Medicare 101: What Pre-Retirees Need to Know Before 65
Updated May 2026
Medicare is the federal health insurance program for people 65 and older, and it has four parts: A, B, C, and D. Most people sign up during their seven-month Initial Enrollment Period, which begins three months before the month they turn 65. Missing that window can mean lifelong premium penalties. The right structure (Original Medicare with Medigap, or Medicare Advantage) depends on your health, finances, and where you live.
This guide walks through how Medicare actually works, when to sign up, how the major coverage choices compare, what it costs in 2026, and where pre-retirees most often go wrong. By the end, you will have the framework to make a decision that fits your situation, not a generic checklist.
What is Medicare, and what are its four parts?
Medicare is the federal health insurance program for people 65 and older, plus people under 65 with certain disabilities or end-stage conditions. It has four parts that work in different ways and, in most cases, require separate decisions.
Part A covers inpatient hospital care, skilled nursing facility care after a qualifying hospital stay, hospice, and limited home health. Most people pay no premium for Part A because they (or a spouse) worked at least 40 quarters in Medicare-covered employment. The 2026 Part A inpatient deductible is $1,736 per benefit period, and coinsurance kicks in for hospital stays beyond 60 days.
Part B covers physician visits, outpatient care, durable medical equipment, lab work, and most preventive services. Part B is not free. The 2026 standard premium is $202.90 per month, with a $283 annual deductible. Higher-income retirees pay more through IRMAA, which we cover below.
Part C is Medicare Advantage. Instead of using Original Medicare (Parts A and B) directly, you receive your Medicare benefits through a private plan that bundles A, B, and usually D. Networks, copays, and extra benefits vary by plan and county.
Part D covers prescription drugs and is offered by private insurers. You can buy a standalone Part D plan to pair with Original Medicare, or get drug coverage built into a Medicare Advantage plan. The average 2026 Part D premium is $46.50, but plans vary widely on premium, formulary, and pharmacy network.
When do I sign up? The 7-month Initial Enrollment Period
Your Initial Enrollment Period (IEP) is a seven-month window built around your 65th birthday. It starts three months before your birthday month, includes your birthday month, and runs three months after.
If you sign up during the three months before your birthday month, coverage typically starts the first day of your birthday month. If you sign up during your birthday month or in the three months after, coverage starts the following month. For people whose birthday falls on the first of a month, the IEP shifts back by one month, as if you were born the month before.
Two situations trigger automatic enrollment, and they catch people off guard:
- If you are already drawing Social Security or Railroad Retirement benefits when you turn 65, you are auto-enrolled in Parts A and B.
- If you are receiving Social Security disability benefits, you are auto-enrolled in Parts A and B after 24 months of disability checks.
Outside the IEP, your two main paths to enroll are the General Enrollment Period (January 1 to March 31 each year, with coverage starting the month after sign-up) and a Special Enrollment Period if you are still working at 65 with qualifying employer coverage. Late enrollment penalties may apply when you fall outside both windows. For a closer look at how working into your 60s affects your benefits more broadly, see our guide to part-time work and Social Security.
Original Medicare vs. Medicare Advantage: which structure fits your situation?
Most people approaching 65 face one large structural decision: stay with Original Medicare (Parts A and B, usually paired with a Medigap plan and a standalone Part D plan), or enroll in a Medicare Advantage plan (Part C). Both are legitimate paths. They behave differently.
| Feature | Original Medicare + Medigap + Part D | Medicare Advantage (Part C) |
|---|---|---|
| Provider access | Any provider that accepts Medicare nationwide | Plan network, often local or regional |
| Out-of-pocket costs | Predictable; Medigap fills most gaps | Lower premiums, but copays per service |
| Premiums | Part B + Medigap + Part D (multiple) | Often a single premium, sometimes only Part B |
| Extras (dental, vision, hearing) | Generally not included | Often bundled in |
| Referrals for specialists | None required | Often required |
| Annual changes | Medigap is generally stable once issued | Networks and formularies change yearly |
The choice often comes down to two questions. How important is provider flexibility, especially if you travel or split time between two states? And how comfortable are you trading lower upfront premiums for variable copays and network limits?
In our work with Mayo Clinic retirees in Rochester and Scottsdale, the snowbird pattern matters. Original Medicare with a Medigap plan travels with you anywhere in the country and works the same in Maricopa County as it does in Olmsted County. Most Medicare Advantage plans work best when you stay in network, in your home county. That single distinction changes the answer for a lot of retirees who split the year between Minnesota and Arizona.
Where does Medigap fit?
Medigap, also called Medicare Supplement Insurance, is private insurance that pays for the gaps Original Medicare leaves: deductibles, copays, and coinsurance. There are 10 standardized Medigap plan types, labeled by letter (A, B, C, D, F, G, K, L, M, N), though Plans C and F are no longer available to people who became eligible for Medicare on or after January 1, 2020.
Two features of Medigap deserve attention before you turn 65.
First, the federal Medigap Open Enrollment Period is a one-time, six-month window that begins the month you are 65 or older and enrolled in Part B. During that window, insurers cannot deny you coverage or charge more for pre-existing conditions. After it ends, that protection generally disappears, and switching plans later can be difficult or impossible depending on your state.
Second, Medigap pairs only with Original Medicare. You cannot use a Medigap plan with a Medicare Advantage plan. Choosing Medicare Advantage means giving up the ability to add a Medigap plan later under guaranteed-issue rules in most states.
Plan G is currently the most comprehensive plan available to new enrollees. Plan N has lower premiums but requires copays for office visits and emergency room trips. Plans K and L cap your annual out-of-pocket costs but require you to pay a percentage of expenses. Premiums vary by ZIP code, age, gender, and tobacco use, and a 65-year-old in Rochester may pay meaningfully different premiums for the same plan compared to a 65-year-old in Scottsdale. Comparing quotes from multiple carriers, and revisiting pricing every few years, is sound practice.
How does Part D prescription drug coverage work?
Part D plans are sold by private insurers and have annual premiums, deductibles, copays, and a list of covered drugs called a formulary. Every plan's formulary is different. A drug that is cheap on one plan can be expensive (or not covered at all) on another.
A few mechanics worth knowing. The Inflation Reduction Act capped out-of-pocket Part D costs at $2,000 per year starting in 2025, which is a meaningful change for retirees on expensive specialty drugs. Plans renew automatically each year, but the formulary, network of pharmacies, and pricing can change. The Annual Enrollment Period (October 15 to December 7) is your once-a-year chance to switch plans for the following year.
Higher-income retirees pay an IRMAA surcharge on top of their Part D premium, ranging from $14.50 to $91.00 per month in 2026. If you take regular medications, comparing Part D plans using the actual drugs you take, and not just the lowest premium, usually saves the most money. The Medicare Plan Finder at Medicare.gov lets you input your prescriptions and see the total annual cost under each plan in your ZIP code.
What if I am still working at 65, and what about my HSA?
If you are still working at 65 and have group health insurance through an employer with 20 or more employees, you can usually delay Part B without penalty. Most pre-retirees still take Part A because it is premium-free for them. But that decision interacts with HSA contributions in a way that catches a lot of people.
Two things matter most when you keep working past 65.
First, the Special Enrollment Period. When you eventually leave that employer coverage, you have an 8-month SEP to sign up for Medicare without late penalties. The clock starts the month after your employment or your group coverage ends, whichever comes first.
Second, Health Savings Accounts. The IRS does not allow you to contribute to an HSA in any month that you are enrolled in any part of Medicare, including Part A. Here is the trap: when you enroll in Medicare after age 65, Medicare backdates your Part A coverage by up to six months, but never before your 65th birthday.
The practical implication is that if you plan to keep contributing to an HSA past 65, you generally need to stop HSA contributions, including any employer HSA contributions, at least six months before you enroll in Medicare or claim Social Security. We see this miss most often when someone retires unexpectedly, files for Social Security right away, and only later realizes their last six months of HSA contributions are now excess contributions subject to a 6% excise tax until corrected. For Mayo Clinic employees deciding when to retire, this overlaps with decisions about your Mayo retirement plans.
What about my spouse's Medicare coverage?
Medicare is individual coverage. There is no family plan. Your spouse signs up during their own Initial Enrollment Period, based on their own 65th birthday. Two situations come up most often.
Spouse younger than 65. If you are 65 and on Medicare, your younger spouse cannot join Medicare until they turn 65 (or qualify on disability). They will need separate coverage in the meantime: COBRA, the marketplace, your employer plan if you are still working, or another option.
Spouse qualifies for premium-free Part A through your work history. If your spouse has not earned 40 quarters of Medicare-covered employment on their own, they may still qualify for premium-free Part A through your work record once they turn 65, provided you are at least 62 and meet the work-history requirements.
For couples, sequencing matters. Sometimes one spouse keeps employer coverage past 65 specifically so the other can stay on the family plan. That choice has implications for both Medicare timing and Social Security timing, and they are worth modeling before either of you locks in a decision. Our Social Security claiming guide walks through how those timelines interact.
What does Medicare actually cost in 2026?
The honest answer is that it depends on income, what you use, and which path you choose. Here is a baseline of what you can expect for a standard Original Medicare structure in 2026.
| Component | 2026 amount |
|---|---|
| Part A monthly premium (40+ quarters of work) | $0 |
| Part A inpatient deductible (per benefit period) | $1,736 |
| Part B standard monthly premium | $202.90 |
| Part B annual deductible | $283 |
| Average Part D monthly premium | $46.50 |
| Part D annual out-of-pocket cap | $2,000 |
| Medigap Plan G premium (varies widely by ZIP, age, carrier) | Often $130 to $250+ per month |
Then layer IRMAA on top. In 2026, the standard monthly Part B premium of $202.90 applies to single filers with 2024 modified adjusted gross income of $109,000 or less, and to joint filers at $218,000 or less. Above those thresholds, IRMAA surcharges take effect on Part B (ranging up to $487.00 per month above the standard premium) and on Part D (ranging from $14.50 to $91.00 per month), based on five income tiers.
IRMAA is one of the biggest surprises retirees encounter. It is calculated on a two-year lookback, which means your 2026 IRMAA is based on your 2024 tax return. It also operates as a cliff: one dollar over a threshold can move you into the next bracket. This is why retirees with control over their taxable income (Roth conversions, capital gains realization, retirement-account withdrawal sequencing) should plan around IRMAA before they file the return that determines two years of premiums, not after. We cover the broader picture in 3 Retirement Tax Traps to Avoid: RMDs, Social Security & Medicare IRMAA and Why So Many Retirees Are Blindsided by Taxes.
The most common Medicare enrollment mistakes we see
A few patterns repeat often enough that they are worth naming.
- Missing the Initial Enrollment Period because of confusion about Social Security. A lot of people assume they will claim Social Security and Medicare at the same time when they retire. If you delay Social Security to 67 or 70, that is fine. But you typically still need to sign up for Medicare around 65, separately, unless you have qualifying employer coverage.
- Letting Medicare retroactively start six months before you realized, while you were still funding an HSA. The fix requires removing excess contributions before your tax filing deadline to avoid the 6% excise tax.
- Picking a Medicare Advantage plan based only on the premium. Networks, formularies, and out-of-pocket maximums matter as much as (or more than) the headline premium. A zero-premium plan can cost more in actual care than a higher-premium plan with a stronger network and lower copays for the services you actually use.
- Skipping the Medigap open enrollment window and assuming you can buy supplemental coverage later. After the six-month window, insurers in most states can use medical underwriting to deny you or charge more. People with health changes between 65 and 70 sometimes find themselves stuck in Original Medicare without a Medigap plan and exposed to the 20% Part B coinsurance with no annual cap.
- Not coordinating Medicare timing with a working spouse on the same employer plan. Letting one spouse drop the family plan can leave the other uninsured for a stretch. Map both timelines together.
- Ignoring IRMAA when planning Roth conversions or large one-time taxable events. A Roth conversion that makes sense in isolation can create two years of higher Medicare premiums. The conversion still might be the right move; you just want to model both effects before you execute. The same instinct shows up in our 9 Retirement Mistakes We See Most and our pre-retirement checklist in Last-Minute Prep for Retirement.
What this means for you
If you are within two years of 65, the practical sequence is straightforward. Get clear on whether you will keep employer coverage past 65. Mark your seven-month Initial Enrollment Period on the calendar. Decide between Original Medicare with Medigap or a Medicare Advantage plan based on your providers and travel pattern. And run the numbers on how income decisions before 65 will affect your IRMAA two years later. The choices stack, and the consequences are long. A small amount of planning a year or two ahead can help reduce many common Medicare planning mistakes.
Frequently asked questions
When do I have to enroll in Medicare?
Most people enroll during their seven-month Initial Enrollment Period, which begins three months before the month they turn 65 and ends three months after. If you have qualifying employer coverage at 65, you can usually delay Part B and use a Special Enrollment Period when that coverage ends. Outside those windows, late enrollment penalties may apply for the rest of your life.
Do I have to pay for Medicare Part A?
Most people get Part A premium-free because they (or a spouse) worked at least 40 quarters in Medicare-covered employment. People with fewer than 30 quarters pay a $565 monthly premium for Part A in 2026, and people with 30 to 39 quarters pay a reduced premium of $311 per month. Part A still has an inpatient deductible of $1,736 per benefit period in 2026.
Can I have both Medicare Advantage and Medigap?
No. Medigap is designed to fill the gaps in Original Medicare. If you enroll in a Medicare Advantage plan, you cannot use a Medigap policy with it, and selling you one would be illegal. You can switch from Medicare Advantage back to Original Medicare during certain enrollment windows, but in most states you may not have guaranteed-issue rights to a Medigap plan when you do, which means underwriting can apply.
What is IRMAA, and how do I avoid it?
IRMAA stands for Income-Related Monthly Adjustment Amount. It is a surcharge on Medicare Part B and Part D premiums for higher-income retirees. The 2026 IRMAA brackets start at $109,000 of modified adjusted gross income for single filers and $218,000 for joint filers, based on your 2024 tax return. You cannot always avoid IRMAA, but you can often reduce it by sequencing income, timing Roth conversions carefully, and using Qualified Charitable Distributions from your IRA after age 70 1/2 to lower MAGI.
Does Medicare cover my spouse?
No. Medicare is individual coverage based on each person's own age and work history. Your spouse needs to enroll separately during their own Initial Enrollment Period at 65. If your spouse has not worked enough quarters to qualify for premium-free Part A on their own, they may qualify through your work record once both of you meet age and work-history requirements.
Can I keep my HSA after I enroll in Medicare?
You can keep the HSA you already have and continue using it tax-free for qualified medical expenses (including Medicare premiums for Part B, Part D, and Medicare Advantage, but generally not Medigap premiums). What you cannot do is contribute new money to an HSA in any month you are enrolled in any part of Medicare, including Part A. Plan to stop HSA contributions at least six months before you enroll in Medicare or file for Social Security to avoid the retroactive Part A trap.
Disclosures
This article is for educational purposes only and does not constitute personalized investment, tax, legal, or financial advice. The information provided is general in nature and may not apply to your specific situation. Please consult with a qualified financial advisor, tax professional, or attorney about your individual circumstances before making any financial decisions.
Fortress Financial Group is a Registered Investment Adviser. Registration does not imply a certain level of skill or training. Fortress Financial Group operates as a fee-only fiduciary.
Medicare and IRMAA. Medicare rules, premiums, and IRMAA brackets change annually. The information in this article reflects rules in effect as of May 2026. Medicare.gov is the authoritative source for current premiums, brackets, and enrollment rules. Decisions about Medicare coverage should be made with consideration of your specific health needs and financial situation.
Tax content. Tax laws and regulations change frequently. The information in this article reflects rules in effect as of May 2026 and may not reflect subsequent changes. Tax outcomes depend on your specific situation. Consult a qualified tax professional before making decisions based on tax considerations.
Social Security. Social Security claiming decisions involve numerous factors specific to your situation, including health, marital status, work history, and other income sources. The Social Security Administration is the authoritative source on benefit calculations and eligibility. Visit ssa.gov or speak with a qualified advisor before making a claiming decision.
