Medicare is an important part of retirement planning, but it doesn’t cover every healthcare expense. Understanding your coverage options, enrollment deadlines, and potential costs can help you avoid gaps in coverage and unexpected bills.

What Is Medicare?

Medicare is a federal health insurance program primarily for people age 65 and older. Some younger people also qualify because of a disability, end-stage renal disease, or ALS. Medicare helps cover healthcare costs, but understanding what it excludes is an important part of retirement planning.

Medicare is divided into four parts: Part A, Part B, Part C, and Part D. There are also supplemental coverages to consider to fill in any gaps not covered in the four main parts. Here is an overview of the different options to review as you approach retirement:

  • Part A helps cover inpatient hospital care, skilled nursing facility care, hospice, and certain home health services. Most people qualify without a monthly premium based on their own or their spouse’s work history, generally requiring at least 10 years of Medicare-covered work. Deductibles and coinsurance can still apply, and people who don’t qualify for premium-free coverage may be able to purchase it.
  • Part B helps cover doctor visits, outpatient care, preventive services, and certain medical equipment. In 2026, the standard monthly premium is $202.90, and the annual deductible is $283. Higher-income beneficiaries pay an additional monthly charge. Premiums and deductibles are updated annually.
  • Part D provides prescription drug coverage through private insurance plans. Annual out-of-pocket spending on covered Part D drugs is capped at $2,100 in 2026 and $2,400 in 2027. The cap includes eligible deductibles, copayments, and coinsurance, but excludes premiums and drugs your plan doesn’t cover. Premiums and covered medications vary by plan.
  • Original Medicare includes Part A and Part B. You can add a separate Part D plan for prescription drug coverage and may purchase a Medigap policy to help cover certain remaining costs.
  • Eligible people with dementia who have Original Medicare may receive additional support through a participating GUIDE provider. Services include care coordination, a 24/7 support line, caregiver education, and respite care for qualifying patients. Eligibility requirements and an annual respite limit apply, so families should confirm available services with a participating provider.
  • Medigap is private insurance that helps pay certain deductibles, copayments, and coinsurance under Original Medicare. Your one-time, 6-month Medigap Open Enrollment Period begins the first month you’re 65 or older and enrolled in Part B. After that window, insurers may use medical underwriting or deny coverage unless you qualify for specific protections.

    If you’re considering switching from Medicare Advantage to Original Medicare, confirm whether you can obtain the Medigap coverage you want before making the change. Annual Medicare open enrollment doesn’t create a guaranteed right to buy Medigap.

  • Medicare Advantage, also known as Part C, is an alternative to Original Medicare that is offered through Medicare-approved private companies. This plan bundles Part A and Part B and often includes Part D as well. Medicare Advantage plans may cover additional services, including vision, hearing, and dental visits, but it is dependent on the terms of each plan. You must continue paying your Part B premium, along with any premium charged by your Medicare Advantage plan.

Income Related Monthly Adjustment Amount (IRMAA)

Higher-income beneficiaries may pay an Income-Related Monthly Adjustment Amount, or IRMAA, in addition to their Part B and Part D premiums. Social Security generally uses your tax return from 2 years earlier to determine these charges, so 2026 premiums generally reflect 2024 income. For Medicare purposes, modified adjusted gross income includes adjusted gross income plus tax-exempt interest.

In 2026, a single filer with modified adjusted gross income above $109,000 and up to $137,000 pays a total Part B premium of $284.10 per month, including an $81.20 surcharge. The same per-person amounts apply to married couples filing jointly with income above $218,000 and up to $274,000. Each enrolled spouse also pays a $14.50 monthly Part D surcharge if they have drug coverage.

At a higher income level, a single filer with modified adjusted gross income above $205,000 but below $500,000 pays a total Part B premium of $649.20 per month, including a $446.30 surcharge. The same per-person amounts apply to joint filers with income above $410,000 but below $750,000. The additional Part D surcharge is $83.30 per enrolled person each month.

If retirement, reduced work, or another qualifying life event lowers your income, you may be able to ask Social Security to reduce your IRMAA using Form SSA-44.

You can review current Medicare costs at Medicare.gov. Medicare generally doesn’t cover ongoing custodial care, such as help with bathing, dressing, or eating, although it may cover qualifying short-term skilled nursing or home health services. Planning separately for long-term care expenses can help protect your assets and your overall retirement plan.

What to Expect

Your Initial Enrollment Period generally lasts 7 months: the 3 months before your 65th birthday month, your birthday month, and the 3 months afterward. If you’re receiving Social Security benefits at least 4 months before turning 65, you’ll generally be enrolled automatically in Parts A and B. Otherwise, you’ll usually need to apply. Drug plans, Medicare Advantage, and Medigap require separate enrollment decisions.

If you or your spouse are still working and you have employer health coverage, confirm whether you can delay Part B without a penalty. COBRA and retiree coverage generally don’t provide the same enrollment protection as coverage based on current employment.

Medicare open enrollment runs from October 15 through December 7 each year. Changes made during fall 2026 generally take effect January 1, 2027. You can switch between Original Medicare and Medicare Advantage or change your Medicare Advantage or Part D plan. Review next year’s premiums, covered medications, provider networks, and out-of-pocket costs before deciding whether to keep your current coverage.