A Medicare Primer

I'm a planner; I think everyone here knows that. It will therefore come as no surprise that I have been researching Medicare for a while now, and I'd argue that anyone hovering around 60, or looking to retire anytime soon should have a solid understanding of Medicare's ins and outs. I have learned quite a lot, and have been asked to write up a primer for anyone who may not already know about the program.

Almost everyone in the US who is 65 or older and does not receive healthcare insurance from a company with more than 20 employees will likely enroll in Medicare. This is because failing to do so within 3 months of turning 65 will result in a lifetime penalty if and when you eventually do sign up.

Below you will find key information about Medicare which you should know: what is is, how it works, when you need to sign up (and what happens if you don't), a discussion of premium surcharges (IRMAA), and information on how to sign up. While I think that everyone should read all those sections in full, I recognize some may just want a snapshot. If that is you, click here to jump to the quickie overview at the end of this post.

WHAT MEDICARE IS

Medicare is the federal health insurance system in the United States for those aged 65+ (and some other populations, which I will not go into here) who are not covered through any other "creditable" health insurance (i.e. an insurance plan through a company with more than 20 employees). Original Medicare refers to Parts A & B (discussed below), and is often supplemented with a Medigap plan and a drug plan (Part D). An alternative (which is almost always cheaper) to Original Medicare is Medicare Advantage, a private insurance plan which typically works like a HMO. If you can afford it, most people strongly recommend you opt for Original Medicare (with a supplement) over a Medicare Advantage Plan (keep reading for why).

HOW MEDICARE WORKS

There are several Parts to Medicare. Original Medicare (OM) refers to Parts A + B.

1. Part A: Hospital Insurance. If you have worked enough to be eligible for social security (40 quarters), this insurance is free, although there is a deductible that you pay for each hospital stay (amount changes every year; it is $1736 for 2026).

   
   

2. Part B: Non-Hospital Medical Insurance (think: doctors' visits, medically required tests/labs, outpatient procedures). There is a federally mandated regular monthly premium ($202.90 in 2026) and annual deductible ($283 in 2026) for this insurance, which covers 80% of these medical costs.* Additionally, there is an enrollment window to sign up for a Part B plan which you do not want to miss (see below for details).

   1. If you want to have the additional 20% covered, you need to purchase a Supplemental (or Medigap) Plan, which has an additional monthly premium.

   2. Any medical provider who is part of the Medicare network is covered by Part B and all the medigap (but not Medicare Advantage!) plans.

   3. As an example: if you go to any doctor (who accepts Medicare) for something and have a Medigap supplemental plan, you would give the doctor's office your Medicare (insurance) card for billing purposes. Medicare will pay (after the deductible) the 80% it is responsible for and then send to the medigap plan the bill for the remaining 20%. Timing can be problematic, but this is the way it should work for anyone with OM and a supplemental Medigap plan.

      
      

3. Part C -- Medicare Advantage Insurance

   1. Medicare Advantage is an alternative to Parts A + B (and oftentimes Part D, below). Typically the costs of these private plans are cheaper than Original Medicare, but there are some serious drawbacks, especially if/ when you have a serious medical issue and/or do not have many (or any!) providers in your area -- a very real issue for many.

   2. Most plans work like a HMO and only cover in-network providers: both in terms of medical professionals as well as medical centers/ out-patient places. (This is especially a problem in many rural areas.)

   3. As an example: if you go to a specialist doctor (who accepts Medicare Advantage plans and is usually referred by your primary care doctor) for something and have a Medicare Advantage plan, you would give the doctor's office your Medicare Advantage (insurance) card for billing purposes. You may have a co-pay and your specific plan dictates how much of the bill is covered (just like a typical HMO).

      
      

4. Part D -- Prescription drug coverage insurance. Like Part B, you need to sign up for a Part D plan or you will incur penalties. Some Part D plans have no premium, others have them. What's important is to check the list of acceptable drugs before making a decision as different Part D plans have different formularies...

IMPORTANT TIMING CONSIDERATIONS REGARDING MEDICARE

There are several deadlines you need to be aware of regarding Medicare. If you miss these deadlines, you will be penalized, and the financial implications can be significant. So pull out your calendar and read on.

1. While you officially can contribute to your HSA (Health Savings Account) up to the day before Medicare starts, it is strongly recommended that you stop making HSA contributions 6-8 months before signing up for Medicare. This is because your coverage may be backdated, meaning contributions made during this retroactive period could be considered excess contributions, which would lead to tax penalties.

   
   

2. The Initial Enrollment Period (IEP) starts three months before the month you turn 65, and runs for a total of seven months.  Unless you want to be financially penalized (an increase of 10% of your Part B premium for every year you waited, for the rest of your life!), you want to be sure to sign up within that IEP! If you are opting for a Medicare Advantage plan, you can be denied coverage if you miss this enrollment window. FYI, you can sign up for Part A if you want during this period even if you are still working (there's no cost to do so).

   
   

3. If you are working at or after 65, you do not need to sign up for Medicare, assuming you have what is considered creditable health insurance through your employer (your company has more than 20 employees). Once you lose your employer health insurance, there is a Special Enrollment Period (SEP) which gives you 8 months to sign up for Medicare without incurring a penalty. This period starts from the time you lose your company insurance, NOT from the time you end your COBRA benefits!

   
   

4. If you are enrolling in Original Medicare, you have a one-time six month period to sign up and choose a supplemental Medigap plan to start when Part B coverage begins. During this time, insurers cannot ask about your health or deny coverage or charge extra for any pre-existing conditions.  After this initial six month period, you should expect that you will need to be approved if you want to change Medigap plans through a process called "underwriting," (where your health and pre-existing conditions are considered). Think long and hard about which plan you want (and can afford, keeping in mind increasing premiums), as switching plans can be difficult. Here is information about the different types of Medigap plans currently available -- please know that premiums are based on zip codes, so until you are almost 65 it is impossible to know what pricing will be.

   
   

5. There is a penalty for not signing up for Part D at the right time -- an extra one percent per uncovered month, added to your Part D premium, for life. The Medicare Part D late enrollment penalty is applied if you do not enroll in a Part D plan during your Initial Enrollment Period (IEP) or if you go 63 days or more without creditable drug coverage. As with Part B, if you have creditable insurance through an employer, you will not be penalized -- but you will need a letter from your employer confirming you have that coverage!

*IRMAA

IRMAA stands for Income Related Monthly Adjustment Amount. IRMAA is essentially a Medicare (Part B & Part D) surcharge for those with higher Modified Adjustable Taxable Income (MAGI) from two years prior. In 2026, IRMAA surcharges apply to beneficiaries whose modified adjusted gross income exceeds $109,000 for single filers and $218,000 for joint filers. Exemptions can be requested if you experience a life-changing event that reduces your income, such as marriage, divorce, or loss of employment. Also, IRMAA is recalculated each year, so it does not follow you for life.

HOW TO SIGN UP

You can sign up for Medicare online at the Social Security website, by calling Social Security at 800-772-1213, or by visiting your local Social Security office.

There are insurance brokers who specialize in Medicare policies (Medigap supplemental plans as well as Medicare Advantage plans). From what I have read, you do not pay extra by enrolling in a plan through them, and they can help with billing issues and questions which may arise. The one I will be using is called Boomer Benefits, but there are certain states they don't cover (like NY & MA, where I assume they can help you find a broker). Of course, if you already have a trusted insurance agent, they may well be able to help you, too. (And no, I am not getting paid for recommending Boomer Benefits.)

MY QUICKIE OVERVIEW:

• If you are not working when you turn 65, you have 3 months after your 65th birthday month to sign up for Medicare without a penalty. (You can sign up starting 3 months before your birthday month).

• If you are working and/or have company insurance (over 20 employees) at or after 65 years of age, you don't need to sign up for Medicare. When you stop working, however, you have 8 months to do so, in order to avoid a penalty.

• Medicare does not cover all your medical expenses.  If you want extra (supplemental) insurance (to cover everything), you have to buy either a Supplemental -- aka Medigap -- Plan (recommended) or a Medicare Advantage Plan (which is actually a private insurance plan that is NOT part of Medicare).

• Medicare Part A covers hospitalizations (with a deductible), Part B covers 80% of approved out-patient medical care (like labs, doctor appointments, etc.), and Part D covers prescriptions.

  • Part B has a monthly premium and an annual deductible. Your supplemental Medigap plan will have an additional monthly premium.

    • If you opt for a Medicare Advantage Plan, this replaces Part B (and often Part D) supplemental (Medigap) insurance, and also has a monthly premium -- often far lower than Medigap plans.

  • If you sign up late for Part B or Part D, there are steep penalties (for life!).

  • The Part B premium is based on your income FROM TWO YEARS PRIOR.  If you had high income in the years before Medicare, your Part B premium will be higher than the "regular" amount. This is called IRMAA and should be considered in your financial planning.

Hope this has been helpful. Remember, knowledge is power!