Understanding Medicare: What You Need to Know Before Enrolling

Peter Seriano (00:00) All right, thank you for joining us this afternoon on our webinar. We are gonna go ahead and cover Medicare and what you need to know before enrolling. I am Peter Seriano. I am one of the financial planners here at ProVise Management Group. I am a certified financial planner and I’m also a certified divorce financial analyst.
Peter Seriano (00:22) Just to let you know, there is a Q&A box at the bottom of the screen, so feel free to drop your questions there and we will get to them at the end of the presentation.
Peter Seriano (00:34) All right, so we are gonna start with understanding the parts of Medicare. So there is Medicare parts A, B, C, which is Medicare Advantage, and Medicare part D, which is your drug coverage. So part A is your hospital insurance. This covers facility-based healthcare services such as inpatient care, and that’s when a patient is admitted to a hospital and typically stays for at least one night. We have your skilled nursing facility care, which is an inpatient rehabilitation and medical treatment center. Now patients typically arrive here after a stay in the hospital. Medicare covers skilled nursing facility care after a three-day minimum medically necessary inpatient hospital stay.
Peter Seriano (01:10) We also have hospice care, which is specialized care that provides physical comfort and emotional, social and spiritual support for individuals nearing the end of life. The care is usually given in your home or a facility where you live, like an assisted living facility. Home health services are also covered, such as skilled nursing care, physical therapy, and home health aid support. Home health care services can also be covered under Part B.
Peter Seriano (01:36) So then we have part B, which is the medical insurance. This covers medically necessary services from healthcare providers, such as doctor visits. It also includes many preventative services, such as screenings, shots and vaccines. And if you’ve had part B for longer than 12 months, you’re allowed a yearly wellness visit.
Peter Seriano (02:03) Part of your yearly wellness or welcome visit, Medicare covers voluntary advanced care planning. This is planning for care you would receive when you need help making medical decisions for yourself. As part of advanced care planning, you may choose to complete an advanced directive, which is a legal document that records your wishes about medical treatment if you aren’t able to make those decisions for yourself.
Peter Seriano (02:28) Part B also covers outpatient care and durable medical equipment such as wheelchairs and walkers and hospital beds. Part B does have an income-based premium, possible income-related monthly adjustment amount, also known as IRMA, and an annual deductible.
Peter Seriano (02:45) But let’s jump out of order here for a second and talk about Part D before we cover Part C. Part D, this is your Medicare drug coverage and you must be enrolled in Part A and B to join. Part D helps cover the cost of prescription drugs. Part D plans are run by private insurance companies that follow rules set by Medicare. Part D has an income-based premium and may also have a deductible that is the patient’s responsibility.
Peter Seriano (03:25) Now going back to part C, this is the Medicare Advantage plans and they’re an alternate way to get your Medicare Part A and B coverage. These plans often cover Part D plans and some additional benefits that are not offered under Original Medicare such as vision and dental. I’ll cover more on Part C and D in a few minutes.
Peter Seriano (03:49) Now, who is eligible? Generally, Medicare is for people 65 years of age or older. You may be able to get Medicare earlier if you have a disability, end-stage renal disease or ALS.
Peter Seriano (04:13) So let’s talk about Parts A and B costs. For part A, $0 premiums are going to be for most people if you paid Medicare taxes long enough while working. This is generally at least 10 years. If you don’t qualify for premium free Part A, you could buy it at either $285 or $518 a month. This depends on how long you or your spouse worked and paid into Medicare.
Peter Seriano (04:46) Now, Part A also has a deductible. For 2025, the part A deductible is $1,676 for each inpatient hospital benefit period. This deductible is expected to rise to $1,716 in 2026. Since the part A deductible applies per benefit period, you could pay it more than once in a year if you have multiple hospital stays separated by more than 60 days. Starting day 61 of inpatient care, you will be responsible to pay coinsurance. Coinsurance also kicks in on day 21 for skilled nursing care facilities.
Peter Seriano (05:20) Now part B. For 2026, the Medicare Trustees Report projects the standard Part B premium is set to increase 11.6% from $185 a month to approximately $206 a month. The Part B deductible for 2026 is also expected to rise approximately 12% from $257 to $288 before Original Medicare starts to pay. After the deductible is met, you typically pay 20% coinsurance on most services.
Peter Seriano (05:55) For 2026, if you are a single tax filer and your 2024 modified adjusted gross income is above $109,000 or you’re a joint filer and your 2024 modified adjusted gross income is above $218,000, your Part B premium will be subject to an income related monthly adjustment amount, also known as IRMA. And yes, I did say 2024 modified adjusted gross income as this is the year used to determine the IRMA you pay in 2026. IRMA is a surcharge added to your standard base premium.
Peter Seriano (06:46) All right, let’s dive into part D, the prescription drug coverage. So to obtain part D coverage, you must be enrolled in Medicare Parts A B. There are two different ways to obtain prescription drug coverage. The first is by enrolling in a standalone Medicare Part D plan. And the second is part of a Medicare Advantage plan, which I will cover on the next slide. Part D is voluntary and only provided by private insurance companies that have contracts with the federal government. These plans can vary based on price, coverage and the formulary, which is a pre-approved list of drugs that aim to provide high quality, cost-effective care.
Peter Seriano (07:15) Now drug formularies are often tiered. Lower tiers have the lowest co-pays, tend to be generic drugs and do not need prior authorization. Higher tiers have higher co-pays or co-insurance and may be brand name drugs that require prior authorization.
Peter Seriano (07:36) In 2026, the average Part D premium are projected to drop to around $34.50 for standalone plans and are projected to average about $11.50 in Medicare Advantage plans. Now I talked about IRMA on the last slide. Now, depending upon your income from 2024, you may pay a surcharge on your Part D premium as well. In 2026, the Part D deductible is also expected to rise approximately 4.2% to $615.
Peter Seriano (08:04) Under the Affordable Care Act, the Medicare Part D donut hole, which is where beneficiaries paid a higher share of prescription drug costs, had been significantly reduced. Building on that progress, in August of 2022, President Biden signed into law the Inflation Reduction Act, which further improved affordability. The Inflation Reduction Act instituted a cap of out-of-pocket drug costs for Part D. So the Part D catastrophic threshold, which is like an out-of-pocket maximum in other health plans, but for prescription drugs, was capped at $2,000 in 2025, and this will increase to $2,100 in the year 2026. After you meet this threshold, you won’t have to pay a copayment or coinsurance for covered Part D drugs for the rest of the calendar year. To reiterate, the $2,100 cap only applies to covered medications, so if you have uncovered medications, there is no limit to what your out-of-pocket cost could be.
Peter Seriano (09:05) Next we’re going to talk a little bit more about Medicare Advantage, Part C plan, and supplemental plans, also called Medigap plans. Medicare Advantage plans are offered through Medicare approved commercial insurance companies as an alternative to Original Medicare, Part A and B. Medicare Advantage may also provide additional benefits such as coverage for vision, dental, or hair and services, and even gym memberships. These benefits are not the same as standalone vision or dental insurance policies, as they typically only cover checkups and/or cleanings.
Peter Seriano (09:50) Costs do vary based on the type of Medicare Advantage plan you choose. While you will still pay your Part B monthly premium, your Medicare Advantage monthly fixed premium is usually very low or possibly even zero. Under Medicare Advantage coverage, you may also have a flat rate copayment or percentage-based coinsurance to cover before you reach your plan’s annual out-of-pocket maximum. If you are enrolled in a Medicare Advantage plan, you are not eligible for and won’t need a Medigap plan.
Peter Seriano (10:20) Medicare Advantage plans use provider networks, and some plans also require you to get pre-approval for certain services or be required to get a referral to see a specialist. Medicare Advantage provider networks include HMO and PPO plans. The HMO, or Health Maintenance Organization, requires members to choose a primary care physician and get referrals to see specialists. Most care must be received from in-network providers. This structure has lower premiums and out-of-pocket costs but limits flexibility.
Peter Seriano (11:00) A preferred provider organization or PPO plan offers greater flexibility by allowing members to see any healthcare provider without a referral, including out-of-network providers. PPOs typically have higher premiums and out-of-pocket costs, especially if visiting an out-of-network provider. Emergency services are included in all insurance plans.
Peter Seriano (11:38) Now let’s talk about Medicare supplemental insurance plans, also called Medigap plans. Original Medicare pays for 80% of the cost for covered healthcare services and supplies. The remaining 20% is paid by you. A Medigap policy will fill in the gaps by covering the remaining 20% coinsurance, as well as some other costs that Original Medicare doesn’t cover, like medical care when traveling outside of the US.
Peter Seriano (12:15) Medigap plans are provided by federally approved private insurance companies. Without a Medigap policy, your out-of-pocket expenses are uncapped. If you feel Original Medicare is in your best interest and your budget allows, it usually makes sense to consider the purchase of a Medigap policy to provide comprehensive coverage, especially if you are new to Medicare and want to avoid high out-of-pocket costs. When you have enrolled in Medicare A and B and you receive your red, white, and blue Medicare card, you can then choose a Medigap plan.
Peter Seriano (12:58) The best time to buy a Medigap plan is during the six month open enrollment period because regardless of your health status, you cannot be denied coverage for any reason. During open enrollment, Medigap plans are generally cheaper and easier to enroll in. These policies are also guaranteed to be renewed each year as long as your premiums are paid. Medigap policy premiums are paid monthly to the insurer in addition to your Part B premium. As you age, your Medigap premiums usually increase.
Peter Seriano (13:51) Let’s compare your coverage options. Original Medicare is run by the federal government where Medicare Advantage and Medigap plans are run by private health insurance companies. Original Medicare allows you to see any provider that accepts Medicare without a referral, while Medicare Advantage plans usually require referrals, prior authorizations, and in-network providers.
Peter Seriano (14:22) Medicare Advantage plans are usually geographically limited, so if you like to travel or live part of the year in another country, your coverage may not extend outside of your area. Medicare Advantage plans may partially include vision, dental, and hearing benefits, where Original Medicare and Medigap plans, you would need to purchase the option separately through private insurance.
Peter Seriano (14:52) Original Medicare and Medigap plans do not include prescription drug coverage. That is where the purchase of a Part D plan comes into play. Medicare Advantage plans usually include Part D coverage. Original Medicare requires cost sharing for many services along with cost unpredictability. So folks with Original Medicare tend to have a Medigap plan. With Medicare Advantage plans, costs are determined in advance and annual limits apply. Plans usually change annually.
Peter Seriano (15:34) Now let’s talk about enrollment periods and deadlines. Initial enrollment period in the Medicare Part A and/or B is a seven month window. You can enroll three months before the month you turn 65, the month of turning 65, and three months after the month you turn 65. Part A and B coverage start the first day of the month you turn 65 if you signed up in the first three months of your initial enrollment period.
Peter Seriano (16:03) Part D has the same initial enrollment period as Part A and B. With that said, you cannot enroll in a Part D standalone plan unless you have enrolled in Parts A and B and have your Medicare ID number. Initial enrollment into Part C, Medicare Advantage, has the same initial seven-month enrollment period surrounding your 65th birthday.
Peter Seriano (16:28) Initial enrollment for a Medigap supplemental plan is the same seven month period as Parts A and B. During this period you can buy a Medigap supplement sold in your state and receive guaranteed enrollment even if you have health issues. You cannot enroll in a supplemental plan unless you have enrolled in Parts A and B and have your Medicare ID number.
Peter Seriano (17:02) Now let’s look at the general enrollment period. If you missed your initial enrollment period and you do not qualify for special enrollment, you won’t be able to sign up for Medicare until the general enrollment period, which is January 1st through March 31st. Sign up during this time would start your coverage the first day of the month after you enroll. You may also have to pay a Part B late enrollment penalty as well.
Peter Seriano (17:24) There is also a Medicare Advantage open enrollment period, and this is for those already in a Medicare Advantage plan. During this period, you can switch to another Medicare Advantage plan or drop your Medicare Advantage plan and return to original Medicare. You cannot switch from original Medicare to a Medicare Advantage plan during this time.
Peter Seriano (17:47) Now we have the annual election period or open enrollment, which happens from October 15th to December 7th. And this is the time each year when you can make changes to your existing Medigap plans, Part D plans, and Medicare Advantage plans. Changes made during this time are effective January 1st of next year. There are a few special situations that allow you to delay your enrollment into Medicare and sign up at a later date without paying a late enrollment penalty. This is called the special enrollment period.
Peter Seriano (18:15) It’s very important for a participant to confirm that you will qualify for a special enrollment period before you miss your initial enrollment to avoid late enrollment penalties. A couple of examples could be a move to another state or you lose your current medical coverage because you left an employer.
Peter Seriano (18:42) So let’s talk about late enrollment penalties. These occur when you do not enroll in Medicare when you are first eligible and you did not qualify for a special enrollment period. If you aren’t eligible for premium free Part A and you don’t buy it when you’re first eligible, your monthly premium may go up 10%. You would have to pay the higher premium for twice the number of years you could have had part A but didn’t sign up. And again, this is if you are not eligible for premium free Part A coverage.
Peter Seriano (19:16) You will pay an extra 10% in your Part B premium for each year you were not enrolled after 65. This 10% penalty is added to your monthly Part B premium for the rest of your life. If you’re allowed to sign up for Part B during a special enrollment period, you may not have to pay the late enrollment penalty.
Peter Seriano (19:48) You could have a late enrollment penalty for Part D if you did not join a Part D plan when you first enrolled in Medicare and you went 63 days or more without credible drug coverage. The penalty is an extra 1% per month that you were eligible for drug coverage but went without. This late fee will be applied to every month’s premium for as long as you have Part D coverage.
Peter Seriano (20:20) Every September you will receive your annual Notice of Change Letter that reviews what your current plan will look like on January 1st. If your annual notice of change shows higher premiums, deductibles, copays, or coinsurance, shop at least two alternative plans with lower premiums but similar coverage and networks. You can also look at original Medicare with a Medigap policy, however you may be subject to underwriting. Your annual notice of change should also make note of formulary changes like a drug moving from tier 2 to tier 3, which would be higher copays, or new prior authorization or quantity limits.
Peter Seriano (21:04) Plans change provider networks every year, so doctors, hospitals, and pharmacies can change from in-network to out-of-network, which can increase cost. You can call each of the providers you see and ask if they are in network for your 2026 plan listed on your annual notice of change. If your network shrank, shop alternatives during October 15th through December 7th, which is the annual election period. Now, some plans are trimming back some of their supplemental benefits for 2026, like dental allowances or higher co-pays for vision. If these benefits are important to you, please shop around.
Peter Seriano (21:42) So some key takeaways: have a Medicare action plan, understand your options and review your coverage annually. Don’t miss enrollment deadlines and do your research. If you still have questions, speak with a licensed Medicare agent. Thank you for joining us today. And now we’re going to go ahead and run through some of your questions.