Medicare Doesn’t Have to Scare

Photo by Łukasz Nieścioruk on Unsplash‍

For those of you who can be described as a fine wine, as in aged to perfection (like this silver fox will be one day), this section is for you. We are currently in the Open Enrollment Period for Medicare and therefore it seems an appropriate topic of conversation. I doubt it will be as fitting a conversation at your upcoming Thanksgiving gathering, but hey give it a shot.

Some of you reading may have already enrolled in Medicare, or maybe it's far enough in the future that you are already skipping this section. But if you are nearing the age of 65, currently 65+, or want to prep for that thrilling conversation about Medicare with your 65-year-old aunt over stuffing and mashed potatoes, let's talk turkey. And by turkey I mean Medicare's general components, the enrollment process, and the costs to expect. Yum, let’s dig in.

What is Medicare?

Well, first of all, it doesn’t have to be scary. “Medicare” can sometimes feel like a word we should all know what it means and entails, and yet if we’re honest, most of us probably actually know very little about how it works. So for those who are 65+, we should make sure we understand what exactly we are enrolling in.

At a high level, Medicare is federal health insurance for individuals age 65 and older (and some younger than 65 with certain conditions). Anyone employed in the United States contributes through the Medicare Tax, which is paid via our paychecks, often without us even realizing it. Medicare is structured to provide coverage when income and resources may be limited during one’s retirement.

To summarize what we’re going to break down next, Original Medicare includes Part A & Part B, which is your basic coverage that you are required to sign up for. Part D covers prescription medications. And then there is Medicare Advantage and Medigap, which are ways to supplement or get extra coverage in addition to or alongside Parts A & B. Now let’s dive into each of those parts: 

• Part A (Hospital Insurance): Medicare Part A covers services like hospital inpatient care, hospice care, some home health care, and some types of skilled, inpatient nursing home care (excluding long-term care).

• Part B (Medical Insurance): Medicare Part B covers preventive and medically necessary services that diagnose or treat medical conditions. Examples of these services include doctor visits, some outpatient services, some mental health services, and prescribed durable medical equipment.

• Part C (Medicare Advantage): Medicare Advantage plans offer an alternative way of getting the same coverage found under Parts A and B (Original Medicare) plus additional coverage for some things Parts A and B don’t cover. Medicare Advantage Plans, which are often bundled with Part D, are provided by Medicare-approved private insurance companies. Individuals typically have dozens of Medicare Advantage Plans to choose from, depending on the state they live in. The Advantage Plans also have an annual out‑of‑pocket maximum (which Original Medicare does not) and network restrictions. That can be a big differentiator for individuals who are used to employer plans.

• Medicare Supplement (“Medigap”): Medigap, which can be purchased instead of Medicare Advantage, is basically extra insurance that you can buy from a private insurance company to help cover costs of things not covered elsewhere. Medigap acts as a supplement to Parts A & B (whereas a Medicare Advantage plan offers an alternative way to get Parts A & B) by paying for some of the costs for covered healthcare services and supplies, including co-payments, coinsurance, and deductibles. Some Medigap policies also offer additional coverage on services not covered by Parts A & B. The coverage offered by the various private insurance companies will always be the same for each of the various lettered Parts; that is, policies with the same letter offer the same basic coverage, no matter the insurance company you are buying it through. But the cost of those policies will vary from company to company, for various reasons, so it’s always good to shop around and compare.

• Part D (Prescription Drug Coverage): Medicare Part D aids in covering the cost of prescription medications. This coverage is available to anyone with Original Medicare (Parts A & B). Most Medicare Advantage Plans bundle in prescription drug coverage.

Enrollment Periods

When is the best time to enroll? Most individuals are able to sign up for Parts A and B during their Initial Enrollment Period (known as IEP), which starts three months before you turn 65 and ends three months after. For most people, signing up during your Initial Enrollment Period is not optional and can actually result in lasting penalties or a delay in coverage if missed. Once enrolled, coverage start dates can vary, depending on when you actually enrolled. For example: When you enroll during your Initial Enrollment Period and turn 65, your Part A/Part B coverage start date will depend on whether you enroll early, on your birthday month, or after. But the earliest it will be is the month of your birthday, starting the first day of the month.

Once enrolled, you are able to make changes during the Open Enrollment Period, from October 15 to December 7 each year. There is also a Special Enrollment Period that allows for certain changes for limited special circumstances. Before you can sign up for Medigap, Medicare Advantage, or a Part D plan, you will need to have been enrolled in Parts A and B.

It is always wise to be aware of when your enrollment periods and deadlines are, as missing those can result in penalties, gaps in coverage, or other headaches.

Enrollment Process

The process for signing up for Original Medicare (Parts A & B) is surprisingly simple. There are a few options:

• Apply Online: The easiest (and often fastest) way to sign up for Medicare is to sign up online on the Social Security website. You’ll need to create a secure Social Security account to get started. Note: If you’re already collecting Social Security, you'll be automatically enrolled in Parts A and B on the first day of the month you turn 65.

• Call Social Security: You can also call the Social Security Administration at 800-772-1213. Individuals can also contact a local Social Security office in their area and reach out for assistance.

• Railroad Retirement Board: It’s worth noting that if you or your spouse worked for a railroad, you have the option of reaching out to the Railroad Retirement Board. The Railroad Retirement Board can be reached at 877-772-5772.

Enrolling in Medigap, Medicare Advantage, or a standalone Part D plan requires more effort. Because you likely have many plans available as options, this is a good opportunity to review your medical needs, research various plan options, and review potential costs. You can compare and enroll in plans using the official Medicare Plan Finder tool.

Cost Expectation

So is it free? You might be thinking, hey I’ve worked my whole life and contributed to the program via every paycheck, so what’s the cost, eh? Well, it does cost, kinda. Or rather portions of it. And of course, I can't give you an exact quote of what your monthly cost will be. But we can cover what the general expectation of some of the costs might be. And remember, this is as of October 2025. The premiums will be adjusted for 2026, so nothing is set in stone.

• Part A is often known as the premium-free Part A, and most people are eligible for premium-free coverage depending on how long they have paid the Medicare tax and if they are already receiving Social Security benefits. Generally speaking, the qualifier for premium-free Part A is if you or your spouse has worked 40 quarters/10 years paying Medicare taxes. But remember, premium-free doesn’t mean zero-cost; you’ll still have deductibles, coinsurance, etc.

• If you do have to pay for Part A coverage, you may be looking at a premium between $278 and $518 each month as of 2025. The number will depend on how long you (or your spouse) worked and paid Medicare taxes. Additionally, you’ll be subject to a deductible of around $1,676 for hospital inpatient stays as well as a potential range of coinsurance payments.

• For Part B coverage, the standard premium for most individuals is $185 per month for 2025. However, you may have to pay a higher premium depending on your income. Additionally, you may also pay 20% of the Medicare-Approved Amount for most outpatient therapy, durable medical equipment, and doctor services (including ones rendered as a hospital inpatient), unless you have a Medigap or Medicare Advantage plan, which will provide a cap on total medical costs. With a Medigap Plan G, for example, you’ll be subject to only a $257 deductible for 2025. Monthly premiums vary by plan for Medigap, Medicare Advantage, and Part D. You can compare plan costs here. 

So why do I say ‘depending on your income’ when it comes to the cost of the various parts of Medicare? Well, Medicare looks at your Modified Adjusted Gross Income (MAGI) from two years ago. So for 2026 Medicare costs, they’ll peek at your 2024 tax return. If you made over a certain amount, you get hit with a surcharge on top of your standard Medicare premiums. This surcharge is called IRMAA (Income-Related Monthly Adjustment Amount). This is why it can be so crucial to be aware of the timing of things and why it can be so helpful to have a financial planner to help you navigate this stuff. This is one reason we do Tax Planning meetings for our clients, analyzing how current happenings can impact our future as well, whether it’s premium costs or tax implications.

Let’s sum up

Now that I have potentially overwhelmed you, or at least bored you, with the general details of Medicare, let's acknowledge a few things:

• This is a big transition and it’s totally normal to be confused or overwhelmed. Our medical system is complicated and not always easy to navigate, and now you get to learn a whole new process and system. Yay! I hope this short guide is a helpful tool. Or at least prompts some thinking and awareness.

• Medicare has some major differences from what you may be used to from employer-sponsored or Marketplace insurance, so be aware of that from the beginning.

• There are Medicare insurance agents and other places to ask for help, but note that it is often a commission-based service, so their advice may not be unbiased. I would encourage anyone who has questions to talk to their financial advisor, if applicable, and if you don’t have one, maybe it’s time to consider looking for one.

Hopefully this has been helpful and/or insightful for you! And if nothing else, you’ll have a topic to fall back on when conversation lags at Thanksgiving dinner.