Medicare Basics: What You Need to Know Before You Turn 65

A Straightforward Guide to Understanding Your Healthcare Options

Medicare. Just the word makes people's eyes glaze over. There's Part A, Part B, Part C, Part D, Medigap, Medicare Advantage, open enrollment, and about a thousand other terms that make no sense.

And here's the kicker: if you mess up your enrollment or miss a deadline, you could end up paying penalties for the rest of your life. No pressure, right?

Look, Medicare is confusing by design. It wasn't meant to be this complicated, but decades of changes and additions have turned it into a maze. The good news? Once you understand the basics, it's actually not that bad.

So let's break this down into plain English and figure out what you actually need to know.

What Is Medicare, Anyway?

Medicare is the federal health insurance program for people 65 and older. You've been paying into it through payroll taxes your entire working life, and now it's time to use it.

Most people become eligible for Medicare the month they turn 65. Some people qualify earlier if they're on disability or have certain medical conditions, but for most of us, it's all about that 65th birthday.

Now here's the important part: Medicare doesn't cover everything. It's not free. And you have choices to make about your coverage. Understanding those choices is what this whole thing is about.

Let's start with the different parts of Medicare, because that's where most of the confusion starts.

The Four Parts of Medicare (Yes, Four)

Part A: Hospital Insurance

Part A covers hospital stays, skilled nursing facility care, hospice care, and some home healthcare. For most people, Part A is premium-free because you paid for it through Medicare taxes while you were working.

You still have deductibles and coinsurance to deal with, but there's no monthly premium if you or your spouse worked at least 40 quarters (10 years) in a Medicare-covered job.

Part A is automatic if you're already collecting Social Security when you turn 65. If you're not collecting Social Security yet, you'll need to sign up for Part A when you turn 65.

Part B: Medical Insurance

Part B covers doctor visits, outpatient care, preventive services, and medical equipment. Unlike Part A, Part B comes with a monthly premium.

For 2026, the standard Part B premium is $202.90 per month, but if you're a higher earner, you might pay more. The premium is based on your income from two years ago, so your 2026 premium is based on your 2024 tax return.

Part B also has a deductible (currently $283 for 2026) and you typically pay 20% coinsurance for most services after you meet the deductible.

Most people need Part B. It's the coverage that pays for your regular doctor visits, lab work, and outpatient procedures. Don't skip this one unless you have other creditable coverage.

Part C: Medicare Advantage

Here's where it gets interesting. Part C, also called Medicare Advantage, is an alternative way to get your Medicare benefits. Instead of Original Medicare (Parts A and B), you get your coverage through a private insurance company.

Medicare Advantage plans usually include Part A, Part B, and Part D (prescription drug coverage) all in one package. Many also include extras like dental, vision, and hearing coverage.

The catch? You typically have to use doctors and hospitals in the plan's network, and you might need referrals to see specialists. It works a lot like an HMO or PPO from your working years.

Some people love Medicare Advantage because it simplifies everything and often costs less upfront. Others prefer the flexibility of Original Medicare. We'll talk more about this choice in a bit.

Part D: Prescription Drug Coverage

Part D covers prescription medications. It's optional, but if you don't sign up when you're first eligible and you don't have other creditable drug coverage, you'll pay a penalty for every month you go without it.

Part D plans are offered by private insurance companies, and the costs and coverage vary widely. You'll want to look at which drugs are covered and what your out-of-pocket costs will be.

If you take regular medications, Part D coverage is pretty much essential. The penalty for not having it adds up fast, and it stays with you forever.

If you don't take medications you may be tempted to skip this part. Don't. That will result in penalties later and there are currently options on the market that cost $0 per month...and save you from the penalty, so it is a no-brainer.

The Enrollment Periods You Can't Afford to Miss

This is where people get into trouble. Miss your enrollment window and you could face late enrollment penalties that last the rest of your life. So pay attention here.

Initial Enrollment Period (IEP)

Your Initial Enrollment Period is a seven-month window: the three months before your 65th birthday, your birthday month, and the three months after.

If you're still working and covered by an employer health plan (with 20 or more employees), you might be able to delay enrolling in Part B without a penalty. But you need to understand the rules. Don't just assume you can wait.

If you're not covered by a qualifying employer plan, sign up during your IEP. Don't miss it.

General Enrollment Period (GEP)

If you miss your Initial Enrollment Period, you can sign up during the General Enrollment Period, which runs from January 1 to March 31 each year. Your coverage starts July 1.

But here's the problem: you'll likely face late enrollment penalties, and you'll have a gap in coverage. Better to get it right the first time.

Special Enrollment Period (SEP)

If you're delaying Medicare because you have employer coverage and then you lose that coverage, you get a Special Enrollment Period. You have eight months from when the employer coverage ends to sign up without penalties.

Don't wait the full eight months, though. Sign up as soon as possible to avoid any gaps in coverage.

Annual Enrollment Period (AEP)

Once you're enrolled in Medicare, you can make changes during the Annual Enrollment Period, which runs from October 15 to December 7 each year. This is when you can switch from Original Medicare to Medicare Advantage (or vice versa), change Part D plans, or adjust your coverage.

Use this time to review your coverage every year. Your health needs change, drug prices change, and plan benefits change. What worked last year might not be the best option this year.

***A quick note, the AEP is not for Medi-Gap (Medicare Supplement Plans. Those can be changed at ANY time, although you will have to go through medical underwriting by the carrier if you are outside of your IEP. There are some exceptions to this in some states. States like Virginia that have a "Birthday Rule" gives beneficiaries the opportunity to switch plans every year up to 60 days after their birthday (varies by state) without any medical questions or risk of denial.

Original Medicare vs. Medicare Advantage: Which Should You Choose?

This is the big decision most people struggle with. Both options have pros and cons, and what's right for your neighbor might not be right for you.

Original Medicare (Parts A and B)

Pros:

• You can see any doctor or specialist who accepts Medicare (which is most of them)
• No referrals needed to see specialists
• Coverage is the same nationwide, so you can travel without worrying about networks
• Predictable costs if you add a Medigap plan

Cons:

• No coverage cap, so you could face high out-of-pocket costs without a Medigap plan
• Doesn't include prescription drug coverage (you need to add Part D)
• Usually doesn't include extras like dental, vision, or hearing
• You pay separate premiums for Part B, Part D, and possibly Medigap

Medicare Advantage (Part C)

Pros:

• Often includes Part D prescription coverage and extras like dental, vision, and hearing
• All-in-one coverage with a single plan and ID card
• Many plans have low (or even $0) premiums beyond your Part B premium
• Annual out-of-pocket maximums protect you from catastrophic costs

Cons:

• You must use doctors and hospitals in the plan's network (or pay more)
• You might need referrals to see specialists
• Coverage is usually regional, so traveling outside your plan's service area can be tricky
• Plans can change benefits, costs, and networks every year

So which is better? It depends. If you want maximum flexibility and you're willing to pay for it, Original Medicare with a Medigap plan might be your best bet. If you want lower upfront costs and you're okay with network restrictions, Medicare Advantage could work great.

The key is to look at your health needs, your budget, and your priorities. Don't just pick the cheapest option without understanding what you're getting (or not getting).

What About Medigap?

If you go with Original Medicare, you'll want to think about Medigap, also called Medicare Supplement Insurance.

Medigap policies are sold by private insurance companies and help cover the gaps in Original Medicare, like copayments, coinsurance, and deductibles.

There are different Medigap plans (labeled with letters like Plan G, Plan N, etc.), and they offer different levels of coverage. The most comprehensive plans cost more, but they also provide the most predictable out-of-pocket costs.

Here's the important part: the best time to buy a Medigap policy is during your Medigap Open Enrollment Period, which starts when you're 65 or older and enrolled in Part B. During this six-month window, insurance companies can't deny you coverage or charge you more based on your health.

If you wait and try to buy Medigap later, you might face medical underwriting, higher premiums, or even denial of coverage. Don't miss this window if you're going the Original Medicare route. (See the note about "Birthday Rule" above, available in some states.)

What Medicare Doesn't Cover

Let's talk about what Medicare doesn't cover, because this catches a lot of people off guard.

• Most dental care
• Eye exams related to prescribing glasses
• Dentures
• Routine foot care
• Hearing aids
• Long-term care (nursing home care)
• Healthcare while traveling outside the U.S. (with limited exceptions)

That last one is a big deal. Long-term care is expensive, and Medicare doesn't cover it beyond limited skilled nursing care. If you need help with daily activities like bathing, dressing, or eating for an extended period, you'll be paying out of pocket unless you have long-term care insurance.

Some Medicare Advantage plans include limited coverage for dental, vision, and hearing, but it's usually basic stuff. Don't assume you're fully covered just because you have Medicare.

How Much Will Medicare Actually Cost You?

Here's the part nobody likes to hear: Medicare isn't free.

If you go with Original Medicare, you're looking at:

• Part B premium: around $203/month (or more if you're a high earner)
• Part D premium: varies, but typically $30-$80/month (Some $0 options. Depends heavily on the medications you are taking).
• Medigap premium: varies widely, but could be $100-$300+/month depending on the plan and your location
• Deductibles, copays, and coinsurance on top of that

All told, you could easily spend $400-$600 or more per month on healthcare in retirement, and that's before you factor in things like dental work or long-term care.

Medicare Advantage plans might look cheaper upfront (some have $0 premiums), but you'll still pay copays and coinsurance when you use services. It's a different cost structure, not necessarily lower total costs.

The point is, you need to budget for healthcare in retirement. It's one of the biggest expenses you'll have, and it tends to increase as you get older.

Don't Go It Alone

Medicare is complicated. You're making decisions that will affect your health and your finances for the rest of your life, and the rules are constantly changing.

At Iron Eagle Advisors, we help folks in Charlottesville navigate Medicare as part of their overall retirement planning. We can't give you medical advice, but we can help you understand your options, compare plans, and figure out what makes sense for your budget and your needs.

We also help you plan for the costs you'll face, both now and down the road. Because healthcare expenses don't stay static in retirement. They go up. And if you don't plan for that, it can throw off your entire retirement budget.

Medicare isn't something to figure out on your own while you're stressed and confused. Let's sit down, go through your options, and make sure you're set up with coverage that works for you.

Need Help Understanding Your Medicare Options?

Let's review your healthcare options and create a plan that fits your budget. Schedule a free consultation with Iron Eagle Advisors today.