What Most People Get Wrong About Medicare—and How to Get It Right

Key Takeaways

• Many Medicare mistakes stem from assuming it covers everything or failing to understand enrollment timing rules.

• To avoid costly gaps or penalties, it’s essential to understand what Medicare does not cover and how Part A, B, C, and D work together.

Medicare Might Be Familiar, But It’s Rarely Understood

You’ve likely heard of Medicare long before you need it. But when it comes time to enroll or use your coverage, the details can feel murky. Medicare is not one all-encompassing health plan. It is a complex system with multiple components, enrollment rules, penalties, and coverage gaps. Failing to understand these details can cost you money or limit your access to care.

Let’s walk through what people often misunderstand—and how you can make smarter, more informed Medicare choices in 2025.

Understanding the Four Parts: Not All Letters Are Created Equal

Medicare is made up of four parts, but they don’t all work the same way or cover the same things. Each part has its own purpose:

Part A: Hospital Insurance

• Covers inpatient care, hospice, and some home health services.

• Most people don’t pay a premium if they worked at least 10 years (40 quarters) and paid Medicare taxes.

• In 2025, the inpatient hospital deductible is $1,676 per benefit period.

Part B: Medical Insurance

• Covers outpatient care, doctor visits, lab tests, and preventive services.

• Requires a monthly premium. The standard premium in 2025 is $185.

• Includes an annual deductible of $257.

Part C: Medicare Advantage

• Offered by private plans approved by Medicare, these combine Part A and Part B, and often include Part D.

• May include extra benefits, but can have network restrictions and variable out-of-pocket costs.

Part D: Prescription Drug Coverage

• Helps cover the cost of prescription drugs.

• In 2025, the annual deductible can be up to $590.

• A new $2,000 annual out-of-pocket cap helps limit drug spending.

Enrollment Isn’t Automatic for Everyone

One of the most common Medicare mistakes is assuming enrollment is automatic. That’s true only in some cases. If you’re already receiving Social Security or Railroad Retirement Board benefits, you’re typically auto-enrolled in Parts A and B when you turn 65.

However, if you’re not receiving these benefits, you need to enroll yourself during a specific time window.

Initial Enrollment Period (IEP)

• This is a 7-month period that begins three months before you turn 65 and ends three months after.

General Enrollment Period (GEP)

• Runs from January 1 to March 31 each year.

• For those who missed their IEP, but it may result in late penalties.

Special Enrollment Period (SEP)

• Available for those delaying Medicare because they have qualifying employer coverage.

• You have 8 months after that coverage ends to enroll without penalties.

Missing these periods can result in permanent late penalties for Part B and Part D.

Medicare Doesn’t Cover Everything

Many people assume that Medicare is full coverage. It’s not. You are responsible for premiums, deductibles, coinsurance, and services that Medicare doesn’t cover at all. Here are a few examples of what Medicare does not pay for:

• Routine dental care

• Eye exams for prescription glasses

• Hearing aids and fitting exams

• Long-term custodial care (non-skilled care in nursing homes)

• Care received outside the United States

Even when services are covered, cost-sharing applies. For example, under Part B, you typically pay 20% of the Medicare-approved amount after the deductible.

Medicare Advantage Sounds Simple, But Comes With Trade-Offs

Medicare Advantage (Part C) plans may offer convenience—combining Parts A, B, and often D into a single plan. But they also come with important trade-offs:

• You may need to stay within a provider network.

• Referrals may be required to see specialists.

• Coverage rules and out-of-pocket costs vary by plan and region.

• Plans can change their coverage and costs each year.

It’s crucial to compare the plan’s Summary of Benefits and Annual Notice of Change before deciding to enroll or renew.

You Might Need to Pair Medicare With Other Coverage

Original Medicare (Parts A and B) leaves gaps in coverage. To protect yourself from high out-of-pocket costs, you might need additional coverage:

Medigap (Medicare Supplement Insurance)

• Helps pay deductibles, coinsurance, and copayments not covered by Original Medicare.

• Does not work with Medicare Advantage plans.

• You must be enrolled in Parts A and B to buy a Medigap policy.

• Best time to buy is during your 6-month Medigap Open Enrollment Period, which starts the first month you have Part B and are 65 or older.

Employer or Retiree Coverage

• If you or your spouse has group health coverage, this may work alongside Medicare.

• Coordinate benefits carefully to avoid overlaps or gaps.

The Late Enrollment Penalties Are Permanent

Failing to enroll in Medicare on time can lead to financial penalties that don’t go away. These are not one-time fees—they get added to your premiums and stay there.

Part B Penalty

• If you delay enrollment without credible coverage, your premium increases by 10% for each full 12-month period you could have had Part B.

Part D Penalty

• If you go without drug coverage for 63 days or more, you may pay an extra 1% for each uncovered month.

These penalties are added to your premiums for as long as you have Medicare.

Medicare Has Annual Changes You Should Monitor

Medicare isn’t static. Costs, coverage rules, and plan options often change from year to year. Staying informed is vital to avoid surprises.

In 2025, a few key updates include:

• Part D drug costs are now capped at $2,000 out-of-pocket annually.

• The Medicare Prescription Payment Plan allows monthly installments for drug costs.

• Average Part D premiums have decreased slightly from 2024.

• Many Medicare Advantage plans have adjusted supplemental benefits like dental and vision.

You should review your Annual Notice of Change (ANOC) and consider switching plans during the Open Enrollment Period from October 15 to December 7.

Medicare and Employer Insurance: How They Coordinate Matters

If you’re still working past age 65, Medicare coordination with employer insurance can get tricky. The size of your employer determines whether your employer or Medicare pays first.

• Employer has 20+ employees: Your group plan usually pays first, and Medicare pays second.

• Employer has fewer than 20 employees: Medicare typically pays first, and your employer plan is secondary.

Failing to enroll in Medicare on time because of a misunderstanding here could lead to claim denials or late penalties. Always verify with your HR department and consider consulting a licensed agent.

Medicare and Medicaid Are Not the Same

Medicare and Medicaid often get confused, but they serve very different groups and have different rules.

• Medicare is federal health insurance primarily for people 65 and older or under 65 with certain disabilities.

• Medicaid is a state and federal program for people with limited income and resources.

Some individuals qualify for both. This is known as “dual eligibility” and can result in lower out-of-pocket costs, but managing coverage under both programs requires additional guidance.

Coverage Abroad: Know Your Limitations

Medicare generally does not cover health care outside the U.S. If you plan to travel or live abroad, you may need supplemental travel insurance or a plan that offers some foreign emergency coverage.

Certain Medigap plans may offer limited emergency benefits while traveling, but Original Medicare and most Medicare Advantage plans provide little to no international coverage.

Where to Turn When It’s Time to Choose

Getting Medicare right involves more than just signing up at 65. You need to:

• Understand enrollment periods and avoid penalties.

• Evaluate whether Original Medicare or Medicare Advantage suits your needs.

• Consider supplemental options to limit out-of-pocket costs.

• Stay informed about annual plan changes.

It’s wise to speak with a licensed agent listed on this website before you make a final decision.

Make Your Medicare Decisions With Confidence

Medicare is more than a set-it-and-forget-it program. Understanding the coverage limitations, enrollment windows, and the annual changes happening in 2025 helps you get the most out of your benefits.

Don’t rely on assumptions or outdated advice. Talk with a licensed agent listed on this website who can walk you through your options based on your specific situation and goals.