"For example, if you get a $1,000 bill for an X-ray or a CAT scan, you'll pay 20 percent of that," or about $200, Metcalfe explains. "But if you get a $100,000 bill for chemotherapy, you're paying $20,000."
Additionally, if you earn more than $85,000 a year, Part B premiums are determined on a sliding scale that starts at $147 a month and could go up to $335 a month. There are also penalties for people based on their tax history, or whether they subscribed to employer- or union-sponsored health care while they were in the workplace.
And then there's the infamous Medicare Part D "donut hole" – the $1,400 gap where prescription drug coverage runs out but before "catastrophic" drug coverage begins. The gap is rapidly shrinking and should close by 2020, but until then seniors will have to pay the difference themselves.
The AARP's Duritz said there are ways seniors can bridge the gaps in coverage, including purchasing Medicare Advantage, a privately-administered health policy that works like a preferred-provider or HMO plan – including prescription drug coverage. The premiums can be higher, but companies keep out-of-pocket costs low by requiring treatment at an in-network hospital or care provider, which limits some options. Medigap -- a supplemental policy that covers some of the things that Medicare Parts A, B and C don't -- is another option. Administered by private companies, it also travels with the policyholder, but there are restrictions – including having to buy Medicare Part B, and separate Medigap policies for each family member, according to Medicare.gov.
One of Medicare's hidden costs kicks in if you don't sign up for coverage when you're first eligible; seniors who wait too long to get coverage have to pay higher prices. In Part D, for example, the premium goes up one percent a month for every month that an eligible person stays out of the system.
"Some people who are 65 and healthy, still working and don't take very many drugs say, 'Why would I sign up for Medicare? Why would I want to do that?'" Metcalfe says. "Well, here's why."
If you skip the open enrollment period because you're assuming you'll stay healthy, and then "all of a sudden you're taking three or four drugs a month" and enrolling in Part D is much more expensive, Metcalfe says. "It's a thing that blindsides people. They make this mistake over and over again."
The key, she said, is planning – and making a realistic assessment of your health and what you might need. And, she said, it's important to do your homework, talking with your doctor and reading the "Medicare and You" handbook that the government regularly issues to eligible seniors.
"A lot of mistakes people make could have been avoided if they read it," she says. "It's long, but it's written in big print, and it's in plain English."
More about Medicare:
- Medicare vs. Medigap: What's the Difference?
- Medicare Open Enrollment: What You Need to Know
- Making the Best of the Medicare 'Donut Hole'
Corrected 10/21/13: An earlier version of this article stated that Medicare was created as part of FDR’s New Deal. It was signed into law by Lyndon B. Johnson in 1965 and went into effect in 1966.