Medicare Planning Guide: Navigating Healthcare in Retirement
Medicare is one of the most important decisions you will make in retirement. Understanding your options, enrollment periods, and costs is essential to ensuring adequate healthcare coverage without overpaying. This guide breaks down everything you need to know about Medicare.
Understanding Medicare Basics
The Four Parts of Medicare
| Part | Coverage | Premium |
| Part A | Hospital insurance | Usually $0 |
| Part B | Medical insurance | $174.70/month (2026) |
| Part C | Medicare Advantage | Varies by plan |
| Part D | Prescription drugs | Varies by plan | Original Medicare vs. Medicare Advantage | Feature | Original Medicare (A + B) | Medicare Advantage (Part C) |
| Coverage | Hospital + medical | All-in-one |
| Networks | Any Medicare provider | Usually HMO/PPO |
| Extra benefits | No | Often yes (dental, vision) |
| Out-of-pocket max | No cap | Capped |
| Medigap | Can purchase | Cannot purchase |
| Drug coverage | Add Part D | Usually included | Who Is Eligible? | Eligibility | Requirements |
| Age 65+ | US citizen or permanent resident 5+ years |
| Under 65 | Disability (after 24 months SSDI) |
| Under 65 | End-Stage Renal Disease |
| Under 65 | ALS (immediate eligibility) | Medicare Part A: Hospital InsuranceWhat Part A Covers | Service | Coverage |
| Inpatient hospital | Room, meals, nursing, drugs |
| Skilled nursing facility | After hospital stay |
| Home health care | If homebound |
| Hospice care | Terminal illness | Part A Costs (2026) | Cost | Amount |
| Premium (40+ quarters worked) | $0 |
| Premium (30-39 quarters) | $278/month |
| Premium (under 30 quarters) | $505/month |
| Hospital deductible | $1,632 per benefit period |
| Days 1-60 | $0 after deductible |
| Days 61-90 | $408/day coinsurance |
| Days 91+ | $816/day (lifetime reserve) | Benefit PeriodA benefit period starts when you enter the hospital and ends when you have been out for 60 consecutive days. Each new benefit period means a new deductible. Medicare Part B: Medical InsuranceWhat Part B Covers | Service | Coverage |
| Doctor visits | Office and outpatient |
| Preventive services | Many at no cost |
| Outpatient procedures | Surgery, tests |
| Durable medical equipment | Wheelchairs, walkers |
| Mental health | Outpatient therapy |
| Ambulance | When medically necessary | Part B Costs (2026) | Income (Single) | Income (MFJ) | Monthly Premium |
| $103,000 or less | $206,000 or less | $174.70 |
| $103,001 - $129,000 | $206,001 - $258,000 | $244.60 |
| $129,001 - $161,000 | $258,001 - $322,000 | $349.40 |
| $161,001 - $193,000 | $322,001 - $386,000 | $454.20 |
| $193,001 - $500,000 | $386,001 - $750,000 | $559.00 |
| Over $500,000 | Over $750,000 | $594.00 | IRMAA: Income-Related Monthly Adjustment Amount based on tax return from 2 years prior. Part B Additional Costs | Cost | Amount |
| Annual deductible | $240 |
| Coinsurance | 20% of approved amount |
| Excess charges | Up to 15% above approved | Use our budget calculator to plan Medicare costs. Medicare Part C: Medicare AdvantageHow Medicare Advantage Works | Feature | Details |
| Provider | Private insurance companies |
| Must include | Everything Original Medicare covers |
| Often includes | Drug coverage, dental, vision, hearing |
| Networks | HMO, PPO, PFFS, SNP |
| Out-of-pocket max | Required (Original has none) | Types of Medicare Advantage Plans | Type | Network Requirement |
| HMO | Must use network providers |
| PPO | Can go out-of-network (higher cost) |
| PFFS | Any Medicare provider accepting terms |
| SNP | Special needs populations | Medicare Advantage Pros and Cons | Pros | Cons |
| Often lower premiums | Network restrictions |
| Out-of-pocket maximum | May need referrals |
| Extra benefits | Prior authorization |
| One card for everything | Travel limitations |
| $0 premium options | Plan changes annually | Choosing Medicare Advantage | Consider | Questions to Ask |
| Doctors | Are my doctors in network? |
| Hospitals | Which hospitals are covered? |
| Prescriptions | Are my drugs covered? |
| Travel | Coverage while traveling? |
| Specialists | Do I need referrals? | Medicare Part D: Prescription DrugsHow Part D Works | Phase | What You Pay |
| Deductible | Up to $545 (2026) |
| Initial coverage | 25% coinsurance |
| Coverage gap (donut hole) | 25% for brand, 25% for generic |
| Catastrophic | 5% or small copay | Catastrophic Coverage Threshold (2026) | Amount | Details |
| True out-of-pocket | $8,000 |
| After reaching | Pay only 5% or $4.50/$11.20 | Choosing a Part D Plan | Factor | Consideration |
| Drug formulary | Are your medications covered? |
| Tier placement | What tier are your drugs on? |
| Pharmacy network | Is your pharmacy in network? |
| Mail order | Available and cheaper? |
| Monthly premium | Balance against out-of-pocket | Medigap (Medicare Supplement) PoliciesWhat Medigap Covers | Gap | Medigap Fills |
| Part A deductible | Most plans |
| Part B deductible | Plans C, F (if eligible) |
| Part A coinsurance | All plans |
| Part B coinsurance | All plans |
| Part B excess charges | Plans F, G |
| Foreign travel emergency | Most plans | Medigap Plan Comparison | Plan | Part A Deductible | Part B Deductible | Part B Excess | Foreign Travel |
| A | No | No | No | No |
| B | Yes | No | No | No |
| G | Yes | No | Yes | Yes |
| K | 50% | No | No | No |
| L | 75% | No | No | No |
| N | Yes | No | No | Yes | Plan F: Only available if eligible before 1/1/2020 Medigap vs. Medicare Advantage | Factor | Medigap | Medicare Advantage |
| Monthly cost | Higher | Often lower |
| Out-of-pocket | Predictable | Variable |
| Network | Any Medicare provider | Usually restricted |
| Drug coverage | Need Part D | Usually included |
| Extra benefits | No | Often yes | Enrollment PeriodsInitial Enrollment Period (IEP) | Timing | 7-month window |
| Starts | 3 months before 65th birthday month |
| Includes | Birthday month |
| Ends | 3 months after birthday month | General Enrollment Period (GEP) | Timing | January 1 - March 31 |
| Coverage starts | July 1 |
| Late penalty | May apply |
| For | Those who missed IEP | Special Enrollment Period (SEP) | Trigger | Timing |
| Losing employer coverage | 8 months |
| Moving | 63 days |
| Other qualifying events | Varies | Medicare Advantage/Part D Enrollment | Period | Timing |
| Annual Election Period | October 15 - December 7 |
| Medicare Advantage Open Enrollment | January 1 - March 31 |
| Initial Enrollment | 7-month window at 65 | Late Enrollment PenaltiesPart B Penalty | Calculation | Amount |
| Per 12-month period | 10% of standard premium |
| Duration | Lifetime |
| Example (2 years late) | 20% added permanently | Part D Penalty | Calculation | Amount |
| Per month without coverage | 1% of base premium |
| Duration | Lifetime |
| Example (12 months late) | ~$4/month added permanently | Medicare and Working Past 65If You Have Employer Coverage | Employer Size | What to Do |
| 20+ employees | Can delay Part B without penalty |
| Under 20 employees | Medicare is primary, enroll |
| Retiree coverage | Usually need both | Coordination of Benefits | Situation | Primary Insurance |
| Working, employer 20+ | Employer plan |
| Working, employer under 20 | Medicare |
| Retired with retiree coverage | Medicare |
| COBRA | Medicare | Medicare Costs PlanningAnnual Cost Estimate (2026) | Cost | Original Medicare + Medigap |
| Part B premium | $2,096 |
| Medigap Plan G | $1,800-3,600 |
| Part D | $600-1,200 |
| Part B deductible | $240 |
| Total | $4,736 - $7,136 | | Cost | Medicare Advantage |
| Part B premium | $2,096 |
| MA premium | $0-1,200 |
| Out-of-pocket | $0-8,300 (max) |
| Total | $2,096 - $11,596 | Reducing Medicare Costs | Strategy | How It Works |
| IRMAA planning | Manage income 2 years prior |
| Plan shopping | Compare during AEP |
| Extra Help (LIS) | Low-income Part D assistance |
| Medicaid | Dual eligible benefits |
| State assistance | SHIP programs | See our retirement calculator for healthcare cost planning. Making the DecisionOriginal Medicare + Medigap If: | Factor | Consideration |
| Travel frequently | Nationwide coverage |
| Want predictability | Know costs upfront |
| See many specialists | No referrals needed |
| Value choice | Any Medicare provider | Medicare Advantage If: | Factor | Consideration |
| Want lower premiums | Often $0 premium |
| Want extra benefits | Dental, vision, hearing |
| Don't travel much | Network restrictions |
| Prefer one card | All-in-one coverage |
Medicare Checklist
3 Months Before 65
- [ ] Review Medicare options
- [ ] Check employer coverage coordination
- [ ] Compare plans in your area
- [ ] Decide Original vs. Advantage
- [ ] If Original, shop Medigap
At Enrollment
- [ ] Enroll in Part A and B
- [ ] Enroll in chosen plan
- [ ] Set up premium payments
- [ ] Receive Medicare card
- [ ] Notify current insurance
Annually
- [ ] Review during AEP (Oct 15 - Dec 7)
Conclusion
Medicare planning requires understanding your options, enrollment timing, and costs. The right choice depends on your health needs, preferences, and financial situation.
Key takeaways:
1. Don't miss enrollment deadlines
2. Understand the four parts
3. Compare Original vs. Advantage
4. Account for all costs
5. Review plans annually
6. Consider future health needs
Medicare is not one-size-fits-all. Take time to evaluate your options and make an informed decision.
Sandra Phillips is a Medicare specialist and benefits counselor who has helped thousands of seniors navigate their Medicare choices.