How does Medicare work?

Medicare is the federal health insurance program designed to support retirees, offering critical coverage as healthcare needs often increase with age. At My Retirement Decision, we help you unravel Medicare’s complexities to ensure you’re prepared for enrollment and costs. It’s more than just a safety net—it’s a system with choices that impact your wallet and well-being. Here’s what to consider to make Medicare work for you in retirement.

• Eligibility: You’re eligible at age 65 if you or your spouse paid Medicare taxes for 10+ years—or earlier if you have certain disabilities or conditions (e.g., ESRD). Confirm your status as you near 65.
• Parts of Medicare: Understand the components:
  • Part A (Hospital Insurance): Covers inpatient hospital stays, skilled nursing, and hospice—usually premium-free if you qualify.
  • Part B (Medical Insurance): Covers doctor visits, outpatient care, and preventive services—requires a monthly premium (e.g., $174.70 in 2025, adjusted by income).
  • Part C (Medicare Advantage): An alternative bundling A, B, and often D, offered by private insurers with varying costs and networks.
  • Part D (Prescription Drugs): Optional drug coverage with premiums—essential if you take medications regularly.
• Enrollment Periods: Timing is critical:
  • Initial Enrollment: A 7-month window (3 months before to 3 months after your 65th birthday). Missing it may mean penalties or delays.
  • Open Enrollment: October 15–December 7 annually to switch plans or join Part D.
  • Special Enrollment: For those still working with employer coverage—enroll later without penalties.
• Costs: Beyond premiums, factor in deductibles (e.g., $240 for Part B in 2025), copays, and coinsurance. High earners pay more via Income-Related Monthly Adjustment Amounts (IRMAA).
• Coverage Gaps: Medicare doesn’t cover everything—think dental, vision, hearing, or long-term care. Medigap (supplemental insurance) can fill gaps but adds premiums.
• Provider Networks: Original Medicare (A+B) offers broad choice, while Part C plans may limit you to specific doctors or regions—check compatibility with your care providers.
• Prescription Needs: Part D plans vary by formulary (covered drugs). Review annually to match your medications and minimize out-of-pocket costs.
• Long-Term Planning: Healthcare costs escalate with age. Medicare is a foundation, but savings or additional insurance may be needed for extended care or uncovered services.

Navigating Medicare means balancing coverage, costs, and your health needs. Use our tools to compare plans, estimate expenses, and enroll on time—visit medicare.gov or consult an advisor to tailor your choices to your retirement lifestyle.