5 Surprising Things You Might Not Know About Medicare

Navigating Healthcare in Retirement with Confidence

If you’re preparing for retirement, you’ve probably heard that Medicare will “take care of your healthcare needs.” But what that actually means is often unclear—and sometimes flat-out misunderstood.

As a financial advisor, I help clients plan around healthcare decisions all the time. And here’s what I’ve found: when people approach Medicare with good information and a smart plan, they avoid costly surprises—and make better financial decisions overall.

Here are five things about Medicare that often catch people off guard—and why it’s important to get ahead of them.

1. Medicare Isn’t Free

One of the biggest misconceptions is that Medicare is fully paid for because you contributed to it during your working years. While that’s partially true, you will still face monthly premiums and out-of-pocket costs.

Here’s a breakdown:

• Part A (hospital insurance) is usually premium-free if you’ve worked and paid Medicare taxes for at least 10 years.
• Part B (medical insurance) has a monthly premium—and the amount you pay is based on your income.
• Part D (prescription drug coverage) also comes with a premium.
• Many people choose a Medigap policy or a Medicare Advantage Plan to help cover what traditional Medicare doesn’t.

The bottom line? Medicare helps, but it’s not a blank check. You’ll want to build these costs into your retirement income plan.

2. Enrollment Timing Is Crucial

You have a 7-month window to enroll in Medicare around your 65th birthday: the three months before, the month of, and three months after. Miss it, and you could be subject to lifetime penalties and coverage delays.

A few additional considerations:

• If you’re still working and covered by an employer health plan, special rules apply—and they vary based on employer size and coverage type.
• If you have an HSA, you’ll need to stop contributions six months before enrolling in Medicare Part A.
• If you delay Part B without qualifying coverage, the late enrollment penalty is 10% for every 12-month period you were eligible and didn’t sign up.

This is one of those areas where a little proactive planning can go a long way. Make sure you’re clear on your specific situation before the clock starts ticking.

3. Medicare Does Not Cover Long-Term Care

This one surprises a lot of people—and it’s a big deal. Medicare does not cover most long-term care costs.

Here’s what it does—and doesn’t—include:

• Short-term skilled nursing care after a hospital stay (up to 100 days) is partially covered, but only under specific conditions.
• Custodial care—help with bathing, dressing, eating, and other daily activities—is not covered.
• Assisted living, memory care, and in-home long-term care services are generally out-of-pocket expenses.

Given the rising cost of long-term care (often $100,000+ per year), this is a critical piece of your retirement plan. Whether through insurance or personal savings, having a strategy in place is key.

4. High-Income Retirees Pay More (Thanks to IRMAA)

If your income is above a certain threshold, you’ll pay an additional monthly amount for Medicare Parts B and D. This surcharge is called the Income-Related Monthly Adjustment Amount, or IRMAA.

Here’s how it works:

• IRMAA is based on your modified adjusted gross income (MAGI) from two years prior.
• For example, your 2025 Medicare premiums are based on your 2023 tax return.
• There are multiple income tiers that determine how much extra you’ll pay, and it can add up fast.

This is why tax planning and Medicare planning need to go hand in hand. Strategies like Roth conversions, qualified charitable distributions (QCDs), or tax-efficient withdrawals can help manage your income—and potentially reduce your Medicare premiums.

5. You Can—and Should—Review Your Coverage Annually

Many retirees don’t realize that Medicare allows you to make changes each year. And for most people, it’s worth reviewing annually.

Key enrollment periods to know:

• Open Enrollment (Oct 15 – Dec 7): You can switch between Original Medicare and a Medicare Advantage Plan, change drug plans, or adjust coverage.
• Medicare Advantage Open Enrollment (Jan 1 – Mar 31): If you’re already in a Medicare Advantage Plan, you can switch to another plan or go back to Original Medicare.

Why does this matter? Because drug formularies, provider networks, and plan benefits change year to year. And as your health evolves, your coverage needs may change, too.

Staying on top of this with your advisor—and a trusted Medicare specialist—can save you money and help ensure you’re covered for what matters most.

Final Thoughts

Medicare is one of the most important pieces of your retirement plan—and one of the most misunderstood.

It’s not just about picking a plan. It’s about coordinating your healthcare with your tax strategy, income planning, and long-term care goals. That’s where thoughtful, proactive planning makes all the difference.

As you prepare for retirement, the decisions you make around income can directly impact what you pay for healthcare—planning ahead isn’t just smart, it’s essential. If you’re ready to think strategically about how Medicare fits into your broader financial picture, reach out—I’d be happy to help.