Key Takeaways

• Medicare is made up of distinct parts, and each covers different services. Understanding how they work together is crucial to avoid coverage gaps or penalties.

• Enrollment decisions have deadlines and consequences. Missing your Initial Enrollment Period or delaying Part B without creditable coverage can cost you more in the long run.

Why Medicare Isn’t Just One Simple Plan

When you hear “Medicare,” you might assume it’s one single health insurance plan for people 65 and older. In reality, Medicare is a complex program with multiple parts, coverage options, and costs that can catch you off guard if you’re not prepared.

Here’s what you need to know to make sense of it all—without feeling like you’re flipping through a government handbook.

Medicare Eligibility and Enrollment Basics

You become eligible for Medicare at age 65, or earlier if you have certain disabilities or end-stage renal disease. But eligibility isn’t the same as automatic enrollment.

• Automatic enrollment: If you’re already receiving Social Security benefits at least four months before turning 65, you’re usually enrolled in Parts A and B automatically.

• Manual enrollment: If you’re not receiving Social Security, you must sign up through Social Security during your Initial Enrollment Period (IEP).

The IEP lasts seven months: it begins three months before your 65th birthday, includes your birth month, and ends three months after. If you miss this window, you could face late enrollment penalties and delayed coverage.

The Structure of Medicare: Part A, Part B, Part C, and Part D

Understanding what each part does is key to understanding how to build the right coverage for your health and financial needs.

Part A: Hospital Insurance

Covers inpatient hospital stays, skilled nursing facility care (not custodial), hospice, and limited home health care.

• Most people don’t pay a premium if they or their spouse paid Medicare taxes for 40 quarters (10 years).

• For 2025, the hospital deductible is $1,676 per benefit period.

Part B: Medical Insurance

Covers outpatient services like doctor visits, preventive care, durable medical equipment, lab tests, and some home health services.

• The monthly premium in 2025 is $185.

• The annual deductible is $257, after which you usually pay 20% of Medicare-approved charges.

Part C: Medicare Advantage

Offered by private companies approved by Medicare. These plans combine Parts A and B and often include Part D. Many offer extra benefits like dental or vision.

• You still must pay your Part B premium.

• Plan availability and costs vary by region.

Part D: Prescription Drug Coverage

Covers a range of prescription medications. Standalone Part D plans are for those with Original Medicare. If you have a Medicare Advantage plan that includes drug coverage, you don’t need a separate Part D plan.

• The 2025 deductible cap is $590.

• Once your out-of-pocket spending hits $2,000, catastrophic coverage kicks in and you pay nothing more for covered drugs.

Medigap: Filling the Coverage Gaps in Original Medicare

Original Medicare (Parts A and B) covers many services but not all costs. You’re still responsible for deductibles, coinsurance, and other out-of-pocket expenses. That’s where Medigap (Medicare Supplement Insurance) comes in.

• Medigap policies are sold by private insurers.

• They help cover expenses like copayments, coinsurance, and deductibles.

• You must have Parts A and B to purchase a Medigap plan.

Enrollment in a Medigap policy is most favorable during your six-month Medigap Open Enrollment Period, which begins the first month you’re 65 or older and enrolled in Part B. During this window, you can’t be denied coverage or charged more due to pre-existing conditions.

How Medicare and Employer Coverage Can Work Together

If you’re still working at 65 and have employer coverage, Medicare can coordinate with that coverage. The size of your employer often determines whether Medicare pays first (primary) or second (secondary).

• If your employer has 20 or more employees, your group plan typically pays first.

• If your employer has fewer than 20 employees, Medicare usually pays first.

You can delay enrolling in Part B without penalty if you have creditable coverage from a current employer.

When your employment ends, you get an 8-month Special Enrollment Period to sign up for Part B without a late enrollment penalty.

Key Enrollment Periods to Keep on Your Radar

Missing a deadline can lead to late penalties and coverage delays. Here are the main timeframes to be aware of:

• Initial Enrollment Period (IEP): The 7-month period around your 65th birthday.

• General Enrollment Period (GEP): January 1 to March 31 each year. Coverage starts July 1. Late penalties may apply.

• Annual Enrollment Period (AEP): October 15 to December 7. Switch between Original Medicare and Medicare Advantage or change drug plans.

• Medicare Advantage Open Enrollment Period: January 1 to March 31. Switch Medicare Advantage plans or return to Original Medicare.

• Special Enrollment Periods (SEPs): Triggered by certain life events, such as moving or losing other coverage.

Medicare Costs That Can Surprise You

Even with Medicare, you’ll have out-of-pocket costs. Being aware of them helps you plan better.

• Premiums: Part B has a standard premium, and higher-income individuals may pay more due to IRMAA (Income-Related Monthly Adjustment Amount).

• Deductibles and Coinsurance: Parts A and B include deductibles and coinsurance, which can add up over time.

• Drug Costs: Part D includes premiums, deductibles, and cost-sharing. Fortunately, the 2025 $2,000 out-of-pocket cap reduces long-term drug expenses.

• Services Medicare Doesn’t Cover: Routine dental, vision, hearing aids, and long-term custodial care are not covered.

When to Consider Switching Plans

Your health needs and finances may change over time. Reviewing your plan options annually during the Annual Enrollment Period is wise.

• Check if your doctors are still in-network.

• Make sure your prescriptions are covered.

• Compare your total out-of-pocket costs, not just premiums.

Medicare Advantage and Part D plans can change their formularies, provider networks, and out-of-pocket limits each year, so don’t assume what worked last year still fits now.

Coordinating Medicare With Other Government Benefits

If you receive Medicaid, Veterans benefits, or retiree health benefits, Medicare may work differently for you.

• Medicaid: Helps pay Medicare premiums and out-of-pocket costs for people with limited income.

• VA Benefits: You can use both VA and Medicare, but they don’t coordinate. You must receive care at a VA facility for VA to pay.

• TRICARE for Life: Works with Medicare to cover military retirees.

It’s essential to understand how these programs interact to avoid duplicate coverage or missed benefits.

What You Need to Know Before Making a Choice

You don’t have to stick with the first plan you pick forever. But you should make your first Medicare choices carefully. Here are some questions to consider:

• Do you want the flexibility to see any provider who accepts Medicare?

• How often do you travel or live in different locations throughout the year?

• Do you take expensive medications?

• Are you comfortable managing care through a network?

Taking stock of your lifestyle, health status, and preferences can help guide your Medicare decisions.

Start With the Basics, Then Build Your Strategy

Medicare is not one-size-fits-all. The best approach is to first understand what each part offers and then layer in the extras based on what you need now—and might need later. Take the time to review your choices annually, especially during the fall enrollment window.

If you’re feeling unsure, get in touch with a licensed insurance agent listed on this website. They can walk you through your options, answer your questions, and help you build a plan that works for you.