Medicare Guide for Retirees
Everything you need to know about Medicare — what it covers, what it costs, when to enroll, and how your retirement income affects your premiums.
The 4 Parts of Medicare
Covers: Inpatient hospital, skilled nursing, hospice, some home health
Most people pay $0 premium. Deductible: $1,676/benefit period (2026).
Covers: Doctor visits, outpatient care, preventive services, durable medical equipment
Premium is income-based (IRMAA). Deductible: ~$257/year, then 20% coinsurance.
Covers: Combines A + B, often includes dental/vision/drugs. HMO or PPO network.
Private insurance alternative. May have lower out-of-pocket but restricted networks.
Covers: Prescription medications (formulary varies by plan)
Out-of-pocket cap: $2,000/year (2025+). Late enrollment penalty: 1% per month delayed.
Enrollment Timeline
| When | What | Details |
|---|---|---|
| 3 months before 65th birthday | Initial Enrollment Period (IEP) begins | 7-month window: 3 months before, birth month, 3 months after. |
| Month you turn 65 | Coverage can start | If you enroll in the 3 months before your birthday, coverage starts the 1st of your birth month. |
| 3 months after 65th birthday | IEP ends | If you miss this window without qualifying coverage, you face late enrollment penalties. |
| Jan 1 – Mar 31 (annually) | General Enrollment Period | For those who missed IEP. Coverage starts July 1. Late penalty applies permanently. |
| Oct 15 – Dec 7 (annually) | Open Enrollment (AEP) | Switch between Original Medicare and Advantage, change Part D plans. |
⚠️ Late Enrollment Penalties
- Part B: 10% premium surcharge for each 12-month period you were eligible but didn't enroll. This penalty is permanent.
- Part D: 1% of the national base premium × number of months without creditable coverage. Also permanent.
- Exception: If you have employer coverage (yours or spouse's), you get a Special Enrollment Period when that coverage ends — no penalty.
IRMAA: Income-Based Premium Surcharges
Medicare uses your tax return from 2 years ago (MAGI) to determine surcharges. This is critical for Roth conversion planning — a large conversion can spike your Medicare premiums two years later.
| Single (MAGI) | Married (MAGI) | Part B Monthly | Part D Surcharge |
|---|---|---|---|
| Up to $106,000 | Up to $212,000 | $185.00 | $0.00 |
| $106,001–$133,500 | $212,001–$267,000 | $259.00 | $13.70 |
| $133,501–$167,000 | $267,001–$334,000 | $370.00 | $35.30 |
| $167,001–$200,000 | $334,001–$400,000 | $480.90 | $57.00 |
| $200,001–$500,000 | $400,001–$750,000 | $591.90 | $78.60 |
| Over $500,000 | Over $750,000 | $628.90 | $85.80 |
2026 estimated amounts. IRMAA is based on MAGI from 2 years prior (2024 tax return for 2026 premiums).
Strategies for Early Retirees (Before 65)
Keep MAGI under 400% FPL (~$60K single / $81K couple) for premium subsidies. Roth conversions and capital gains count as income.
Use HSA funds tax-free for premiums and medical costs before Medicare. Save receipts from prior years for tax-free reimbursement anytime.
Continue employer coverage after leaving. Expensive (full premium + 2% admin) but useful as a short bridge to Medicare.
Do large Roth conversions before 63 — IRMAA uses income from 2 years prior. Conversions at 64+ will spike Medicare premiums at 66+.
Original Medicare vs Medicare Advantage
| Original Medicare (A + B + D + Medigap) | Medicare Advantage (Part C) | |
|---|---|---|
| Network | Any doctor that accepts Medicare (nationwide) | HMO/PPO network (may be limited) |
| Monthly Cost | Part B + Medigap + Part D (~$350–$500/mo) | Part B + plan premium ($0–$200/mo) |
| Out-of-Pocket Max | No cap (Medigap covers most gaps) | Capped (~$8,000–$12,000/year) |
| Extras | None (add separate dental/vision) | Often includes dental, vision, hearing, gym |
| Best For | Travelers, those wanting any doctor, predictable costs | Budget-conscious, healthy, staying local |
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