Everyone Thinks They Know the Medicare Basics—Until They’re Faced With a Real Decision

Key Takeaways

• Having a basic understanding of Medicare is not enough when you’re actually making coverage decisions. Every choice, from when you enroll to which plan you choose, affects your healthcare and costs.

• Common assumptions about Medicare can lead to costly mistakes, such as thinking all services are covered or that enrollment happens automatically.

Medicare Isn’t a Single Program

You might hear “Medicare” and assume it’s one government plan. It’s not. In 2025, Medicare includes multiple parts, each handling different types of care and costs:

• Part A covers inpatient hospital stays, hospice care, and limited skilled nursing care.

• Part B handles outpatient services like doctor visits, lab tests, and durable medical equipment.

• Part C, also known as Medicare Advantage, combines Parts A and B and often includes additional benefits.

• Part D provides prescription drug coverage.

Understanding how these parts interact is crucial. You can’t assume you’re covered for everything just because you’re enrolled in Medicare.

Enrollment Doesn’t Happen Automatically for Everyone

If you’re collecting Social Security at age 65, you’ll be enrolled in Medicare Parts A and B automatically. But if you’re delaying Social Security, you need to actively sign up. The Initial Enrollment Period (IEP) is a seven-month window:

• Starts three months before your 65th birthday month

• Includes your birthday month

• Ends three months after

Missing this window can result in penalties that last for life, especially for Part B and Part D.

Not All Healthcare Costs Are Covered

Even with Medicare, you’re responsible for:

• Monthly premiums (especially for Part B)

• Annual deductibles

• Copayments and coinsurance

In 2025, the standard Part B premium is $185 per month, and the annual Part B deductible is $257. For Part A, most people don’t pay a premium if they’ve worked 40 quarters, but the hospital deductible is $1,676 per benefit period.

There’s also no cap on what you might pay out-of-pocket unless you have supplemental coverage.

You May Need Additional Coverage

To cover the gaps in Original Medicare (Parts A and B), many people add:

• A Medigap policy, which helps pay for deductibles and coinsurance

• A Part D drug plan, which is essential unless you have other creditable drug coverage

• Or enroll in a Medicare Advantage plan, which often bundles everything together

Each choice comes with trade-offs in costs, provider access, and coverage limits.

Medicare Advantage Plans Have Rules You Must Follow

If you choose Medicare Advantage, you typically need to:

• Use network providers to get full benefits

• Get referrals for specialists in some plans

• Follow prior authorization rules

You also still pay your Part B premium and may have additional plan costs. While Advantage plans offer added benefits, like vision or dental, they also come with annual coverage limits and varying cost-sharing.

Prescription Drug Coverage Is Optional but Critical

You aren’t required to enroll in Medicare Part D, but going without it can be a costly mistake. If you don’t have drug coverage that’s considered “creditable” and you delay enrollment, you’ll pay a late enrollment penalty for as long as you have Medicare.

In 2025, the Part D deductible can go up to $590. But a new feature this year is the $2,000 out-of-pocket cap for drug costs, which helps many beneficiaries who rely on expensive medications.

Income Can Affect What You Pay

If your modified adjusted gross income (MAGI) from two years ago is above a certain threshold, you’ll pay more for Part B and Part D. This is known as the Income-Related Monthly Adjustment Amount (IRMAA).

In 2025, the IRMAA threshold is $106,000 for individuals and $212,000 for joint filers. If your income exceeds this, your monthly premiums can be hundreds of dollars higher.

Working Past 65? Rules Change

If you’re still employed and covered by a group health plan, you may be able to delay Medicare enrollment without penalty. However, the rules depend on the size of your employer:

• 20 or more employees: You can delay Part B without penalty while covered.

• Fewer than 20 employees: Medicare typically becomes primary, and not enrolling in time can lead to late penalties.

When you lose employer coverage, you get a Special Enrollment Period lasting eight months to sign up for Medicare Part B without penalty.

Switching Plans Isn’t Always Simple

Medicare gives you chances to change coverage, but these windows are limited. The Annual Enrollment Period runs from October 15 to December 7 every year. During this time, you can:

• Join, switch, or drop a Medicare Advantage plan

• Add, drop, or change a Part D plan

If you’re in a Medicare Advantage plan, there’s also a Medicare Advantage Open Enrollment Period from January 1 to March 31, where you can switch Advantage plans or go back to Original Medicare.

Outside these windows, changes are generally limited to qualifying life events.

Not All Doctors Accept Medicare Patients

Even if a provider sees Medicare patients, they may not take new ones. And some doctors “opt out” of Medicare entirely. That means they don’t bill Medicare and require patients to pay out of pocket.

Before receiving care, always confirm that a doctor or specialist accepts Medicare. If you’re in a Medicare Advantage plan, also check that the provider is in your plan’s network.

Coverage Gaps Still Exist

There are several services Medicare doesn’t fully cover, or doesn’t cover at all:

• Long-term custodial care

• Routine dental and vision (unless covered by a Medicare Advantage plan)

• Hearing aids (in most Original Medicare plans)

• Overseas emergency care (not typically covered)

You need to plan for these costs separately, either through other insurance, savings, or alternative resources.

You Need to Actively Compare Plans

Every year, plan costs and coverage details can change. Medicare Advantage and Part D plans send out an Annual Notice of Change (ANOC) every September. This document outlines:

• Premium changes

• Deductibles and copay adjustments

• Coverage modifications

Reviewing your plan each year during open enrollment is essential. What worked for you last year may not be your best option in 2025.

Misconceptions Can Lead to Expensive Mistakes

Some common misunderstandings include:

• Thinking Medicare covers all costs

• Believing your doctor will always be covered under any Medicare plan

• Assuming you can switch plans anytime

• Ignoring income-related premium adjustments

Each of these can cause financial surprises or care delays.

Making the Right Choice Takes Effort

Choosing Medicare coverage involves:

• Evaluating your current and future health needs

• Considering your prescription medications

• Reviewing your providers and whether they accept Medicare

• Estimating total annual costs, not just premiums

Even small mistakes, like missing an enrollment window or ignoring formulary changes in a drug plan, can have long-term consequences.

What to Focus On Before You Enroll

Before making any decisions, ask yourself:

• Will you be traveling often? Some plans have local networks only.

• Do you need out-of-network flexibility?

• Are you willing to manage prior authorizations?

• Is it important for you to have dental or vision coverage?

• Can you afford potential out-of-pocket maximums?

Answering these questions can narrow down your options and help you make an informed decision.

Making Medicare Work for You Starts With Clarity

It’s easy to assume you’ve got the Medicare basics down. But when it’s time to choose a plan, manage costs, or change coverage, the details matter. Knowing what’s covered, what isn’t, and when to take action is what sets you up for long-term healthcare stability.

If you’re unsure about the best coverage for your needs, speak with a licensed agent listed on this website. They can walk you through your options and help you avoid mistakes that might cost you in the future.