I turn 65 soon. What do I need to know about Medicare?

Turning 65 is an important milestone, and for many individuals, it also means becoming eligible for Medicare. While Medicare provides valuable health care coverage, the system can feel overwhelming at first. Between enrollment windows, coverage options, supplemental plans and potential penalties, there are several important decisions that can impact both health care access and long-term costs.

Understanding the basics before you turn 65 can help you avoid common mistakes and make more informed decisions.

When Do I Need to Enroll?

For most individuals, Medicare eligibility begins at age 65. Your Initial Enrollment Period generally starts three months before the month you turn 65, includes your birth month and continues for three months afterward.

Missing this window can lead to late enrollment penalties in some situations, particularly for Medicare Part B and Part D.

However, not everyone needs to enroll immediately. If you are still working and covered under a qualifying employer health plan, you may be able to delay certain parts of Medicare without penalty. This is an area where many people become confused, especially when coordinating employer coverage with Medicare.

Understanding the Different Parts of Medicare

One reason Medicare can seem complicated is that it consists of several different components.

Medicare Part A

Part A primarily covers:

- Hospital stays

- Skilled nursing care

- Certain home health services

Many individuals do not pay a premium for Part A if they paid Medicare taxes during their working years.

Medicare Part B

Part B covers:

- Doctor visits

- Outpatient care

- Preventive services

- Medical equipment

Part B does require a monthly premium, and higher-income individuals may pay additional surcharges known as IRMAA, or Income Related Monthly Adjustment Amounts.

Medicare Part D

Part D provides prescription drug coverage through private insurance companies approved by Medicare.

Part D also requires a monthly premium, and higher-income individuals may pay IRMAA as well.

Costs and coverage can vary significantly between plans, so reviewing medications and plan formularies is important when selecting coverage.

Original Medicare vs. Medicare Advantage

One of the biggest decisions retirees face is choosing between:

- Original Medicare plus supplemental coverage

OR

- Medicare Advantage

Original Medicare

Original Medicare includes Part A and Part B. Many individuals also purchase:

- A Medicare supplement policy (Medigap)

- A separate Part D drug plan

This approach generally offers:

- Greater provider flexibility

- Broader nationwide acceptance

- More predictable coverage

However, premiums may be higher.

Medicare Advantage

Medicare Advantage plans are offered by private insurers and combine hospital and medical coverage into one plan. Many also include prescription coverage and additional benefits such as dental or vision care.

These plans may have:

- Lower upfront premiums

- Network restrictions

- Different copays and out-of-pocket structures

Neither option is universally better. The right choice often depends on health care usage, travel habits, physician preferences and financial considerations.

Medicare Is Not Free

One common misconception is that Medicare fully covers health care costs in retirement. In reality, retirees may still face:

- Premiums

- Deductibles

- Copays

- Prescription expenses

- Long-term care costs

Health care can remain one of the largest expenses during retirement, which makes planning especially important.

Income Can Affect Your Medicare Premiums

Many retirees are surprised to learn that Medicare premiums may increase based on income.

Medicare uses a two-year lookback when determining certain premium surcharges. This means a large Roth conversion, the sale of a business and a large capital gain event may increase Medicare premiums later through IRMAA surcharges.

For higher-income retirees, tax planning and Medicare planning often go hand in hand.

Health Savings Accounts and Medicare

Another important consideration involves Health Savings Accounts, or HSAs.

Once enrolled in Medicare, individuals generally can no longer make HSA contributions. Because Medicare enrollment can sometimes be retroactive, individuals working past age 65 should carefully coordinate the timing of enrollment and HSA contributions to avoid penalties.

Final Thoughts

Medicare is one of the most important transitions individuals face as they approach retirement. While the system can appear complicated at first, understanding the basics can help reduce stress and avoid costly mistakes.

The key is starting early. Reviewing your options before turning 65 gives you time to:

- Understand enrollment deadlines

- Compare coverage options

- Coordinate health care and tax planning

- Evaluate retirement cash flow needs

Ultimately, Medicare planning is not just about choosing health insurance. It is an important part of building a broader retirement strategy that helps protect both your health and your financial future.

Reid Schwartz is a columnist for The Item and Co-Founder of Creech Schwartz Wealth Management in Sumter, SC, where he works as a financial advisor helping individuals, families, businesses, and nonprofits plan for long-term financial success.

*Tax and accountancy services are not available through or provided by Creech Schwartz Wealth Management or &Partners, LLC.

This article is for educational purposes only and not to be interpreted as tax or legal advice. Any tax planning strategies discussed by Creech Schwartz Wealth Management will be in conjunction with your tax/legal professional.

Securities and investment advisory services offered through &Partners, LLC, a broker-dealer and investment adviser registered with the U.S. Securities and Exchange Commission and member FINRA, SIPC.