Millions of older Americans today receive health coverage through Medicare. And it may be hard to imagine navigating healthcare in retirement without it.

But one of the biggest Medicare myths out there is that coverage under it is free. That’s not true in any shape or form.

You’re likely to face a host of expenses as a Medicare participant, so it’s important to know which ones to anticipate and how to minimize them. Here are three big costs to gear up for.

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1. Premiums

Most Medicare enrollees don’t have to pay a premium for Part A, which covers hospital care. But there’s a monthly premium associated with Part B, which covers outpatient care. In 2024, the standard monthly premium is $174.70. Higher earners, however, may be subject to a surcharge.

There are also premiums associated with Medicare Advantage and Part D drug plans. However, sometimes these plans have a $0 premium.

One way to keep your Part B premiums to a minimum is to enroll in Medicare on time. Your initial enrollment window starts three months before the month you turn 65 and ends three months after that month. If you sign up late, you risk a 10% surcharge on your Part B premiums for every 12-month period you were eligible for coverage but didn’t enroll.

Meanwhile, you can keep your Medicare Advantage or Part D plan premiums more affordable by shopping around for coverage each year during fall open enrollment. That period is currently underway and runs through Dec. 7.

2. Deductibles

You’ll face a deductible for Medicare Parts A and B before your services are covered. The Part B deductible is fairly reasonable at $240 for 2024. But if you’re admitted to the hospital, you’ll pay a $1,632 inpatient deductible under Part A. And that only covers your first 60 days.

One way to ease the burden of costly deductibles is to buy a Medigap plan for supplemental insurance when you first enroll in Medicare (you can also do so later on, but it might cost you more). Medigap is compatible with original Medicare, but it’s not available to enrollees in Medicare Advantage plans.

3. Non-covered services

While Medicare covers a broad range of health services, it won’t cover everything. Expect to pay out of pocket for dental care, eye exams, and hearing aids if you’re enrolled in original Medicare.

That said, it’s common for Medicare Advantage plans to offer supplemental benefits beyond what original Medicare comes with. If you want these services covered, you shouldn’t have too much trouble finding an Advantage plan that includes them. However, you’ll need to weigh the pros and cons of an Advantage plan against the pros and cons of original Medicare to decide which option is best for you.

Make sure you’re prepared

Clearly, you might face a number of large expenses as a Medicare enrollee. And while you can steps to mitigate them, it’s best to enter retirement with as much savings as possible so you can dip in as necessary to cover your costs.

It’s also a good idea to contribute to a health savings account (HSA) during your working years and reserve that money for retirement. That way, you’ll have dedicated funds to tackle your various Medicare costs.

Although you’re not allowed to make HSA contributions once you enroll in Medicare, you can absolutely use your existing funds to pay for different expenses you incur. And HSA withdrawals used for qualifying medical expenses are tax-free, so that’s an added benefit.

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