Key Takeaways

• Many Medicare beneficiaries make costly errors by misunderstanding how enrollment periods, coverage limitations, and plan choices work.

• In 2025, new rules, deadlines, and cost structures demand close attention to avoid penalties and coverage gaps.

Medicare Isn’t Automatically Free or All-Inclusive

One of the most persistent misunderstandings is the belief that Medicare is completely free and covers everything. While Medicare is a vital source of health coverage for millions of older Americans, it’s not without costs or limitations.

• Part A (Hospital Insurance) is typically premium-free only if you or your spouse paid Medicare taxes for at least 10 years. If not, monthly premiums can reach over $500 in 2025.

• Part B (Medical Insurance) has a monthly premium for everyone. In 2025, the standard Part B premium is $185, with higher amounts if your income exceeds certain thresholds.

• Out-of-pocket costs still apply: deductibles, coinsurance, and copayments are common. Part A has a $1,676 deductible per benefit period in 2025, while Part B has a $257 annual deductible.

• Medicare doesn’t cover long-term care, routine dental or vision services, hearing aids, or cosmetic procedures.

Failing to understand these costs can lead you to overestimate your coverage and face high out-of-pocket bills.

Enrollment Windows Are Not Flexible

Another costly misunderstanding is assuming you can enroll in Medicare anytime after turning 65. Medicare enrollment is governed by strict timeframes.

• Initial Enrollment Period (IEP): This is a 7-month window that starts 3 months before you turn 65, includes your birth month, and extends 3 months after.

• General Enrollment Period (GEP): If you miss your IEP, you can enroll from January 1 to March 31 each year. However, coverage won’t start until July 1, and late penalties may apply.

• Special Enrollment Periods (SEPs): These are triggered by specific events like losing employer coverage. Even then, there are limits—usually 8 months to enroll without penalty.

Delaying enrollment can lead to:

• Late enrollment penalties: A permanent increase in your monthly premium for Part B or Part D.

• Coverage gaps: A period where you may have no health insurance at all.

Medicare Advantage and Original Medicare Are Not the Same

You may think you’re choosing between two versions of the same thing—but Original Medicare and Medicare Advantage (Part C) are fundamentally different in structure and service.

• Original Medicare includes Part A and Part B. You can add Part D for drug coverage and buy a Medigap policy for supplemental coverage.

• Medicare Advantage bundles Part A, Part B, and usually Part D in a single plan, often with extra benefits like dental or fitness. But it usually requires network restrictions, prior authorizations, and different cost-sharing.

In 2025, both options remain popular, but failing to compare them closely could lock you into a plan that doesn’t meet your medical or financial needs. You can only change your plan during specific windows:

• Annual Enrollment Period (AEP): October 15 to December 7.

• Medicare Advantage Open Enrollment: January 1 to March 31 for current MA enrollees to make a one-time switch.

Drug Coverage Rules Can Be Confusing

Medicare Part D helps cover the cost of prescription drugs—but many beneficiaries underestimate how it works.

• You must enroll separately in Part D if you choose Original Medicare, unless you have creditable drug coverage elsewhere.

• Plans vary widely in formulary (the list of covered drugs), pharmacy networks, and cost tiers.

• In 2025, the Part D deductible is capped at $590, and a $2,000 out-of-pocket maximum now applies—an improvement over previous years, but still a cost to budget for.

• If you don’t enroll in Part D when you’re first eligible and don’t have creditable coverage, you’ll pay a late enrollment penalty for as long as you have coverage.

Many people mistakenly assume their current prescriptions will be covered or that they don’t need drug coverage at all. But even if you take few medications now, avoiding Part D can cost more in the long run.

Medicare Doesn’t Cover Everything You Might Expect

Medicare is comprehensive—but not complete. Many people are shocked to learn that some major health needs aren’t included in the standard benefits.

Not covered under Original Medicare:

• Routine dental care (cleanings, fillings, dentures)

• Routine vision care (eyeglasses, contacts)

• Hearing aids

• Long-term custodial care (nursing home or home care not deemed medically necessary)

In some Medicare Advantage plans, these services may be partially included—but availability, limits, and copayments vary significantly.

In 2025, it’s more important than ever to check the Evidence of Coverage or plan details if you want these services. Don’t assume they’re included—read carefully.

Medicare and Employer Insurance Coordination Is Often Misunderstood

If you’re still working at 65 and covered by an employer health plan, the rules for Medicare enrollment depend on your employer size and plan type.

• If your employer has 20 or more employees, you can delay enrolling in Part B without penalty, and your employer insurance pays first.

• If your employer has fewer than 20 employees, you must enroll in Medicare when first eligible because Medicare pays first in this case.

Failing to understand coordination rules can result in:

• Your group plan denying claims because you didn’t enroll in Medicare.

• Penalties for late enrollment in Part B.

When retiring or losing employer coverage, you have 8 months to enroll in Part B under a Special Enrollment Period. But drug coverage (Part D) rules may require faster action to avoid penalties.

IRMAA Penalties Surprise High-Income Beneficiaries

Many Medicare beneficiaries don’t expect to pay more just because of their income—but that’s exactly what happens under the Income-Related Monthly Adjustment Amount (IRMAA).

In 2025:

• IRMAA applies to individuals with income over $106,000 and couples over $212,000 (based on your 2023 tax return).

• It increases your monthly premiums for both Part B and Part D.

You may receive a letter from Social Security informing you of your IRMAA tier. If your income has dropped due to a life-changing event (like retirement or divorce), you can file Form SSA-44 to request a reduction.

Not planning for IRMAA can catch you off guard and strain your retirement budget.

Timing Your Withdrawals From Other Accounts Can Affect Premiums

Your Medicare premiums are linked to your modified adjusted gross income (MAGI)—and that includes taxable withdrawals from retirement accounts.

If you take large withdrawals from your IRA or begin receiving deferred income, you could unintentionally bump your income into a higher IRMAA bracket.

• This could mean hundreds more per month in premiums for a full calendar year.

• The Social Security Administration reviews your income annually based on tax returns two years prior.

Proper tax planning can help avoid this. Consulting a professional or licensed agent before large withdrawals is smart if you’re near an IRMAA threshold.

Understanding Medicare’s Rules Now Can Save You Later

Misunderstanding Medicare isn’t just frustrating—it can lead to penalties, higher premiums, limited coverage, or unexpected medical bills. You’ve spent years paying into the system; it makes sense to make the most of what it offers.

Make time now to review:

• Your eligibility window

• Your current or future health needs

• The best plan structure for you (Original vs. Advantage)

• IRMAA thresholds and tax implications

• Which benefits are included—and which aren’t

If you’re unsure, don’t guess. Get in touch with a licensed agent listed on this website to talk through your Medicare choices and avoid costly errors.