Key Takeaways

• You only get one Initial Enrollment Period (IEP), and missing it can lead to lifelong penalties or delayed coverage.

• Understanding the structure of Medicare Parts A, B, C, and D helps prevent gaps in care and surprise expenses.

Why the First Step Matters More Than You Think

Enrolling in Medicare is not just a formality; it sets the stage for your healthcare during retirement. Many people underestimate how complex Medicare can be until it is too late. If you are approaching age 65, understanding the key parts of Medicare and your enrollment windows is critical. One misstep now can result in penalties, coverage delays, or unnecessary out-of-pocket costs later.

Breaking Down Medicare: The Four Parts You Need to Know

Part A: Hospital Insurance

Part A covers inpatient hospital stays, skilled nursing facility care (after a qualifying hospital stay), hospice care, and some home health services. For most people, it is premium-free because they or their spouse paid Medicare taxes for at least 40 quarters.

• Deductible in 2025: $1,676 per benefit period

• Coinsurance: After 60 days in the hospital, daily coinsurance begins at $419 per day

Part B: Medical Insurance

Part B covers outpatient care, doctor visits, preventive services, durable medical equipment, and some home health services. Most people must pay a monthly premium.

• Monthly premium in 2025: $185

• Annual deductible: $257

• Higher-income individuals pay more due to Income-Related Monthly Adjustment Amounts (IRMAA)

Part C: Medicare Advantage (Offered by Private Plans)

Medicare Advantage plans replace Original Medicare (Parts A and B) and often include extra benefits like vision or dental. While these may sound appealing, they come with networks and coverage rules that can limit flexibility. You must still enroll in Parts A and B to join.

Part D: Prescription Drug Coverage

Part D helps cover the cost of prescription medications. You can add it to Original Medicare or find it bundled in some Medicare Advantage plans.

• Maximum deductible in 2025: $590

• Out-of-pocket cap for drugs: $2,000 annually, a recent and important change that eliminates the donut hole

The Enrollment Periods You Can’t Afford to Miss

Initial Enrollment Period (IEP)

This is your first opportunity to sign up for Medicare. It lasts for 7 months:

• Starts 3 months before your 65th birthday month

• Includes your birthday month

• Ends 3 months after your birthday month

Missing this window without having other credible coverage can result in lifetime penalties.

General Enrollment Period (GEP)

If you miss your IEP, the next chance is the GEP from January 1 to March 31 each year. However, coverage only begins July 1, and you may face penalties.

Special Enrollment Period (SEP)

You may qualify for an SEP if you delayed Medicare due to having employer coverage past 65. The SEP lasts for 8 months after your employment or coverage ends, whichever comes first.

Annual Enrollment Period (AEP)

From October 15 to December 7, you can make changes to your Medicare Advantage or Part D coverage. These changes take effect on January 1 of the following year.

What You Might Not Expect Until It’s Too Late

Penalties That Don’t Go Away

Late enrollment in Part B or Part D leads to permanent penalties. For Part B, you pay 10% more in premiums for each full 12-month period you delay. For Part D, it’s 1% of the national base beneficiary premium per month delayed.

Medicare Isn’t Free

Although Part A is often premium-free, Part B and Part D come with monthly premiums and other out-of-pocket costs. If you opt for Medicare Advantage, you still pay your Part B premium and any costs set by your private plan.

Not Everything Is Covered

Medicare does not cover long-term care, most dental care, eye exams for glasses, hearing aids, or cosmetic surgery. These exclusions often surprise new enrollees.

How Medicare Works With Other Coverage

If you continue working past 65 and have group health coverage through an employer with 20 or more employees, Medicare can be secondary. In this case, you can delay enrolling in Part B and Part D without penalty. However, you must enroll promptly once that coverage ends to avoid gaps.

If your employer has fewer than 20 employees, Medicare usually becomes primary, and you should enroll when first eligible.

Understanding Medigap: The Missing Piece for Many

Medigap policies help cover the out-of-pocket costs left by Original Medicare, like coinsurance, copayments, and deductibles. They are only available if you enroll in Original Medicare, not Medicare Advantage.

Your 6-month Medigap open enrollment period begins when you are both 65 and enrolled in Part B. During this time, you cannot be denied coverage or charged more based on health status.

Outside this period, coverage is not guaranteed, and you may be subject to underwriting.

What Happens If You’re Still Working at 65?

This is one of the most confusing situations for new Medicare enrollees. The steps you need to take depend on:

• Whether your employer has 20 or more employees

• Whether your employer’s insurance is considered creditable

In general:

• If the coverage is creditable, you can delay Parts B and D without penalty

• You should still enroll in Part A since it is usually premium-free, unless contributing to an HSA

Medicare and Health Savings Accounts (HSA)

Once you enroll in any part of Medicare, you can no longer contribute to an HSA. If you delay Medicare past 65 due to employer coverage and are contributing to an HSA, stop contributions 6 months before you plan to enroll to avoid tax penalties.

Your Coverage May Look Different Each Year

Each fall, you receive an Annual Notice of Change (ANOC) if you’re enrolled in a Medicare Advantage or Part D plan. It outlines upcoming changes to premiums, copays, covered drugs, and more.

Failing to review these changes may result in higher costs or less coverage the following year. You can switch plans during the Annual Enrollment Period if needed.

Switching or Dropping Coverage Isn’t Always Easy

Medicare gives you options to switch between Original Medicare and Medicare Advantage, but there are limitations:

• You can switch during AEP (October 15 to December 7)

• Medicare Advantage Open Enrollment (January 1 to March 31) allows one change

• Medigap may require underwriting if you try to switch back to Original Medicare after more than 12 months on an Advantage plan

These details are often overlooked until the flexibility is gone.

Mistakes First-Time Enrollees Often Make

• Assuming Medicare covers everything: It doesn’t.

• Missing their Initial Enrollment Period: This leads to penalties and coverage gaps.

• Overlooking the Medigap window: It may not come again without health screening.

• Choosing a plan for extras only: Benefits like gym memberships can be enticing but shouldn’t outweigh core coverage needs.

• Not comparing plans annually: Costs and networks change every year.

What You Can Do to Prepare Now

• Mark your calendar for your Initial Enrollment Period

• Learn about your employer’s insurance and if it is creditable

• Decide whether Original Medicare or Medicare Advantage aligns better with your health needs

• Compare Part D plans based on your current prescriptions

• Consider a Medigap policy if you choose Original Medicare

Get Answers Before You Make a Permanent Decision

Your first experience with Medicare is a crucial one. The timing, coverage choices, and understanding of costs affect your health and finances for years. If you are unsure about your options, or want help comparing them, speak with a licensed agent listed on this website. The right advice today can prevent unnecessary expenses tomorrow.