Think Medicare is free? Plenty of Americans do, and they're wrong.

One in 4 Americans think that Medicare is free for everyone, according to new data from Allianz.

The research exposed three more things folks get wrong about how Medicare works.

More than a third of Americans believe Medicare covers long-term care. It does not.

More than 1 in 3 say Medicare is guaranteed to be available when you retire, and more than 4 in 10 think it covers prescription drugs.

These are profound misunderstandings of how Medicare, which provides health insurance coverage to roughly 70 million people in the US, works and what expenses it covers.

It's an accident waiting to happen as healthcare costs, one of the biggest expenses for retirees, keep surging.

"Americans clearly understand that healthcare costs can threaten their retirement security," Kelly LaVigne, vice president of Consumer Insights at Allianz Life, told Yahoo Finance. But "so many don't fully understand what Medicare will and won't cover. And the details matter."

Roughly 15% of the average retiree's annual expenses will be health-related, according to Fidelity. On average, a 65-year-old who leaves the workforce this year may need $185,500 in savings to cover out-of-pocket healthcare expenses throughout retirement.

That doesn't even include long-term care expenses, over-the-counter medications, and most dental services.

Let's dispel a few of these myths Americans have about Medicare.

Fact: Medicare has a price tag, including prescription drug costs.

Medicare has premiums, deductibles, and out-of-pocket expenses for people using the program.

People with traditional Medicare generally pay a monthly premium for physician coverage, Part B, and for prescription drug coverage, Part D. Those premiums vary by plan. Some people pay a monthly premium for inpatient hospital coverage, Part A.

Each year the Medicare Part B premium, deductible, and coinsurance rates are reset. If you're enrolled in traditional Medicare, you have a Part D drug plan. The 2027 Part D base premium is $36 per month on average, but yours could be higher.

"For 2027, we're seeing monthly premiums for some standalone prescription drug plans increasing by more than $50 a month," said Juliette Cubanski, director of the program on Medicare policy at KFF, "and some will have an increase of as much as $100 a month."

Most Part D enrollees will face a deductible for drug coverage in 2027. The standard Part D deductible will jump to $700 next year, up from $615. And in 2027, everyone enrolled in Part D prescription drug plans will have their annual out-of-pocket drug costs capped at $2,400.