Don’t Choose a Plan Before You Understand the Medicare Basics That Affect Everything

Key Takeaways

• Medicare is made up of several parts, and each plays a different role in how your healthcare is covered. If you don’t understand how they work together, your plan choice may leave serious gaps.

• Enrollment timelines, coverage rules, and costs have real consequences in 2025. Missing a deadline or misunderstanding a requirement can lead to penalties or restricted access to care.

Medicare Isn’t a Single Plan—It’s a Structure with Moving Parts

Before you decide on any Medicare plan, you need to understand that Medicare isn’t one program with one set of benefits. It’s a combination of Parts—each offering something different, and each with its own rules.

Medicare is made up of:

• Part A – Hospital Insurance

• Part B – Medical Insurance

• Part C – Medicare Advantage (offered through private companies)

• Part D – Prescription Drug Coverage

You can choose to stay with Original Medicare (Parts A and B) and add Part D, or go with a Medicare Advantage plan (Part C), which bundles your benefits differently. But these choices hinge on how well you understand what each part covers—and what it doesn’t.

Part A: What It Covers and When It Kicks In

Part A covers inpatient care in hospitals, skilled nursing facility stays (after a qualifying hospital stay), hospice care, and some home health services.

In 2025:

• Most people don’t pay a premium for Part A if they worked and paid Medicare taxes for at least 40 quarters.

• There’s a deductible of $1,676 for each benefit period.

• Coinsurance applies after 60 days of hospitalization or 20 days in a skilled nursing facility.

Even though it sounds like full hospital coverage, it’s limited. It doesn’t cover long-term custodial care, private nursing, or non-medical help at home.

Part B: What You Must Pay Attention To

Part B is where many people get tripped up. It covers outpatient services like doctor visits, preventive care, durable medical equipment, and certain medications administered in a clinical setting.

For 2025:

• The monthly premium is $185 for most people.

• You also pay a $257 annual deductible.

• After that, you’re responsible for 20% of the Medicare-approved amount for most services.

Enrollment is not automatic unless you’re already receiving Social Security. If you miss your Initial Enrollment Period, you may face late penalties for life.

Your Initial Enrollment Period (IEP) Is Your First Window

Your IEP starts three months before the month you turn 65, includes your birth month, and continues for three months after. That’s a 7-month window.

If you’re not automatically enrolled, you must actively sign up through Social Security.

Missing this period means you’ll have to wait for the General Enrollment Period (January 1 to March 31) and your coverage won’t begin until July 1—with potential late penalties.

Understanding Medicare Part C (Medicare Advantage)

Part C plans are administered by private companies and must cover everything Parts A and B cover. Many also include Part D coverage and extra benefits like vision, dental, or hearing services.

However:

• Your out-of-pocket costs, provider networks, and service availability vary.

• In 2025, the maximum out-of-pocket limit for in-network services under Part C is $9,350.

• Plans are regional, so the benefits and provider access depend heavily on where you live.

These plans replace Original Medicare coverage and come with their own set of rules, prior authorizations, and formularies. You must be enrolled in both Part A and Part B to join a Part C plan.

Part D: Prescription Drug Coverage Isn’t Optional

If you delay Part D enrollment beyond your IEP and don’t have other creditable drug coverage, you’ll pay a permanent late enrollment penalty. This penalty is calculated based on how long you went without coverage.

In 2025:

• The deductible can go up to $590.

• Once your out-of-pocket spending reaches $2,000, you enter the catastrophic coverage phase, and your plan covers 100% of your drug costs for the rest of the year.

Many Part D plans are embedded within Medicare Advantage, but if you’re on Original Medicare, you must enroll in a standalone Part D plan.

Coordination with Other Coverage

You might be eligible for coverage from an employer, union, or military service. Medicare interacts differently with each type:

• Still working at 65? Your employer plan might be primary.

• Retired with FEHB or PSHB? Medicare may become primary.

• Veterans? You can use both VA and Medicare separately.

It’s critical to understand how your other coverage integrates with Medicare. Otherwise, you may double-pay or lose access to certain benefits.

Medigap: It’s Only for Original Medicare

Medigap (Medicare Supplement Insurance) is only available if you’re enrolled in Original Medicare. It helps cover costs like deductibles, coinsurance, and copayments.

You have a 6-month Medigap Open Enrollment Period that starts the month you turn 65 and are enrolled in Part B. After that, companies can charge more or deny coverage based on health conditions in most states.

You can’t use Medigap with a Medicare Advantage plan.

When You Can Make Changes

Medicare allows changes during specific times:

• Open Enrollment (Oct 15–Dec 7) – Switch between Original Medicare and Medicare Advantage or change Part D plans.

• Medicare Advantage Open Enrollment (Jan 1–Mar 31) – If you’re already in a Medicare Advantage plan, you can switch to another or return to Original Medicare.

• Special Enrollment Periods (SEPs) – Triggered by certain life events like moving, losing other coverage, or qualifying for Medicaid.

Outside of these windows, changes aren’t allowed unless you meet SEP criteria.

Income Can Affect Your Costs

In 2025, higher-income beneficiaries pay more for Parts B and D. This is called IRMAA (Income-Related Monthly Adjustment Amount).

• If your individual income is above $106,000 or joint income is above $212,000, you’ll pay higher premiums.

• Social Security uses your tax return from two years ago (2023) to determine your IRMAA tier.

You can appeal IRMAA if you’ve experienced a life-changing event that reduced your income.

Penalties Don’t Go Away

Late enrollment penalties are often permanent and added to your premiums:

• Part B – 10% for each full 12-month period you were eligible but didn’t enroll.

• Part D – 1% of the national base premium for every month you delayed.

Avoiding penalties requires timely action during your IEP or a valid SEP.

Your Plan Should Match Your Health Needs

Don’t choose a plan based solely on premiums or add-ons. Consider:

• Your preferred doctors and hospitals – Are they in-network?

• Chronic conditions – Are your treatments and medications covered?

• Travel habits – Do you need nationwide or out-of-state coverage?

• Budget for copays and deductibles – Don’t underestimate out-of-pocket costs.

Your healthcare usage, income, location, and risk tolerance should all factor into your decision.

What You Choose Today Affects You Long-Term

Once you pass certain enrollment windows or make a change, it’s not always reversible. Some plan changes are only allowed during designated periods, and switching between Original Medicare and Medicare Advantage isn’t always seamless.

Also, if you delay Medigap enrollment, your options may become limited or expensive. Choosing Medicare Advantage may also restrict your ability to return to Original Medicare with guaranteed Medigap access.

Understanding the Foundation Helps You Make Better Choices

The more you understand Medicare’s parts, enrollment periods, and coordination rules, the more likely you’ll avoid penalties and regrets. Don’t rush your choice—take time to get the basics down.

If you need help assessing your Medicare options or planning a change, get in touch with a licensed agent listed on this website who can walk you through your choices in detail.