Medicare 101: How to Get It Right the First Time

The four parts of Medicare

Medicare is split into lettered parts. It helps to think of them as pieces you assemble.

Part A: hospital insurance

Part A covers inpatient hospital stays, care in a skilled nursing facility after a hospital stay, hospice care, and some home health care.

Most people don't pay a premium for Part A. If you or your spouse worked and paid Medicare taxes for at least 40 quarters, roughly ten years, Part A is premium-free. About 99% of people on Medicare don't pay a Part A premium.

But Part A isn't free when you use it. In 2026, the Part A deductible is $1,736 for each benefit period. A benefit period starts when you're admitted to a hospital and ends after you've been out of the hospital or a skilled nursing facility for 60 days in a row. So it's possible to pay that deductible more than once in a year.

Part B: medical insurance

Part B covers doctor visits, outpatient care, lab work, preventive services, and medical equipment.

Almost everyone pays a Part B premium. In 2026, the standard premium is $202.90 a month, and the annual deductible is $283. After the deductible, you generally pay 20% of the Medicare-approved amount for most services. There's no cap on that 20% under Original Medicare, which is one of the most important things to understand about it.

For 2027, the Medicare Trustees project the standard Part B premium at about $209.50. The official number usually comes out in November.

Part C: Medicare Advantage

Part C, better known as Medicare Advantage, is an alternative way to get your Medicare benefits. Instead of the government paying your doctors directly, a private insurance company approved by Medicare provides your Part A and Part B coverage, and usually drug coverage too.

Medicare Advantage plans often have networks, like HMOs or PPOs. Many include extras like dental, vision, or hearing. And unlike Original Medicare, they have an annual limit on what you pay out of pocket for covered medical care.

You still pay your Part B premium if you join a Medicare Advantage plan, plus the plan's own premium if it has one.

Part D: prescription drug coverage

Part D covers prescription drugs. It's offered by private insurance companies, either as a standalone drug plan that you add to Original Medicare or built into a Medicare Advantage plan.

For 2026, the standard Part D deductible is up to $615, and there's a $2,100 annual cap on what you pay out of pocket for covered drugs. For 2027, those rise to $700 and $2,400.

Medigap: the supplement

Medigap isn't a part of Medicare. It's private insurance that works alongside Original Medicare to help pay the costs Medicare doesn't, like the Part A deductible and the 20% Part B coinsurance.

Medigap plans are standardized and identified by letters, like Plan G or Plan N. A Plan G from one company covers the same benefits as a Plan G from another. The difference is price and the company's service. Medigap generally doesn't include drug coverage, so people who choose Medigap usually add a standalone Part D plan.

The big choice: Original Medicare or Medicare Advantage

When you first enroll, one of the biggest decisions is which path to take. Here's how they compare in broad strokes.

Original Medicare, usually with Medigap and Part D

How it works. Parts A and B from the government, a Medigap policy to cover most of the gaps, and a Part D plan for drugs.

What people like about it. You can generally see any doctor or hospital in the country that accepts Medicare, with no network. Referrals usually aren't needed. With a comprehensive Medigap plan, your out-of-pocket costs are very predictable.

The trade-offs. You pay more in monthly premiums, because you're paying for Part B, Medigap, and Part D separately. And without Medigap, there's no cap on the 20% you owe for Part B services.

Medicare Advantage

How it works. One private plan that covers your hospital, medical, and usually drug coverage.

What people like about it. Lower monthly premiums, sometimes $0 on top of Part B. An annual out-of-pocket maximum. Extra benefits like dental, vision, or gym memberships. Everything in one card.

The trade-offs. Networks, which can limit which doctors and hospitals you can use. Prior authorization, which means the plan may need to approve certain care in advance. Copays that add up if you use a lot of care. And the plan can change its benefits, network, and costs every year.

This year shows why that last point matters. Many Medicare Advantage plans are expected to cut benefits for 2027, and some insurers are leaving certain markets. If you choose Advantage, you'll want to review it every fall.

Neither path is right for everyone. People who travel a lot, split time between states, or want the widest choice of doctors often lean toward Original Medicare with Medigap. People who are healthy, want lower premiums, and are comfortable with a network often lean toward Advantage. Your health, your doctors, your budget, and where you live all matter.

Why the first choice matters more than people think

Here's the part a lot of people don't know. When you first become eligible, there's a window called the Medigap open enrollment period. It's the six months starting the month you're 65 or older and enrolled in Part B. During that window, Medigap companies generally have to sell you any policy they offer, regardless of your health, at the best available rate.

After that window closes, in many cases, a Medigap company can ask health questions and turn you down or charge you more if you have health conditions.

So if you start on Medicare Advantage and later want to switch to Original Medicare with Medigap, you may not be able to get a Medigap policy at a good price, or at all, depending on your health and your situation. There are some specific situations that give you guaranteed rights later, like a Medicare Advantage plan leaving your area. But you can't count on switching freely.

In plain terms: it's generally easier to move from Medigap to Medicare Advantage later than the other way around. That's worth thinking about before you choose.

When to sign up

This is where the lifelong mistakes happen, so let's go slowly.

Your Initial Enrollment Period

You first become eligible for Medicare at 65. Your Initial Enrollment Period is seven months long: the three months before the month you turn 65, the month you turn 65, and the three months after.

If you sign up during the three months before your birthday month, your coverage generally starts the first day of your birthday month. Signing up later in the window can mean your coverage starts later.

If you're already getting Social Security

If you're already receiving Social Security benefits when you turn 65, you'll generally be enrolled in Parts A and B automatically. Your Medicare card will arrive in the mail a few months before your birthday.

If you're not getting Social Security yet, you have to sign up yourself, usually through Social Security.

If you're still working at 65

This is where it gets tricky. If you or your spouse are still working at 65 and have health coverage through that job, you may be able to delay Part B without a penalty.

In general, if the employer has 20 or more employees and you're covered through current employment, you can delay Part B and sign up later during a Special Enrollment Period. That period runs for eight months after the employment or the coverage ends, whichever comes first.

If the employer has fewer than 20 employees, Medicare usually becomes your primary coverage at 65, and delaying Part B can leave you with serious gaps.

The rules depend on your specific employer coverage. It's worth confirming with your employer's benefits office how their plan works with Medicare before you decide to delay.

The COBRA and retiree coverage trap

This one catches a lot of people. COBRA coverage and retiree health coverage are not coverage based on current employment. So they generally don't let you delay Part B without a penalty.

Let's say you retire at 64, go on COBRA, and turn 65 while still on it. If you don't sign up for Part B during your Initial Enrollment Period, you could end up with a late enrollment penalty and a gap in coverage, even though you had insurance the whole time.

The same logic applies to many retiree health plans. For public employees, this is important. If your former employer offers retiree health coverage, find out exactly how it works with Medicare at 65. Many retiree plans expect you to enroll in Parts A and B at 65 and then coordinate with them. Ask the question well before your 65th birthday.

The penalties to avoid

Part B late enrollment penalty

If you don't sign up for Part B when you're first eligible, and you don't qualify for a Special Enrollment Period, your Part B premium can go up by 10% for each full 12-month period you could have had Part B but didn't.

And it's not temporary. In most cases, you pay that higher premium for as long as you have Part B.

Let's say you went two full years without Part B when you were supposed to have it. Your premium could be 20% higher, every month, for the rest of your life.

Part D late enrollment penalty

If you go 63 days or more in a row without Part D or other creditable drug coverage after you're first eligible, you may owe a Part D penalty when you do sign up.

The penalty is based on a national base premium, which is $38.99 in 2026 and $41.33 in 2027. It adds 1% of that amount for every month you went without coverage. Like the Part B penalty, it generally lasts as long as you have Part D.

"Creditable" means coverage that's expected to pay, on average, at least as much as standard Medicare drug coverage. Employer and retiree plans usually tell you each year whether their drug coverage is creditable. Keep those notices.

The HSA trap

If you have a health savings account through work and plan to keep contributing past 65, be careful. Once you're enrolled in any part of Medicare, you generally can't contribute to an HSA anymore.

There's an extra wrinkle. When you sign up for Part A after 65, your Part A coverage can be made retroactive for up to six months. If you contributed to an HSA during those retroactive months, those contributions may be a problem. Many people stop HSA contributions several months before they plan to enroll. A tax professional can help you time this.

What Medicare costs, all in

Let's pull the numbers together. For 2026, a person on Original Medicare with no income-related surcharges might pay:

• Part A: $0 premium for most people
• Part B: $202.90 a month
• A Medigap policy: varies widely by plan, age, and company
• A Part D plan: varies by plan

A person on Medicare Advantage might pay:

• Part B: $202.90 a month
• The plan's premium: sometimes $0, sometimes more
• Copays and coinsurance as they use care, up to the plan's annual out-of-pocket maximum

Higher income means higher premiums

If your income is above certain levels, you pay more for Part B and Part D. It's called IRMAA, the income-related monthly adjustment amount.

For 2026, IRMAA starts when modified adjusted gross income is above $109,000 for individuals or $218,000 for married couples filing jointly. At the highest income levels, the Part B premium can reach $689.90 a month.

Medicare generally uses your tax return from two years earlier. So 2026 premiums are generally based on 2024 income, and 2027 premiums on 2025 income.

This matters most for people who had a one-time jump in income. A big retirement account withdrawal, a large capital gain, or a lump-sum payout can push your Medicare premiums up two years later. If your income dropped because of a life-changing event like retirement, you can ask Social Security to use your more recent, lower income. That request is made on a specific form, and it's worth knowing about if it applies to you.

A note for FRS members and other public employees

A few things are specific to the people I work with most.

Your retiree health coverage. If you stay on your former employer's health plan after retirement, find out how it changes at 65. Many public employer plans coordinate with Medicare once you're eligible and expect you to enroll in Parts A and B.

Special Risk retirees. If you retired in your 50s, you likely have years between retirement and Medicare. That gap is its own planning problem, with its own rules. I wrote a separate post about the health insurance subsidy cliff for early retirees.

The Health Insurance Subsidy. If you're an FRS retiree, you may be eligible for the Health Insurance Subsidy, a monthly payment to help with health insurance costs. It's worth confirming you've applied if you're eligible.

Social Security coordination. Your Part B premium usually comes out of your Social Security check once you're receiving benefits. So your Medicare decision and your Social Security decision are connected.

Every fall, check your coverage

Medicare isn't a one-time decision. Every year, from October 15 to December 7, you can change your coverage for the following year.

Medicare Advantage and Part D plans can change their premiums, deductibles, drug lists, and networks each year. They send an Annual Notice of Change by September 30 explaining what's different. That letter is worth reading every single year. I wrote a separate post on what to look for.

If you're on Medicare Advantage, there's also a window from January 1 to March 31 when you can make one change, to another Advantage plan or back to Original Medicare.

Where to get unbiased help

• Medicare.gov has a Plan Finder that lets you compare plans in your area based on your drugs and pharmacy.
• 1-800-MEDICARE (1-800-633-4227) connects you directly with Medicare.
• Florida SHINE offers free, unbiased counseling through trained volunteers. Call 1-800-963-5337 or visit floridashine.org.
• Social Security handles enrollment in Parts A and B, and IRMAA appeals.

Be cautious with unsolicited calls. Medicare won't call you out of the blue asking for your Medicare number.

Your Medicare checklist

About a year before you turn 65:

• Find out whether you're eligible for premium-free Part A.
• Ask your employer or former employer how their coverage works with Medicare.
• If you have an HSA, plan when to stop contributing.
• Start thinking about Original Medicare versus Medicare Advantage.

Three months before your 65th birthday month:

• Enroll in Parts A and B if you need to, unless you're confirmed eligible to delay.
• Compare Medigap and Part D options, or Medicare Advantage plans.
• Gather your prescription list and your doctors.

Once you're enrolled:

• Keep records of creditable coverage notices.
• Read your Annual Notice of Change every fall.
• Review your coverage every open enrollment period.

How Medicare fits into your retirement plan

Here's where I come in, and where I think most Medicare advice falls short.

Most people treat Medicare as an insurance decision. Pick a plan, get a card, done. But Medicare is really a retirement income decision too.

Your Part B premium comes out of your Social Security check. Your income today decides your Medicare premiums two years from now. A DROP payout, a Roth conversion, or a big IRA withdrawal can trigger IRMAA surcharges. Your health care costs in retirement are one of the few big expenses you can actually plan around, because the premiums, deductibles, and out-of-pocket caps are known in advance.

I don't sell insurance. I don't get paid a commission for any Medicare plan, which means I have no reason to steer you toward one over another. What I do is help people build a retirement income plan where Medicare, Social Security, your pension, your savings, and your taxes all work together instead of tripping over each other.

If you're within a few years of 65, or you're already there and not sure your pieces fit, let's sit down and map it out. We'll look at when Medicare starts for you, what it's likely to cost, how your income could affect your premiums, and how it all fits with the rest of your retirement.

Getting Medicare right the first time is a lot easier than fixing it later.

Frequently asked questions

When should I sign up for Medicare?

Your Initial Enrollment Period is the seven months around your 65th birthday: three months before, your birthday month, and three months after. If you're still working with coverage from a current employer that has 20 or more employees, you may be able to delay Part B. Confirm with your employer before you delay.

What is the Medicare Part B late enrollment penalty?

If you don't sign up for Part B when you're first eligible and don't qualify for a Special Enrollment Period, your premium can increase by 10% for each full 12-month period you went without it. In most cases, the penalty lasts as long as you have Part B.

Does COBRA let me delay Medicare without a penalty?

Generally, no. COBRA and retiree coverage aren't considered coverage based on current employment, so they usually don't qualify you to delay Part B without a penalty.

What is the difference between Medigap and Medicare Advantage?

Medigap is supplemental insurance that works with Original Medicare to help pay costs Medicare doesn't cover. Medicare Advantage replaces Original Medicare with a private plan that usually includes drug coverage and extras, often with a network and an annual out-of-pocket limit.

How much does Medicare cost in 2026?

In 2026, most people pay no premium for Part A. The standard Part B premium is $202.90 a month with a $283 deductible. The Part A deductible is $1,736 per benefit period. Medigap, Part D, and Medicare Advantage premiums vary by plan. Higher-income beneficiaries pay more through IRMAA.

Can I switch from Medicare Advantage to Medigap later?

You can switch to Original Medicare during certain enrollment periods, but outside your Medigap open enrollment period or a guaranteed issue situation, Medigap companies in many cases can use your health to decide whether to sell you a policy and at what price.

Educational content only. Not individualized investment, tax, legal, or insurance advice. Joy Financial Group LLC does not sell insurance and receives no compensation from any insurance company or Medicare plan. Figures are for 2026 unless noted and change annually. Benowitz Wealth Management is a brand of Joy Financial Group LLC, a Florida state-registered investment adviser. Consult a qualified tax professional regarding your specific situation.

Neither Joy Financial Group LLC nor Benowitz Wealth Management is affiliated with, endorsed by, or employed by the Florida Retirement System, the Florida Division of Retirement, the State Board of Administration of Florida, MyFRS, or any government agency. FRS members may obtain free, unbiased guidance from the MyFRS Financial Guidance Line at 1-866-446-9377.