Key Takeaways

• You can’t make confident Medicare choices unless you understand the four parts, enrollment periods, and coverage coordination.

• Making uninformed decisions can result in late penalties, gaps in coverage, or higher out-of-pocket costs that could last for years.

Medicare Isn’t Just for Later—It’s for Right Now

Medicare is often treated like something you’ll figure out later. But when “later” suddenly becomes now, the pressure to make decisions without a full understanding hits hard. You might be thinking: “I’ll just pick what most people pick” or “I’ll change it if I don’t like it.” However, Medicare isn’t always that flexible. Some decisions are locked in for the year. Others come with financial consequences. That’s why understanding Medicare’s basics in 2025 matters more than ever.

What Medicare Actually Covers—and What It Doesn’t

Medicare is made up of four parts, each doing something different. If you treat them like they’re all the same, you’re likely to miss important details.

Part A: Hospital Insurance

• Covers inpatient hospital stays, skilled nursing facilities, hospice, and some home health care.

• Most people don’t pay a monthly premium for Part A if they or their spouse paid Medicare taxes for at least 10 years.

• There’s a deductible every benefit period, which resets after 60 days without inpatient care.

Part B: Medical Insurance

• Covers doctor visits, outpatient services, lab work, preventive screenings, and durable medical equipment.

• Has a standard monthly premium in 2025 of $185, plus a $257 annual deductible.

• After the deductible, you typically pay 20% of the Medicare-approved amount for covered services.

Part C: Medicare Advantage

• An alternative to Original Medicare that includes Part A and Part B, and often Part D.

• Run by private companies with different rules, networks, and out-of-pocket costs.

• You must still be enrolled in Parts A and B to join.

Part D: Prescription Drug Coverage

• Standalone drug plans or included in some Part C plans.

• Helps cover the cost of prescription medications.

• Monthly premiums vary and can include a penalty if you delay enrollment.

What’s Not Covered

Medicare doesn’t cover everything. You’ll need to plan for:

• Most dental, vision, and hearing services

• Long-term custodial care

• Routine foot care

• Overseas emergency care (in most cases)

Enrollment Is a Clock You Don’t Want to Ignore

Enrollment is where people often stumble. Medicare has strict timelines, and missing them could cost you money—possibly for life.

Initial Enrollment Period (IEP)

• Starts three months before the month you turn 65

• Ends three months after your birthday month (7 months total)

• This is your chance to sign up for Parts A and B, and add Part D or a Medicare Advantage plan

General Enrollment Period (GEP)

• Runs from January 1 to March 31 each year

• For those who missed their IEP and don’t qualify for a Special Enrollment Period

• Coverage starts July 1 and late enrollment penalties may apply

Special Enrollment Period (SEP)

• You qualify if you delayed Part B due to active job-based coverage

• You have 8 months to enroll after losing that coverage without penalty

Annual Enrollment Period (AEP)

• October 15 to December 7 each year

• You can switch from Original Medicare to Medicare Advantage, or vice versa

• You can also change Part D plans

Medicare Advantage Open Enrollment Period

• January 1 to March 31

• For people already enrolled in a Medicare Advantage plan

• Allows you to switch plans or return to Original Medicare once

Late Penalties Aren’t Temporary

Some people think they can delay Medicare because they feel healthy or don’t need it yet. Unfortunately, that delay can turn into permanent penalties:

• Part B penalty: 10% added to your premium for each 12-month period you delay enrollment without credible coverage. This stays with you for life.

• Part D penalty: 1% of the national base premium multiplied by the number of uncovered months. Also permanent.

These penalties are avoidable—but only if you understand the rules before you miss your deadline.

Medicare and Your Job-Based Coverage: Know the Rules

If you’re still working at 65, Medicare decisions may depend on your employer’s size.

• If your employer has 20 or more employees: You may delay Part B without penalty while still covered by your employer’s group plan.

• If your employer has fewer than 20 employees: Medicare becomes primary, and you may need to enroll in Part B to avoid gaps.

For retirees with COBRA or retiree insurance, Medicare usually pays first. In these cases, delaying Part B often leads to late penalties.

What About Medigap?

Medigap, or Medicare Supplement Insurance, is another layer to consider.

• It works with Original Medicare (Parts A and B)

• Covers some out-of-pocket costs like coinsurance and deductibles

• Sold by private companies, but standardized across most states

You have a 6-month Medigap Open Enrollment Period starting the first month you’re 65 and enrolled in Part B. After that, you may be denied or charged more based on health history.

Out-of-Pocket Costs Still Exist

Even with Medicare, you’re not fully protected from healthcare expenses. In 2025:

• The Part A deductible is $1,676 per benefit period

• Part B requires you to pay 20% of the cost for many services

• Medicare Advantage plans cap your in-network out-of-pocket costs, but those caps can be as high as $9,350

• Part D has a $2,000 annual cap on out-of-pocket drug costs, a welcome change introduced this year

Understanding where your coverage stops and your wallet starts is crucial.

Medicare Doesn’t Work the Same for Everyone

What works for someone else may not be the right fit for you. Consider:

• Your travel habits: If you split time between states, you may want a plan that isn’t limited to a local network

• Your prescription needs: Some plans cover your medications better than others

• Your doctors: Not all plans include every provider

• Your health: Chronic conditions may make cost-sharing or plan benefits more important

Making choices based on your personal circumstances—not just what’s popular—is what makes Medicare work for you.

Annual Review Isn’t Optional

Even if you picked the right plan at 65, things change.

• Plans adjust premiums, deductibles, and covered drugs every year

• Your health may shift, changing what you need from a plan

That’s why the Annual Enrollment Period is so important. Each fall, you should:

• Review your Annual Notice of Change (ANOC)

• Compare your current coverage with other available plans

• Ask questions if you’re unsure what’s changing

When Medicare Is the Main Financial Safety Net

As healthcare costs continue to rise in 2025, Medicare remains one of the most essential parts of your retirement safety net. But it’s not automatic protection. If you miss deadlines or skip reviewing your coverage, Medicare may leave you with bigger bills or fewer options than expected.

Getting it right means staying engaged with your choices and planning ahead for the parts Medicare doesn’t cover. That includes:

• Budgeting for dental and vision care

• Considering supplemental insurance

• Keeping up with changes to federal rules and benefits

Make Medicare Work the Way It Should

The decisions you make about Medicare today echo for years. They affect your care, your costs, and your confidence moving forward. That’s why it’s never too early—or too boring—to understand the basics.

You don’t have to do it alone. If you want help reviewing your options or clarifying your choices, get in touch with a licensed agent listed on this website for professional advice tailored to your needs.