Medicare is the federal health insurance program for people age 65 and older, as well as certain younger people with disabilities. It is divided into four parts — each covering different types of care.
Parts A + B together. You use any doctor or hospital that accepts Medicare. Most people also add a Medigap (supplement) policy to cover the gaps, plus a Part D plan for prescriptions.
A private plan that replaces Original Medicare. Often includes prescription and dental/vision coverage. Has a yearly out-of-pocket maximum. You typically stay within a network of providers.
Medicare does not cover everything. Dental care, routine vision, hearing aids, and long-term custodial care (help with bathing, dressing, eating) are generally not covered. Planning ahead for these gaps is important.
Timing your Medicare enrollment correctly is one of the most important steps in your retirement transition. Missing the right window can mean permanent premium penalties that last for life.
Most people get Part A automatically and for free at age 65 if they're already collecting Social Security. If you're not yet drawing Social Security when you turn 65, you'll need to sign up separately.
If you're covered by an employer health plan through a company with 20 or more employees, your employer plan stays primary and Medicare is secondary. You can generally delay Part B without penalty and sign up when you retire.
You have a 7-month Initial Enrollment Period (IEP) centered around your 65th birthday:
If you don't sign up for Part B during your Initial Enrollment Period (and you don't qualify for a Special Enrollment Period), your Part B premium increases by 10% for every 12 months you were eligible but didn't enroll — and that higher premium lasts for life.
Example: Two full years of delay = a 20% higher monthly premium for the rest of your life.
January 1 – March 31 each year. Coverage starts the following month. You may owe a late enrollment penalty.
If you were covered by an employer plan, you have an 8-month window after you retire or lose coverage to enroll without penalty.
Part A covers inpatient hospital care, but it doesn't mean everything is free. Your costs depend on how many days you spend in the hospital during a single "benefit period."
A benefit period starts the day you're admitted to the hospital. It ends when you've been out of the hospital and out of any skilled nursing facility for 60 consecutive days. There's no limit to how many benefit periods you can have — but each one resets your deductible.
| Days in the Hospital | What Medicare Pays | What You Pay |
|---|---|---|
| Days 1–60 | All covered inpatient expenses | Annual deductible (one per benefit period) — ~$1,600 in 2024 |
| Days 61–90 | All covered expenses minus co-payment | Daily co-payment — ~$400/day in 2024 |
| Days 91–150 (Lifetime Reserve) | Partial — requires a higher daily co-payment | Higher daily co-payment — ~$800/day in 2024. You only get 60 lifetime reserve days total. |
| Day 151+ | Nothing | You pay all costs |
Unlike typical health insurance, Part A's deductible applies per benefit period, not per calendar year. If you're hospitalized twice in the same year with a 60+ day gap between stays, you owe the deductible twice. This is one of the most misunderstood parts of Medicare.
Using approximate 2024 figures: A 70-day hospital stay would cost you roughly the deductible (~$1,600) plus co-payments for days 61–70 (~$400/day × 10 days = $4,000) — totaling around $5,600 out of pocket for one stay. A second hospitalization that same year resets the deductible.
A Medigap plan (most commonly Plan G) covers the Part A deductible and daily co-payments — meaning your out-of-pocket for a hospital stay could be close to zero. The tradeoff is a monthly premium for the supplement plan itself. Ask your advisor whether a Medigap plan makes sense for your situation.
Part B covers doctor visits, outpatient services, and durable medical equipment. After you meet your annual deductible, Medicare pays 80% of covered services — and you pay the remaining 20%. There is no annual cap on your 20% share under Original Medicare.
~$240/year in 2024. You pay 100% of covered services until this is met each calendar year.
Medicare pays 80% of the approved amount. You pay 20%. With no out-of-pocket cap, a serious illness can lead to large bills.
This affects how much you pay. Always ask your provider whether they "accept assignment."
| Doctor's Situation | What It Means for You |
|---|---|
| Accepts Assignment | Doctor agrees to Medicare's approved amount. You pay only your 20% coinsurance — nothing more. |
| Does NOT Accept Assignment | Doctor can charge up to 15% above Medicare's approved amount. You pay your 20% plus the extra charge. It adds up. |
"Do you accept Medicare assignment?" A doctor who doesn't accept assignment on all claims may still accept it for your specific visit — it's worth asking every time. You can also look up participating providers at medicare.gov/care-compare.
Many people are surprised by these common exclusions:
Most people pay $0/month for Part A because they (or a spouse) worked and paid Medicare taxes for at least 10 years (40 quarters). It's already been paid through your working years.
Everyone pays a monthly premium for Part B. The standard amount in 2024 is approximately $174.70/month. Premiums are typically deducted automatically from your Social Security check.
If your income was above certain thresholds two years ago, you pay a higher Part B (and Part D) premium. This surcharge is called IRMAA — the Income-Related Monthly Adjustment Amount. It's based on your Modified Adjusted Gross Income (MAGI) from your tax return two years prior to the coverage year.
Example: Your 2026 Medicare premium is based on your 2024 tax return.
| Individual Income | Married Filing Jointly | Additional Monthly Surcharge |
|---|---|---|
| $103,000 or less | $206,000 or less | $0 (standard premium) |
| $103,001 – $129,000 | $206,001 – $258,000 | +$69.90/mo |
| $129,001 – $161,000 | $258,001 – $322,000 | +$174.70/mo |
| $161,001 – $193,000 | $322,001 – $386,000 | +$279.50/mo |
| $193,001 – $500,000 | $386,001 – $750,000 | +$384.30/mo |
| Above $500,000 | Above $750,000 | +$419.30/mo |
If you retired, sold a business, or had another major life event that significantly reduced your income, you can ask Medicare to use a more recent year's income instead. This is called a "life-changing event" appeal. Talk to your advisor — it can save hundreds of dollars per month.
Large Roth conversions, investment gains, or the start of Required Minimum Distributions can all push your income above an IRMAA threshold two years later. Your advisor can help you plan withdrawals and conversions with this in mind.
One of the biggest surprises for new retirees is discovering what Medicare does not cover. Understanding these gaps in advance gives you time to plan — and avoid unexpected bills.
Under Original Medicare, there is no limit on your 20% share for Part B services. A serious condition requiring $80,000 in covered services would leave you with a $16,000 bill — on top of any hospital deductibles.
When you first enroll in Part B at age 65, you have a 6-month window during which insurers must sell you any Medigap policy at the same price as everyone else — regardless of your health history. After that window closes, you may be denied coverage or charged more based on pre-existing conditions. This is one of the most important decisions in your Medicare transition.
Long-term care (LTC) refers to ongoing help with everyday activities — bathing, dressing, eating, getting around — when illness, injury, or aging makes those tasks difficult. Medicare does not cover this type of care. Planning for it is one of the most important steps you can take before retirement.
| Type of Care | Medicare Covers? |
|---|---|
| Short-term skilled nursing (after a 3-night hospital stay, medically necessary) | Yes — up to 100 days, with co-payments after day 20 |
| Rehabilitation therapy (physical, occupational, speech) | Yes — when medically necessary |
| Hospice care (end-of-life comfort care) | Yes — under Part A |
| Custodial care — ongoing help with daily living activities | No — not covered by Medicare |
| Memory care / Alzheimer's custodial care | No — not covered by Medicare |
| Home health aide (custodial/personal assistance) | No — not covered by Medicare |
The best time to consider LTC coverage is in your mid-to-late 50s — before health issues make it harder to qualify or more expensive. Your MPM advisor can walk you through the options and model how each one fits your overall financial plan.
A Medigap policy is private health insurance that works alongside Original Medicare (Parts A and B) to cover many of the costs Medicare leaves behind — deductibles, coinsurance, and co-payments. All Medigap plans are standardized by the government, meaning a Plan G from one insurer covers exactly the same benefits as a Plan G from another. The difference between companies is price and customer service.
You cannot use a Medigap policy if you are enrolled in Medicare Advantage (Part C). Medigap is for people who have chosen Original Medicare (Parts A + B) as their foundation. Also, Medigap does not cover long-term custodial care, dental, vision, or hearing — those gaps remain regardless of which Medigap plan you choose.
Plans C and F are no longer sold to new Medicare enrollees because they covered the Part B deductible, which federal law no longer allows. If you already have Plan C or F, you can keep it.
| What's Covered | A | B | D | G ★ | K | L | M | N |
|---|---|---|---|---|---|---|---|---|
| Part A hospital coinsurance Days 61–90 + 365 extra lifetime days |
✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ |
| Part B coinsurance (the 20%) Doctor and outpatient services |
✓ | ✓ | ✓ | ✓ | 50% | 75% | ✓ | ✓ except $20 office / $50 ER |
| Part A deductible ~$1,600/benefit period in 2024 |
— | ✓ | ✓ | ✓ | 50% | 75% | 50% | ✓ |
| Skilled nursing facility coinsurance Days 21–100 after a hospital stay |
— | — | ✓ | ✓ | 50% | 75% | ✓ | ✓ |
| Part B excess charges When a doctor charges above Medicare's rate |
— | — | — | ✓ | — | — | — | — |
| Foreign travel emergency Up to plan limits; $250 deductible, $50K lifetime max |
— | — | ✓ | ✓ | — | — | ✓ | ✓ |
★ Plan G is the most comprehensive plan currently available to new enrollees. Plan G also offers a high-deductible version with lower premiums.
Instead of covering everything, K pays 50% and L pays 75% of most costs. In exchange, they carry lower monthly premiums. Both have an annual out-of-pocket cap — once you hit it, the plan covers 100% for the rest of the year. Good for people comfortable with some cost exposure in exchange for lower premiums.
Covers almost everything Plan G does, but you pay up to $20 for office visits and up to $50 for emergency room visits that don't lead to an inpatient admission. No coverage for Part B excess charges. Typically lower premiums than Plan G — a practical option for people who rarely see specialists outside the Medicare network.
When you first enroll in Part B at age 65, you have a 6-month Medigap Open Enrollment Period. During this window, insurers must sell you any Medigap plan at standard rates — your health history cannot be used against you. Once this window closes, insurers can deny coverage or charge more based on pre-existing conditions. This is the most important decision in your Medicare setup, and timing matters.