEP if you lose employer coverage, move out of your plan’s area, or experience other life changes.

Medicare Parts A–D Comparison Table

Making Medicare Work for You

Understanding Medicare is like assembling a puzzle — each piece matters, and the way you fit them together shapes your healthcare in retirement.

Part A covers hospital care, Part B covers outpatient and preventive services, Part C offers bundled Advantage plans with extras, and Part D fills the prescription gap.

But just knowing the parts isn’t enough. You need to anticipate what Medicare doesn’t cover, from dental and vision to long-term care, and decide whether Medigap or Advantage is the smarter fit for your lifestyle.

Enrollment timing is just as critical.

Missing deadlines can mean permanent penalties and higher costs, while smart planning during initial or open enrollment can save you money and stress.

And of course, budgeting matters—balancing monthly premiums with potential out-of-pocket expenses ensures you’re financially prepared for the unexpected.

The bottom line: Medicare provides a solid foundation, but the choices you make determine how well it works for you.

Take the time to compare plans, revisit your options each year, and align coverage with your health goals and budget. With the right approach, Medicare becomes more than just insurance — it becomes peace of mind for your retirement years.

Next step: Explore our guides on Medigap vs Medicare Advantage and essential tips for Medicare enrollment to dive deeper into your options.