Welcome to Medicare! Reaching age 65 is a milestone, but it also triggers a major shift in your health insurance. The transition from employer coverage to Medicare can be confusing because Medicare isn't just one plan—it's a system of parts that you have to piece together.
This guide will help you understand the components, avoid permanent late-enrollment penalties, and choose the right path for your retirement.
The ABCs (and D) of Medicare
Part A: Hospital Insurance
- What it covers: Inpatient hospital stays, skilled nursing facility care (after a 3-day hospital stay), hospice care, and some home health care.
- Cost: Most people pay $0 premium (if you or your spouse worked and paid Medicare taxes for 10 years).
- Deductible: Even though the premium is free, it has a high deductible ($1,600+ per benefit period) before it pays.
Part B: Medical Insurance
- What it covers: Doctors' visits, outpatient care, ambulance services, medical equipment (like wheelchairs), and preventive services.
- Cost: Everyone pays a monthly premium (standard is ~$185/month in 2025, higher for high earners).
- Deductible: Annual deductible (~$257), then you pay 20% of all approved costs. There is no cap on this 20%.
Part C: Medicare Advantage
- What it is: An "all-in-one" alternative to Original Medicare offered by private companies. It bundles A, B, and usually D.
- Cost: Often low or $0 monthly premium (you still pay Part B premium). You pay copays for services.
- Network: Usually HMO or PPO networks. You must use their doctors.
Part D: Prescription Drugs
- What it is: Private insurance for prescription medications.
- Cost: Monthly premium varies by plan.
- Crucial Rule: You must have "creditable" drug coverage (from Part D or an employer) when you turn 65, or you will pay a penalty added to your premium for life.
The Two Paths
You have a fundamental choice to make. You cannot have both.
Path 1: Original Medicare + Medigap
- Enrollees: Government Medicare (Part A & B).
- Add: A Medigap (Supplement) policy to pay the 20% coinsurance and deductibles.
- Add: A standalone Part D plan for drugs.
- Best for: People who travel, want to see any doctor in the U.S., and want predictable costs. (Higher monthly premiums, lower out-of-pocket).
Path 2: Medicare Advantage (Part C)
- Enrollees: Private Insurance Plan (replaces A & B management).
- Includes: Usually includes Part D drug coverage.
- Includes: Often adds dental, vision, and hearing benefits.
- Best for: Healthy people on a budget who don't mind networks. (Lower monthly premiums, higher copays when you get sick).
Enrollment Windows: Don't Miss These!
Timing is everything in Medicare.
- Initial Enrollment Period (IEP): The 7-month window around your 65th birthday (3 months before, birth month, 3 months after). Sign up now to avoid penalties.
- General Enrollment Period (GEP): Jan 1 – Mar 31 each year. If you missed your IEP, you can sign up here, but coverage won't start until July 1, and you may pay a penalty.
- Annual Enrollment Period (AEP): Oct 15 – Dec 7 each year. This is when you can switch between Original Medicare and Advantage, or change drug plans.
Medigap Plan G vs. Plan N
If you choose Path 1, you need a Supplement. The two most popular are:
- Plan G: Covers everything that Medicare doesn't cover, except the Part B deductible. Once you pay that small deductible, you pay $0 for doctors/hospitals.
- Plan N: Similar to Plan G, but you have small copays (up to $20) for doctor visits and ER visits. Premiums are lower than G.
Medicare Checklist
- Mark your calendar: 3 months before your 65th birthday.
- Check with employer: If you are still working, ask HR if your coverage is "creditable." If so, you can delay Part B without penalty.
- Decide on a Path: Original + Medigap vs. Advantage.
- List your drugs: Use this list to compare Part D plans.
- Apply: Apply online at SSA.gov.
Medicare is a powerful benefit. Maximizing it requires a little homework. Compare Medicare Advantage and Supplement plans.