Medicare Planning: Navigating the Healthcare Transition at 65
Get Medicare Right the First Time
Learn how to navigate Medicare enrollment including timing, IRMAA planning, choosing between Original Medicare and Medicare Advantage, and avoiding costly penalties.
- Initial Enrollment Period is 7 months around your 65th birthday - missing it triggers lifetime penalties
- IRMAA surcharges apply to high earners based on income from 2 years prior
- Original Medicare + Medigap provides flexibility; Medicare Advantage offers lower premiums with networks
- Medigap Open Enrollment is 6 months starting at Part B enrollment - guaranteed issue only during this window
- Review plans annually during AEP (Oct 15-Dec 7) - plans change and so do your needs
Key Considerations
Understanding Medicare
Initial Enrollment Period is Critical
Your Initial Enrollment Period (IEP) is 7 months centered on your 65th birthday month. Missing this window triggers penalties and coverage gaps. Part B penalty is 10% for each 12-month period you could have enrolled but did not. This penalty lasts for life. Mark your calendar and act on time.
IRMAA Surcharges Based on Income
High earners pay Income-Related Monthly Adjustment Amounts (IRMAA) for Part B and Part D. Based on income from 2 years prior (2024 Medicare premiums based on 2022 income). Thresholds start at $103K single/$206K married. Planning income in the two years before Medicare can reduce IRMAA significantly.
Original Medicare vs Medicare Advantage
Original Medicare (Parts A+B) with Medigap supplement offers maximum provider choice and predictable costs. Medicare Advantage (Part C) bundles everything with lower premiums but network restrictions. Choice depends on health needs, travel patterns, and provider preferences. This is a major decision with long-term implications.
Part D: Prescription Drug Coverage
Part D is optional but penalty applies if you delay enrollment without creditable coverage. Evaluate based on your current medications - plans vary significantly in formularies and costs. New IRA provisions cap out-of-pocket drug costs at $2,000/year starting 2025, making Part D more valuable.
Implementation
Medicare Strategies
IRMAA Reduction Through Income Planning
Manage income in the 2 years before Medicare to reduce IRMAA. Delay Roth conversions, manage capital gains, time income recognition. Or do conversions earlier (3+ years before Medicare) so income is not in the lookback period. IRMAA can add $5,000+ annually to Medicare costs for high earners.
Couple retiring at 63, Medicare at 65. In years 63-64, they manage income below $206K: delay Roth conversions, harvest losses, defer bonuses if possible. At 65, IRMAA is based on years 63-64 income. No IRMAA surcharges. Savings: $3,600+/year in reduced premiums for both spouses.
Original Medicare + Medigap + Part D Strategy
Enroll in Original Medicare Parts A+B. Add Medigap supplement (Plan G most popular) for predictable costs and nationwide provider access. Add standalone Part D for prescriptions. Higher premium but no network restrictions and minimal out-of-pocket surprises. Ideal for those who travel or want maximum flexibility.
Retiree enrolled in Original Medicare: Part A free, Part B $174.70/month. Adds Medigap Plan G $150/month. Adds Part D $35/month. Total: ~$360/month. Deductibles and copays minimal. Any doctor accepting Medicare. No prior authorizations. Can see specialists anywhere. Predictable costs regardless of health events.
Medicare Advantage for Cost Savings
Enroll in Medicare Advantage (Part C) plan that includes prescription drug coverage. Often $0 premium beyond Part B. Lower upfront cost but network restrictions and copays for services. Works well if you stay local, use in-network providers, and are currently healthy. Compare plans annually during open enrollment.
Retiree in good health, staying local, tight budget. Enrolls in $0 premium Medicare Advantage HMO. Part B: $174.70/month, MA premium: $0. Total: ~$175/month. Must use network doctors. Copays for hospital stays. Works well in healthy years but costs rise with health events. Reviews plan annually during AEP.
Avoid These Pitfalls
Common Mistakes
Missing Initial Enrollment Period
If you miss your IEP and do not have creditable employer coverage, you face late enrollment penalties for life. Part B penalty: 10% per 12 months delayed. Part D penalty: 1% of national base premium per month delayed. These penalties compound over retirement. Enroll on time.
Not Understanding Medigap Timing
You have a 6-month Medigap Open Enrollment Period starting when you enroll in Part B at 65+. During this window, insurers must accept you regardless of health. After this window, you may be denied or charged more. If you want Medigap, enroll during this window - you may not get another chance.
Ignoring Annual Plan Reviews
Medicare Advantage and Part D plans change annually - formularies, networks, premiums, benefits. What works this year may not work next year. Review your plans every fall during Annual Election Period (Oct 15-Dec 7). Failing to review can cost thousands in unnecessary expenses.
Questions
Common Questions
Here are the most common questions we receive about this topic.
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Medicare decisions are complex and some are irreversible. Let us help you navigate enrollment, plan selection, and IRMAA planning for optimal coverage and cost.