Medicare Basics Sound Boring—But These Are the Exact Things You’ll Kick Yourself for Ignoring

Key Takeaways

• Ignoring Medicare’s rules, deadlines, and cost-sharing structure can lead to lifelong penalties and unexpected bills. You need to understand the basics before making any decisions.

• Choosing between Original Medicare and Medicare Advantage is not just about preference; it affects your doctors, costs, and how you access care. Review your choices annually.

What Medicare Actually Covers—And What It Doesn’t

At its core, Medicare is a national health insurance program for people aged 65 and older, and for some younger individuals with certain disabilities. But it doesn’t cover everything. Understanding what it covers, and just as importantly, what it leaves out, can save you a lot of regret later.

Medicare Part A: Hospital Insurance

Part A generally covers:

• Inpatient hospital care

• Skilled nursing facility care (not custodial care)

• Hospice care

• Limited home health care services

Most people don’t pay a premium for Part A if they have worked at least 40 quarters (10 years). However, the inpatient deductible in 2025 is $1,676 per benefit period. If your hospital stay lasts longer than 60 days, daily coinsurance costs kick in.

Medicare Part B: Medical Insurance

Part B covers:

• Doctor visits

• Outpatient care

• Preventive services (like screenings and vaccines)

• Durable medical equipment

In 2025, the monthly Part B premium is $185, and the annual deductible is $257. After the deductible, you typically pay 20% of the Medicare-approved amount for covered services.

Medicare Part D: Prescription Drug Coverage

Part D helps cover the cost of prescription drugs. Plans are offered by private insurers approved by Medicare. In 2025, there is a $2,000 annual cap on out-of-pocket costs for covered prescription drugs. This change eliminates the catastrophic cost-sharing phase that used to be burdensome for many.

Not Covered by Medicare

Don’t assume you’re fully protected. Medicare doesn’t cover:

• Long-term care (nursing homes or assisted living)

• Most dental care

• Eye exams for prescription glasses

• Hearing aids and exams

• Routine foot care

You may need to look into supplemental coverage or budget accordingly for these expenses.

The Timeline You Can’t Afford to Miss

Your enrollment timing affects your coverage and costs. Missing key dates can result in penalties or gaps in coverage.

Initial Enrollment Period (IEP)

Your IEP lasts 7 months:

• Starts 3 months before the month you turn 65

• Includes your birthday month

• Ends 3 months after

Enroll during this period to avoid penalties and delayed coverage.

General Enrollment Period (GEP)

If you miss your IEP, you can sign up between January 1 and March 31 each year. Coverage starts July 1, and late penalties may apply.

Medicare Advantage and Part D Open Enrollment

Every year from October 15 to December 7, you can:

• Join or switch Medicare Advantage (Part C) plans

• Join or switch Part D prescription drug plans

• Drop a plan and return to Original Medicare

Medicare Advantage Open Enrollment

From January 1 to March 31, if you already have a Medicare Advantage plan, you can:

• Switch to another Advantage plan

• Drop Advantage and return to Original Medicare (and pick up Part D if needed)

Choosing Between Original Medicare and Medicare Advantage

You have two main pathways for coverage. One is not better than the other universally, but one may be better for you.

Original Medicare (Parts A and B)

• You can see any doctor or provider that accepts Medicare

• Add a standalone Part D plan for prescriptions

• Can buy a Medigap (Medicare Supplement) plan to help with costs

Medicare Advantage (Part C)

• Offered by private insurers

• Must cover everything Original Medicare covers, often includes extra benefits (e.g., vision, hearing)

• Typically has networks and may require referrals

Be aware: With Advantage plans, costs are less predictable. You might pay less upfront but more later depending on your health needs and plan structure.

Penalties That Stick With You

If you delay enrollment without having other creditable coverage, you may face penalties for life.

Part B Late Enrollment Penalty

• 10% added to your premium for each full 12-month period you delayed enrollment

• Penalty applies for as long as you have Part B

Part D Late Enrollment Penalty

• 1% of the national base premium for each month you delayed without creditable coverage

• Penalty is permanent

Delaying because “you feel healthy” isn’t a good reason. Unexpected health issues can leave you unprepared.

Why Medigap Still Matters

If you choose Original Medicare, you may want a Medigap plan to fill cost gaps. Medigap helps pay:

• Coinsurance

• Copayments

• Deductibles

Medigap plans do not include drug coverage, so you’ll still need a Part D plan. The best time to buy a Medigap policy is during your 6-month Medigap Open Enrollment Period, which starts the month you’re both 65 or older and enrolled in Part B. During this time, you cannot be denied coverage for health conditions.

Coordination with Other Coverage

If you have other health insurance, such as from an employer or retiree plan, Medicare coordination rules determine which plan pays first.

• If your employer has fewer than 20 employees, Medicare usually pays first.

• If you’re retired, Medicare is likely your primary coverage.

• TRICARE, VA, or COBRA have separate rules. Always confirm with a licensed agent to avoid dual-coverage mishaps.

What You Need to Reevaluate Every Year

Your health changes. So do Medicare plans. Each year, review:

• Annual Notice of Change (ANOC): Sent each September to Medicare Advantage and Part D enrollees, detailing next year’s changes

• Formulary changes: Your medications may no longer be covered

• Network changes: Your doctors or pharmacies may no longer be in-network

• Premiums and copays: These may rise, making your plan less cost-effective

Open Enrollment is your window to make adjustments based on these changes.

How Medicare Works with Medicaid

If your income and assets are limited, you may qualify for both Medicare and Medicaid, known as “dual eligibility.”

Medicaid can help pay for:

• Medicare premiums

• Deductibles

• Coinsurance

• Services not covered by Medicare (like long-term care)

Programs like the Medicare Savings Program and Extra Help (for drug costs) can drastically reduce out-of-pocket expenses. If you’re struggling financially, don’t assume you have no options.

What Happens at Age 65 If You’re Still Working?

If you or your spouse are still working and have employer health coverage, you may not need to enroll in all parts of Medicare right away.

• If the employer has 20 or more employees, you can delay Part B and Part D without penalty.

• You must still enroll in Part A (premium-free for most people).

• When employment ends, you get an 8-month Special Enrollment Period to sign up for Part B without penalty.

Failing to understand how employer coverage interacts with Medicare can cost you significantly in future penalties.

Don’t Ignore the Fine Print on Prior Authorization

Medicare Advantage plans often require prior authorization for certain procedures or medications. This means you must get the plan’s approval before receiving the service.

Failing to do so can result in denied claims, leaving you responsible for the full cost. Original Medicare rarely requires prior authorization, but some specific services like durable medical equipment may.

Before enrolling or switching, review:

• Which services require prior approval

• How long approvals take

• How denials are handled

Medicare in 2025: What’s New This Year

Several changes in 2025 could impact your choices:

• Part D now has a $2,000 out-of-pocket cap on prescription drugs, eliminating the catastrophic phase

• Premiums and deductibles have increased: Part B premium is $185, and deductible is $257

• More Special Needs Plans (SNPs) are available, offering targeted coverage for chronic conditions

• Mid-Year Notification of Unused Supplemental Benefits: Advantage enrollees now receive mid-year notices detailing unused benefits

Staying informed can help you adjust and avoid missing new opportunities.

Make Medicare Work in Your Favor

Medicare isn’t something you set and forget. Small misunderstandings or delays can snowball into years of penalties or surprise costs. Every year, take the time to:

• Reassess your health and budget

• Compare available plans during Open Enrollment

• Talk with a licensed agent listed on this website to review your options and avoid pitfalls

The more informed you are, the more empowered your choices will be.