Advice
Medicare can be complex and costly if you are not prepared when the time comes to enroll. Consider this Top 10 list to help you understand what Medicare is, what to do, and how it works, what not to do, and how it may impact you now and in the future.
1. Do: Enroll on Time
The 2025 Medicare open enrollment period is October 15 to December 7. During this window, those with Medicare can change their coverage, change plans between Original Medicare (Part A and Part B) and Medicare Advantage (Part C), or enroll in or alter Part D prescription drug plans.[i]
Medicare Advantage Open Enrollment (January 1 – March 31) allows individuals already enrolled in a Medicare Advantage plan to change to a different Medicare Advantage Plan or return to Original Medicare.[ii]
The General Enrollment Period (January 1 – March 31) is for individuals who didn’t enroll in Medicare Part A and/or Part B when first eligible. Understanding the enrollment periods can help you stay on top of your medical and prescription drug coverage and avoid late enrollment penalties.[iii]
2. Don’t: Assume You’ll Be Informed that Medicare Enrollment is Not Automatic for Everyone
While some individuals are automatically enrolled in Medicare Part A and Part B, Medicare enrollment, typically, is not automatic for everyone at age 65. Automatic enrollment may apply to those already receiving Social Security or Railroad Retirement benefits for a certain number of months before their 65th birthday.
- Automatic enrollment: People receiving Social Security or Railroad Retirement benefits at least four months before turning 65 are automatically enrolled in Medicare Part A and Part B.[iv]
- Active Enrollment Required: If you are not receiving Social Security or Railroad Retirement benefits before turning 65, you will need to take it upon yourself to actively enroll in Medicare during your Initial Enrollment Period.[v]
If you don’t enroll in Medicare during your Initial Enrollment Period and don’t have other qualifying coverage, you may be subject to late enrollment penalties when you finally enroll.
3. Do: Compare Plans Annually to Ensure What You Have Still Meets Your Needs
It is important to regularly review your Medicare plan during open enrollment periods. You don’t just purchase it when you reach 65, and that is it. Plans and costs may change annually, and you want to ensure your plan still aligns with your healthcare and financial retirement strategies and goals.
4. Don’t: Overlook Out-of-Pocket Costs
In 2025, Medicare will introduce a $2,000 cap on out-of-pocket prescription drug costs for all Part D and Medicare Advantage plan enrollees.
- Part A (Hospital Insurance):
- Deductible: $1,676 for each “benefit period” for inpatient hospital stays.
- Coinsurance: $419 per day (61 – 90 days) for inpatient hospital stays.
- Lifetime Reserve Days: $838 per day (60 days total).
- Nursing home coinsurance: $209.50 per day (days 31-100)[vi]
- Part B (Medical Insurance):
- Premium payments: $185 per month (or higher, depending on your income). The amount can change each year. If you turn 65 and don’t sign up for Part B when you’re first eligible, you may pay a monthly penalty, which increases the longer you wait to sign up.
- Deductible: The deductible is $257 before Original Medicare starts to pay. You pay this deductible once each year.
- Percentage of service covered: Then you generally pay 20% of the Medicare-approved amount for the service or durable medical equipment needed, such as a wheelchair, walker, hospital bed, and other equipment.
- Other $0 coverages: There is typically $0 charge for clinical lab services, home health care services, and outpatient mental health yearly depression screening.[vii]
- Medicare Advantage (Part C):
- Premiums & other costs: Premiums and other costs (like deductibles, copayments, & coinsurance) vary by plan, and the amounts can change each year. You must have Part B and keep paying your Part B premium to stay in your plan.
- Out-of-pocket limit: Varies by plan. Once you pay the plan’s limit, the plan pays 100% of your covered health services for the rest of the calendar year.
- Prescription Drug Coverage (Part D):
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- Premium: Cost varies by plan. You may pay more depending on your income. To avoid paying a penalty, join a Medicare drug plan when you first get Medicare Part A and/or Part B, and don’t go 63 days or more without creditable drug coverage (coverage that is similar in value to Part D).
- Deductibles, copayments, & coinsurance: Vary by plan and pharmacy.
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5. Do: Consider Medigap or Medicare Advantage Plans
Medicare (Part A and Part B) provides a significant amount of healthcare coverage; however, it doesn’t cover all costs, and you have to be a specific age before you can enroll, which leaves some early retirees in limbo when it comes to their healthcare coverage. To bridge these “gaps,” that arise, beneficiaries can choose between Medicare Supplemental Insurance (Medigap) or Medicare Advantage (Part C) plans.
- Medigap (Medicare Supplemental Insurance)
Medigap plans are designed to help cover out-of-pocket costs that Original Medicare doesn’t cover, such as deductibles, copayments, and coinsurance. The way Medigap works is that you remain in the Original Medicare program and use your Medigap policy to supplement those benefits not covered.
- Medigap features
- Plans available – There are 10 different standardized plans available, labeled A through N, available in most states. These plans are offered by private insurance companies and standardized by the federal government. The outliers are Massachusetts, Minnesota, and Wisconsin, who have their own unique Medigap regulations.[viii]
- Guaranteed policy renewal – As long as you pay your premiums on time, your Medigap policy is guaranteed renewable.
- No referrals necessary – You typically don’t need a referral to see a specialist.
- Travel costs – Certain Medigap plans cover emergency medical care when traveling abroad.
- Several drawbacks
- You’ll pay a separate monthly premium for your Medigap policy in addition to your Part B premium.
- There is no prescription drug coverage.
- The plans don’t offer dental, vision, or hearing coverage.
- There are enrollment period restrictions.
- Medicare Advantage (Part C)
Medicare Advantage Plans are offered by private insurance companies as an alternative way to receive Medicare benefits. These plans bundle your Part A, Part B, and usually Part D coverages, into a single plan.
- Medicare Part C features
- Lower premiums – Many of the plans offered by low or $0 monthly premiums, although you still have to pay your Part B premium.
- Other benefits – Many Part C plans offer coverage for things left out of Original Medicare Plans, such as routine dental, vision, and hearing care. In some cases, fitness memberships as well.
- Out-of-pocket cost limit – All Part C plans have an annual limit on out-of-pocket costs for services covered under Part A and Part B
- Several drawbacks
- Some plans require referrals to see specialists.
- You are typically limited to a network of doctors and hospitals, and going out-of-network for non-emergency care can be costly.
- Plan benefits, costs, and provider networks can change annually.
- You cannot have both Medigap and Medicare Advantage at the same time.
- Many plans require prior authorization for specific services which can delay or deny care.[ix]
6. Don’t: Assume Medicare Covers Everything
Medicare provides coverage for many medical services and needs; however, there are still costs associated that aren’t covered. Becoming familiar with the limitations of Medicare can help you avoid getting blindsided by unexpected expenses.
Medicare generally doesn’t cover most dental care, routine vision and hearing exams, and long-term care such as custodial care in nursing homes or assisted living facilities.
Also, ensure your doctor or other health care provider accepts the Medicare-approved amount as full payment for a covered service. This is called “accepting assignment.” According to Medicare.gov, if a provider accepts assignment, it’s for all Medicare-covered Part A and Part B services.[x]
The benefits of having your health care provider accept assignment include:
- Your out-of-pocket costs could be lower.
- They agree to charge you only the Medicare and deductible, and coinsurance amount, and generally wait for Medicare to pay its share before charging you for yours.
- They have to submit your claim directly to Medicare and can’t charge you for submitting the claim.[xi]
7. Do: Use Preventive Services
Medicare offers a variety of preventive and screening services. Preventive services help you to stay on top of your health goals, detect health issues early when treatment could be easier, determine the most beneficial services, and hopefully prevent certain diseases. These services include screenings, inoculations, and lab tests. The list of preventive services and screenings that Medicare Part B covers is extensive. A few examples include:
- Abdominal aortic aneurysm screenings
- Cardiovascular disease screenings
- Colonoscopies
- Diabetes screenings
- Lung cancer screenings
- Prostate cancer screenings
- Flu shots
- Hepatitis B shots
- Yearly “Wellness” visit
8. Don’t: Ignore Prescription Drug Coverage
Medicare Part D is the federal program that helps people with Medicare pay for prescription drugs. It is not offered directly by Medicare but instead through private insurance companies.
If you are not covered by other credible prescription drug coverage, you want to ensure you enroll in Medicare Part D coverage to avoid late enrollment penalties and higher costs for medications should you need them later.
The late enrollment penalty is calculated as 1% of the national base beneficiary premium ($36.78) for each month you delay enrollment after your initial eligibility. This penalty is added to your monthly premium for as long as you have Part D.
To find the most beneficial Medicare Part D plan for your needs, start by assessing your current prescriptions, then compare costs and coverage across different plans that are offered, and consider things like pharmacy costs and location and plan ratings, and customer reviews. On the Medicare.gov website, they have a page, “Explore your Medicare coverage options,” where you can navigate Medicare Plan D options.[xii] You will input your zip code and then select the county in which you live. You then check the box for Medicare Plan D and continue. They will then ask if you get help with your Medicare health or drug costs. If you are new to this, you select, “I don’t get any help from any of these programs.” You will then input the type of prescription drugs you take so they can create an estimate. Once you are finished answering the questions, you will be given a variety of options to consider.
9. Do: Seek Help When Needed
Get the help that you need. Medicare is packed with many moving parts, supplemental options, rules, costs, coverage nuances, and navigating it is not always as straightforward as we may like. Incorrect decisions may lead to difficult mistakes, gaps in coverage, and unwanted expenses. A financial professional can help you sort through everything and tailor a strategy or offer guidance on some of the topics, particularly cost optimization, and other financial matters that you aren’t as familiar with, and address that the coverage aligns with your retirement plans.
10. Don’t: Be embarrassed to ask for help, we are here to support you
Medicare is far too complex for you to feel embarrassed about not understanding the finer details of the plans and how they may impact you financially. Reach out to us today and schedule a consultation. For more information on Medicare, contact Angie Banicki by calling (574) 401-6143 or send an email to [email protected].
About the Author
Angie Banicki has over a decade of experience in the banking industry. Prior to joining 1st Source Asset Advisors as a Financial Consultant, she was a licensed banker. She has five years of investment experience. Angie holds her Series 6, Series 7, Series 63 and Series 65 registrations with LPL Financial as well as her life and health license.
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Important Disclosures:
Content in this material is for educational and general information only and not intended to provide specific advice or recommendations for any individual.
The Medicare website (medicare.gov) can be a valuable resource. Every year, Medicare also mails Medicare & You to beneficiaries and makes this fact-filled publication available online. You may want to review it to make sure you have an accurate understanding of the Medicare program.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
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Sources:
[ii] Medicare Open Enrollment Period 2025 Guide | Humana
[iii] Avoid late enrollment penalties | Medicare
[iv] Original Medicare (Part A and B) Eligibility and Enrollment | CMS
[v] Original Medicare (Part A and B) Eligibility and Enrollment | CMS
[vi] medicare.gov/publications/10116-your-medicare-benefits.pdf
[vii] medicare.gov/publications/10116-your-medicare-benefits.pdf
[viii] When can I buy a Medigap policy? | Medicare
[ix] What Is the Difference Between Medicare Advantage and Medigap?
[x] Does your provider accept Medicare as full payment? | Medicare
[xi] Does your provider accept Medicare as full payment? | Medicare