Key Takeaways
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Understanding your Medicare options before finalizing your healthcare plan is essential for making informed decisions that fit your budget and medical needs.
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Asking the right questions can help you avoid surprises and ensure you have the coverage you need in retirement.
Are You Eligible for Medicare?
The first step is understanding when and how you qualify for Medicare. Most people become eligible at age 65, but if you’ve been receiving Social Security Disability Insurance (SSDI) for at least 24 months, you may qualify earlier. There are also exceptions for certain medical conditions, like End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS).
If you’re nearing 65, your Initial Enrollment Period (IEP) begins three months before your birthday month and ends three months after it. Missing this window could result in penalties or delayed coverage. Be sure to ask if you’re required to take action, such as signing up for Medicare Part B, especially if you’re still working and have employer-sponsored coverage.
What Does Medicare Cover—and What Doesn’t It Cover?
Medicare is split into different parts, and each offers specific coverage. Here’s a quick breakdown:
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Part A (Hospital Insurance): Covers inpatient hospital stays, skilled nursing facilities, hospice, and some home health care. Most people don’t pay a premium for Part A if they or their spouse paid Medicare taxes for at least 10 years.
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Part B (Medical Insurance): Covers outpatient care, preventive services, lab tests, and durable medical equipment. There is a monthly premium and an annual deductible.
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Part D (Prescription Drug Coverage): Helps cover the cost of medications, with a maximum deductible of $590 in 2025 and a new $2,000 out-of-pocket cap.
However, Medicare doesn’t cover everything. Routine dental care, hearing aids, vision services, and long-term care are typically excluded. You might need supplemental coverage to handle these gaps. Ask yourself whether you’ll need additional plans, such as a Medigap policy, to fill the void.
Should You Enroll in Medicare Part B if You’re Still Working?
If you’re employed or covered under your spouse’s employer health insurance, you might wonder whether enrolling in Medicare Part B right away is necessary. Generally, you can delay Part B enrollment without penalties if you’re covered by a group health plan through current employment.
Once that coverage ends, you’ll have an eight-month Special Enrollment Period (SEP) to sign up for Part B. If you miss this SEP, late enrollment penalties may apply, increasing your premium by 10% for each 12-month period you were eligible but didn’t enroll.
Speak with your HR department to confirm whether your employer’s plan will work alongside Medicare or if you’ll need to take action sooner rather than later.
Are You Prepared for Out-of-Pocket Costs?
While Medicare provides comprehensive coverage, it’s not free. Knowing the associated costs is crucial for budgeting. Here are the key expenses to keep in mind:
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Premiums: Medicare Part B has a standard monthly premium of $185 in 2025, which increases for higher-income individuals.
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Deductibles: Part A has a hospital deductible of $1,676 per benefit period, and Part B has an annual deductible of $257.
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Coinsurance and Copayments: After meeting the Part B deductible, you’ll typically pay 20% of the Medicare-approved amount for most services.
Ask yourself how much you’re comfortable paying out of pocket. This can help you decide if additional coverage, like a Medigap policy or a Medicare Advantage plan, might be a good investment for you.
What Is the Best Way to Get Prescription Drug Coverage?
Medicare Part D is the go-to option for prescription drug coverage, but understanding its structure can help you avoid unexpected costs. Plans come with a monthly premium, deductible (up to $590 in 2025), and a cost-sharing arrangement that applies until you reach the new $2,000 out-of-pocket limit.
If you’re on multiple medications, check whether your prescriptions are included in a plan’s formulary—the list of covered drugs. You’ll also want to review the plan’s pharmacy network to ensure your preferred pharmacy is included. Take the time to compare options during Medicare’s Open Enrollment Period (October 15 to December 7) each year.
Do You Need Supplemental Coverage?
Original Medicare (Parts A and B) provides solid foundational coverage but leaves gaps that can result in high out-of-pocket costs. To address this, you might consider:
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Medicare Supplement Insurance (Medigap): Works alongside Original Medicare to cover expenses like coinsurance, copayments, and deductibles.
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Medicare Advantage (Part C): These plans bundle Part A, Part B, and usually Part D, offering additional benefits like dental, vision, and wellness programs. However, out-of-pocket limits and provider networks vary, so make sure to read the fine print.
Each option has pros and cons, and the best choice depends on your healthcare needs and financial situation. Ask yourself whether a plan’s additional benefits justify its cost and restrictions.
How Will Medicare Coordinate With Other Insurance?
If you have other insurance—whether through an employer, union, or military service—you’ll need to understand how it coordinates with Medicare. In most cases, Medicare acts as the secondary payer if your employer has 20 or more employees.
However, if your employer is smaller, Medicare typically becomes the primary payer. Knowing this distinction can help you avoid surprises when filing claims. Also, if you have TRICARE or VA benefits, special rules apply. Confirm your coordination of benefits to ensure seamless coverage.
Are You Ready to Make Enrollment Decisions During Open Enrollment?
Open Enrollment is your annual opportunity to make changes to your Medicare coverage. This period runs from October 15 to December 7 each year, with changes becoming effective January 1. During this time, you can:
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Switch between Medicare Advantage and Original Medicare.
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Enroll in or change Medicare Part D plans.
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Compare plans to ensure you’re still getting the best coverage and value.
Review your Annual Notice of Change (ANOC) carefully to understand any modifications to your current plan’s premiums, deductibles, or benefits. Use this information to make informed choices that align with your healthcare needs.
What Resources Are Available to Help You Decide?
Navigating Medicare can feel overwhelming, but you don’t have to do it alone. Consider these resources:
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Medicare.gov: The official Medicare website offers tools for comparing plans and estimating costs.
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State Health Insurance Assistance Programs (SHIPs): Provide free, personalized counseling to Medicare beneficiaries.
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Social Security Office: Can answer questions about eligibility and enrollment.
Taking advantage of these resources can save you time, reduce stress, and help you make confident decisions about your Medicare coverage.
Final Thoughts Before You Lock In Your Medicare Plan
Medicare decisions are among the most important choices you’ll make in retirement. By asking the right questions and understanding your options, you can create a healthcare plan that meets your medical needs and budget. Take the time to explore all parts of Medicare, review your costs, and determine whether supplemental coverage is necessary.
