When you're preparing for retirement, healthcare expenses are probably one of the last things on your mind. But retirees can end up spending tens (or even hundreds) of thousands of dollars on healthcare alone during their golden years, making it one of the most crucial costs to prepare for.

The average retiree spends around $4,300 per year on out-of-pocket healthcare costs, according to a study from the Center for Retirement Research at Boston College, and that doesn't include long-term care. Medicare will help cover some costs, but coverage is far from free, and you'll still face some out-of-pocket expenses.

Health insurance in retirement is widely misunderstood, which can be an expensive problem. Seventy-two percent of adults over the age of 50 admit they don't fully understand how Medicare works, a survey from the Nationwide Retirement Institute found, and more than half believe that coverage is free. In order to avoid any pricey surprises, it's important to understand which costs you're responsible for, what your insurance will cover, and how much coverage will cost.

Your health insurance options in retirement

Once you turn 65 years old, you become eligible for Medicare -- but enrolling in coverage isn't as simple as it may seem. There are different types of Medicare coverage available, depending on your specific healthcare needs.

Original Medicare includes Part A and Part B coverage. Part A covers trips to the hospital and other types of emergency care, while Part B covers doctor visits and some other preventative services. Prescription drug coverage isn't covered within Parts A or B, so you'll need to enroll in separate Part D coverage for help with this type of care.

Also, routine care -- such as dental and vision care -- isn't typically covered under Original Medicare, so you'll need to foot the bill for those costs. Keep in mind that if you have a dental or vision emergency, Medicare typically will cover those expenses. But for routine teeth cleanings, eye exams, etc., those will need to be paid for out-of-pocket.

For more expansive care, you can instead opt for a Medicare Advantage plan. These plans are similar to the type of insurance you likely have through an employer, in that they typically cover everything from hospital visits to prescription drugs to routine care. The downside, then, is that this type of coverage is often more expensive than Original Medicare.

The costs of healthcare coverage

No matter which type of coverage you choose, you'll still be responsible for all premiums, deductibles, copayments, and coinsurance. For the lowest monthly payment, you can choose to go with Original Medicare -- but you'll face higher out-of-pocket expenses. With an Advantage plan, you'll likely have higher premiums, but greater coverage and fewer out-of-pocket costs.

Most people won't pay a premium for Part A coverage as long as you've paid Medicare taxes for at least 10 years, but you will have a deductible of $1,364 per benefit period -- which begins when you're admitted to a hospital and ends 60 days after you leave the hospital. Then with Part B coverage, the standard premium is $135.50 per month, but it may be higher depending on your income. Part B also has a deductible, though it's just $185 per year.

If you also enroll in Part D coverage, that will be an additional cost. This type of insurance is offered through private, Medicare-approved providers, so prices will vary based on your individual plan, but the maximum deductible for 2019 is $415 per year.

Medicare Advantage plans are also offered through third-party insurance companies, so rates can vary widely based on your location, the provider, and the amount of coverage you're receiving. But you'll typically still have to pay a premium, usually along with the standard Part B premium as well.

Because prices differ based on the plan, be sure to shop around for the best rates if you choose an Advantage plan. Some plans offer low or even $0 premiums, but you may be stuck with a high deductible or less-than-ideal coverage. Or other plans may charge higher premiums, but you might have more coverage and a lower out-of-pocket maximum. Consider what your healthcare needs may look like in retirement, then choose the option that will provide the most bang for your buck.

Health insurance can be confusing, particularly in retirement. Medicare can be a lifesaver, but choose the wrong type of plan for your needs, and you could end up paying thousands more than you need to. Do your homework beforehand about your insurance options and what they'll cost, though, and you'll ensure you're as prepared as possible for these expenses in retirement.