Suze Orman Warns: 'Medicare Doesn't Cover Everything' – Why You Need $2,000 For Drugs And $1,676 For Hospital Costs In 2025

Medicare is again making waves for retirees and this time it’s because of significant cost increases for 2025. In a recent blog post, personal finance expert Suze Orman broke down the numbers, clarifying that planning is more crucial than ever for anyone relying on Medicare in their retirement years.

Starting with Medicare Part B, which covers doctor visits and various medical tests, the monthly premium is going up. According to the Centers for Medicare & Medicaid Services (CMS), the standard cost will rise from $174.70 in 2024 to $185 in 2025, a 10.30% increase. 

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If you’re an individual earning less than $106,000 annually (or a couple making under $212,000), you’ll pay this standard premium. 

However, higher-income individuals will face even bigger charges, with premiums for the wealthiest enrollees possibly reaching as high as $628.90 per month. And remember, Medicare premiums are per person – there’s no family plan option, so couples will see their bills double. This is based on CMS’s 2025 Medicare parts A & B premiums and deductibles report.

If you delay Social Security benefits, you must arrange direct payments for these premiums. According to a report by the Kaiser Family Foundation, some Medicare Advantage plans may offer partial rebates on Part B premiums, averaging $30 per month to help offset these costs. 

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But it's not just premiums that are increasing. As stated on Medicare's website, the Medicare Part B deductible also rises slightly, from $245 in 2024 to $257 in 2025. Once that's paid, enrollees are still on the hook for 20% of Part B costs unless they've opted for supplemental insurance, like Medigap. 

These gaps in coverage are a big reason nearly half Medicare enrollees are now relying on Medigap to cover out-of-pocket expenses.

Hospital stays under Medicare Part A bring their own financial challenges. While most people pay no monthly premium, the deductible for inpatient hospital care will climb to $1,632 in 2025, up from $1,600. 

This deductible covers the first 60 days of a hospital stay. After that, costs skyrocket – enrollees will pay $419 daily for days 61 through 90. Once you reach day 150, Medicare stops covering your stay entirely, which can leave retirees facing massive out-of-pocket expenses for extended hospital stays.

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Skilled nursing care under Medicare isn't free, either. For the first 20 days, Medicare covers the full cost. Starting on day 21, you'll be responsible for $209.50 per day. After 100 days, you're on the hook for all costs. With 70% of retirees likely to need long-term care at some point, these limits make having a plan for potential nursing home or rehab facility stays essential.

For prescription drug coverage, there's a bit of relief. Enrollees in Original Medicare must purchase a separate Part D plan with an average monthly premium of $40. Those in Medicare Advantage plans often have drug coverage bundled in. 

The bright spot is the introduction of a $2,000 out-of-pocket cap on prescription drug costs in 2025. This cap will offer significant savings to the 57% of Medicare Part D enrollees facing high drug costs.

When deciding between Original Medicare and Medicare Advantage, out-of-pocket costs must be considered. Original Medicare gives retirees more flexibility in choosing providers but doesn't have a maximum limit on annual out-of-pocket expenses, making Medigap insurance essential for managing those costs. 

On the other hand, Medicare Advantage plans have out-of-pocket yearly limits of $9,350 for in-network care and $14,000 for out-of-network care in 2025. These plans also often include co-pays for various services, but the built-in cost caps make them an increasingly popular option for those looking to avoid unpredictable health care bills.

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