Key Takeaways

• Medicare has four main parts—each serving a different purpose—and understanding what each one does is essential to making smart healthcare choices.

• You can’t enroll or make changes at any time; Medicare follows strict timelines that can significantly affect your costs and coverage.

Getting Familiar With the Basics

If you’re just starting to explore Medicare, you’re not alone in feeling overwhelmed. Medicare is a complex system with multiple parts, rules, and deadlines that can take time to fully understand. But the good news is—you don’t have to master it all at once. What you do need is a solid starting point.

Medicare is the federal health insurance program designed primarily for people aged 65 or older, although younger individuals with certain disabilities or end-stage renal disease may also qualify. As of 2025, over 66 million Americans are enrolled in Medicare.

The Four Parts of Medicare

Medicare is divided into four parts: A, B, C, and D. Each part serves a specific role in covering your healthcare needs.

Part A: Hospital Insurance

• Covers inpatient hospital care, skilled nursing facility care, hospice, and some home health services.

• Most people don’t pay a premium for Part A if they worked and paid Medicare taxes for at least 40 quarters (10 years).

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

Part B: Medical Insurance

• Covers outpatient care, doctor visits, preventive services, and durable medical equipment.

• You pay a monthly premium—$185 in 2025—as well as a $257 annual deductible.

• After the deductible, you typically pay 20% of Medicare-approved charges.

Part C: Medicare Advantage

• An alternative to Original Medicare (Parts A and B) offered by private insurers.

• Includes the same coverage as Parts A and B and often adds extras like dental or vision.

• You must be enrolled in both Part A and B to join a Medicare Advantage plan.

Part D: Prescription Drug Coverage

• Helps cover the cost of prescription drugs.

• Available through private insurers approved by Medicare.

• The deductible in 2025 is capped at $590, and there is now a $2,000 annual out-of-pocket maximum.

Enrollment Periods Matter More Than You Think

One of the most confusing parts of Medicare is knowing when you’re allowed to enroll. Missing key windows can lead to penalties or coverage gaps.

Initial Enrollment Period (IEP)

• Lasts 7 months: 3 months before, the month of, and 3 months after your 65th birthday.

• It’s your first chance to sign up for Part A and B.

General Enrollment Period (GEP)

• January 1 to March 31 every year.

• For those who missed their IEP, with coverage beginning July 1.

• Late penalties may apply.

Annual Enrollment Period (AEP)

• October 15 to December 7 every year.

• Allows you to switch between Medicare Advantage and Original Medicare, or join/drop a Part D plan.

Medicare Advantage Open Enrollment Period (MA OEP)

• January 1 to March 31.

• Allows you to change Medicare Advantage plans or switch back to Original Medicare.

Special Enrollment Periods (SEPs)

• Triggered by certain life events like moving or losing employer coverage.

• Lets you make plan changes outside of standard periods.

What Medicare Does Not Cover

It’s equally important to know what Medicare doesn’t pay for, so you’re not caught off guard.

• Long-term custodial care (like assisted living)

• Routine dental, hearing, and vision care

• Overseas emergency medical care

• Cosmetic surgery

Some of these gaps can be addressed by Medigap or Medicare Advantage plans, but not without added cost and eligibility requirements.

The Cost Breakdown You Need to Know

Even though Medicare reduces your healthcare costs, it’s not free. Understanding the general costs can help you plan better.

• Part A: Free for most; otherwise, up to $518/month.

• Part B: $185/month standard premium in 2025.

• Part D: Varies by plan; the maximum deductible is $590.

• Part C: Varies widely and often includes additional copayments, coinsurance, and an out-of-pocket maximum (capped at $9,350 for in-network services in 2025).

Late Enrollment Penalties Are Real

If you delay enrolling in Medicare beyond your eligible window without qualifying for a Special Enrollment Period, you could face lifetime penalties.

• Part B: 10% increase in monthly premium for each 12-month period you were eligible but didn’t enroll.

• Part D: 1% increase for every month you go without creditable drug coverage.

These penalties add up and don’t go away, which makes timely enrollment crucial.

Medigap: Filling the Gaps in Original Medicare

Medigap policies—also called Medicare Supplement Insurance—are available to help pay for out-of-pocket costs not covered by Parts A and B.

• Only available if you’re on Original Medicare, not Medicare Advantage.

• Enrollment is best during your Medigap Open Enrollment Period (the 6 months after you turn 65 and enroll in Part B).

• Plans are standardized but differ in terms of what they cover and what they cost.

Coordination With Other Coverage

If you have retiree benefits, employer insurance, Medicaid, or Veterans Affairs (VA) coverage, coordination rules apply.

• Medicare is typically primary once you turn 65 and are no longer working.

• If you’re still working and covered under an employer plan, Medicare may be secondary.

• It’s important to understand how your other benefits interact with Medicare to avoid gaps or double coverage.

How Medicare and Prescription Coverage Changed in 2025

Starting this year, Medicare Part D introduces a major benefit: a $2,000 annual cap on out-of-pocket drug expenses. This replaces the older coverage gap model (commonly called the “donut hole”) and provides significant financial relief for those with high medication costs.

Additionally, Medicare beneficiaries can now opt into a monthly payment plan to spread out their prescription drug costs across the year. This helps with budgeting and avoids large pharmacy bills upfront.

Avoid Common Pitfalls

Many people make avoidable mistakes when dealing with Medicare. Here are several you can steer clear of:

• Waiting too long to enroll and facing penalties

• Assuming Medicare covers everything

• Overlooking enrollment periods

• Not reviewing your coverage annually

• Ignoring coordination rules with other insurance

Planning Ahead Makes All the Difference

Medicare isn’t something you set and forget. Your healthcare needs, costs, and available plans can all change over time. Reviewing your plan annually—especially during the Annual Enrollment Period—helps ensure that you continue to get the coverage that fits your life and budget.

Also, consider your long-term needs. Will you require long-term care? Are you planning to travel outside the U.S.? Do you expect to take expensive medications? The earlier you factor in these possibilities, the better prepared you’ll be.

What This Means for You in 2025

Starting your Medicare journey doesn’t require memorizing every detail. It requires understanding the framework, knowing the enrollment windows, and being aware of your coverage options and limitations.

Use this foundation to build your knowledge gradually. As you approach key decisions—whether it’s your first enrollment or an annual review—reach out for support when you need it.

For tailored guidance on choosing the right Medicare coverage, get in touch with a licensed agent listed on this website. An informed choice today can spare you years of frustration and unnecessary costs.