Medicare is one of the most confusing and costly aspects of retirement planning. Understanding the differences between Parts A, B, C, and D — plus Medigap and Medicare Advantage — can save you thousands of dollars per year in premiums and out-of-pocket costs.
Here’s everything you need to know, simplified.
Medicare at a Glance
| Part | What It Covers | Monthly Cost (2026) |
|---|---|---|
| Part A (Hospital) | Inpatient hospital, skilled nursing, hospice | $0 for most (paid through payroll taxes) |
| Part B (Medical) | Doctor visits, outpatient care, preventive services | $185/month (standard) |
| Part C (Medicare Advantage) | Combined A + B + often D, through private insurers | $0–$200/month (plus Part B premium) |
| Part D (Prescription Drugs) | Prescription medications | $15–80/month depending on plan |
Original Medicare vs. Medicare Advantage
| Feature | Original Medicare (A + B) | Medicare Advantage (Part C) |
|---|---|---|
| Network | Any doctor that accepts Medicare | Network-based (HMO/PPO) |
| Out-of-pocket max | None (unlimited exposure) | $7,550/year (2026) |
| Extra benefits | None (add separately) | Often includes dental, vision, hearing, gym |
| Prescription drugs | Needs separate Part D plan | Usually included |
| Supplemental insurance | Can add Medigap | Cannot add Medigap |
| Travel coverage | Limited outside U.S. | Some plans include travel |
The IRMAA Surcharge (High-Income Trap)
If your Modified Adjusted Gross Income exceeds certain thresholds, you pay higher Part B and Part D premiums. This affects about 7% of Medicare beneficiaries.
| Single Income | Married Joint Income | Part B Premium |
|---|---|---|
| Under $103,000 | Under $206,000 | $185/month (standard) |
| $103,001–$129,000 | $206,001–$258,000 | $259/month |
| $129,001–$161,000 | $258,001–$322,000 | $370/month |
| $161,001–$193,000 | $322,001–$386,000 | $480/month |
| Above $500,000 | Above $750,000 | $591/month |
Planning tip: IRMAA is based on income from 2 years prior. Strategic Roth conversions before age 63 can reduce your IRMAA exposure during Medicare years.
Enrollment Deadlines
- Initial Enrollment Period (IEP): 7-month window around your 65th birthday. Miss it and face permanent late enrollment penalties.
- General Enrollment: January 1 – March 31 each year (if you missed IEP). Coverage starts July 1.
- Open Enrollment (Medicare Advantage/Part D): October 15 – December 7 each year.
- Special Enrollment: If you delayed because of employer coverage (no penalty).
Common Medicare Mistakes
- Missing enrollment deadlines: Part B late penalty is 10% for every 12-month period you could have enrolled but didn’t. This penalty is permanent and compounds.
- Not reviewing plans annually: Plan formularies and costs change every year during open enrollment.
- Assuming Medicare covers everything: It doesn’t cover dental, vision, hearing (without Advantage), or long-term care.
- IRMAA surprises: Not planning income in the 2 years before Medicare eligibility.
Frequently Asked Questions
Should I choose Original Medicare or Medicare Advantage?
If you want maximum doctor choice and can afford Medigap premiums: Original Medicare + Medigap + Part D. If you want lower premiums and don’t mind network restrictions: Medicare Advantage.
Do I need Medicare if I’m still working at 65?
If your employer has 20+ employees, you can delay Medicare Part B without penalty while covered by employer insurance. Apply within 8 months of leaving the employer plan.
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Disclaimer: This article is for educational purposes only. Medicare rules change annually. Consult medicare.gov or a licensed insurance agent for current information.
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