[HC-02] Medicare 101

Parts A–D, Medigap vs. Medicare Advantage, and the Enrollment Windows That Punish Hesitation

Pillar: Healthcare Navigation · Applies to: Everyone approaching 65 (and anyone advising a parent through it) Last verified: August 2026 · Refresh cadence: Annual (October–November, when CMS releases next-year figures) Related: FN-02 Key Numbers · HC-01 ACA Bridge (hands off here) · HC-06 IRMAA · HC-07 Dental/Vision/Hearing Gap · HC-08 Long-Term Care · SS-05 Coordinating SS + Medicare · [EX-04] Healthcare Abroad

Not advice. Medicare choices are county-specific and health-specific. Use Medicare.gov’s Plan Finder with your actual doctors and drug list, and consider your State Health Insurance Assistance Program (SHIP) — free, unbiased counselors — before enrolling.

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TL;DR

• Medicare is four programs wearing one trench coat: A (hospital), B (outpatient), D (drugs), and either a Medigap supplement or a privatized bundle of everything called Medicare Advantage (Part C). Your real decision is the fork between those last two — and it’s partially a one-way door because Medigap can medically underwrite you later.
• The enrollment calendar is unforgiving: a 7-month Initial Enrollment Period, a one-time 6-month Medigap open enrollment, and lifetime late penalties for Part B (10% per year missed, forever) and Part D (1%/month, forever).
• 2026 baseline costs, all tracking FN-02 §6: Part A $0 for most ✅ · Part B $202.90/mo ✅ (more with IRMAA — your 2024 income) · Part D avg ~$34.50/mo ✅ with a $2,100 annual out-of-pocket drug cap ✅ · Medigap Plan G typically $150–$250/mo ◻️ · Medicare Advantage often $0 extra premium but with networks, prior authorization, and an out-of-pocket max averaging ~$5,400 ◻️ (legal cap $9,250 in-network ✅).
• Original Medicare without a Medigap has no out-of-pocket maximum at all — the one configuration to avoid.
• Still working at 65 with large-employer coverage? You can usually delay Part B penalty-free — but COBRA and retiree coverage don’t count, and HSA contributions must stop before Medicare starts.

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1. The Alphabet, Decoded

Figures below track FN-02 §6, the numbers authority for this wiki, verified August 2026. Statutory and CMS-set amounts are ✅; market averages — which are observations, not entitlements — are ◻️.

Part	Covers	Who runs it	2026 cost (base)
A — Hospital	Inpatient stays, skilled nursing (short-term), hospice, some home health	Federal	$0 premium with 40 quarters of work credits ✅; inpatient deductible ~$1,736 per benefit period (not per year) ◻️
B — Medical	Doctors, outpatient, labs, imaging, durable equipment, preventive	Federal	$202.90/mo ✅ (+IRMAA); $283 annual deductible ✅; then you pay 20% coinsurance with no cap ✅
D — Drugs	Prescriptions, via private plans	Private, CMS-regulated	~$34.50/mo average standalone ✅; deductible up to $615 ✅; $2,100 annual OOP cap ✅ (+IRMAA surcharge $14.50–$91 ✅)
C — Medicare Advantage	Replaces A+B (usually +D) with a private managed-care plan	Private, CMS-regulated	Often $0 beyond Part B; avg supplemental premium ~$14–15/mo ◻️
Medigap (supplement)	Fills A/B cost-sharing (the 20%, deductibles) — pairs with Original Medicare only	Private, state-regulated	Plan G commonly $150–$250/mo ◻️ depending on state, age, and rating method — the spread is far wider than that nationally (ST-02 §4)

What none of it covers: routine dental, vision, hearing aids (HC-07), long-term custodial care (HC-08), and — with narrow exceptions — anything outside the U.S. ([EX-04]).

The uncapped-risk warning: Original Medicare alone (A+B, no Medigap) leaves the 20% Part B coinsurance unlimited. A serious cancer year can run six figures of coinsurance. Everyone needs either a Medigap or an Advantage plan’s MOOP as the catastrophic backstop.

2. The Enrollment Calendar (and Its Penalties)

Window	When	What it’s for
Initial Enrollment Period (IEP)	7 months: 3 before your 65th-birthday month → 3 after	Enroll in A, B, D (or an MA plan). Enroll in the 3 months before for coverage starting your birthday month
Medigap Open Enrollment	6 months from your Part B effective date — once per lifetime	Buy any Medigap sold in your state, no health questions, no underwriting
Annual Election Period (AEP)	Oct 15 – Dec 7, every year	Switch MA plans, switch Part D plans, move between Original and MA (Medigap underwriting may still apply)
MA Open Enrollment	Jan 1 – Mar 31	One switch out of an MA plan (to another MA or back to Original)
General Enrollment Period	Jan 1 – Mar 31	Late Part B signup; coverage starts the month after enrolling; penalties attach
Employer-coverage SEP	8 months after employment/group coverage ends (Part B); ~2 months for Part D	Penalty-free late enrollment for people who kept working past 65
MA “trial right”	12 months	Joined MA at 65 (or dropped a Medigap for a first MA plan)? You may return to Medigap guaranteed-issue within 12 months

The penalties are permanent:

• Part B: +10% of the standard premium for each full 12-month period you were eligible but unenrolled — for life ✅.
• Part D: +1% of the national base premium ($38.99 in 2026 ✅) per month uncovered — for life ✅. Even non-drug-takers should hold the cheapest PDP in their county as penalty insurance.
• Part A is usually automatic/free — but see the HSA trap in §6.

3. The Big Fork: Original + Medigap + Part D vs. Medicare Advantage

This is the decision. An honest comparison:

	Original Medicare + Medigap + PDP	Medicare Advantage
Provider access	Any provider in the U.S. that takes Medicare — no networks, no referrals	Plan network (HMO/PPO), county-based; check every doctor annually
Prior authorization	Essentially none	Near-universal for costlier services; denials and appeals are a real feature of the experience
Monthly cost	Higher, predictable: Part B + Medigap ($150–250 ◻️) + PDP	Lower: often just Part B (75% of MA-PD enrollees pay $0 extra ◻️; avg ~$14–15 ◻️)
Annual out-of-pocket risk	Very low with Plan G (Part B deductible + drug cap, roughly $2,400 worst case + premiums)	MOOP averages ~$5,400 in-network ◻️ (2026 legal cap $9,250; $13,900 combined for PPOs ✅) — and Part D drug costs don’t count toward it (separate $2,100 cap ✅)
Extras	None (buy dental/vision separately)	Often bundled dental/vision/hearing/gym — value varies widely
Travel/snowbirds	Excellent nationwide; foreign emergency coverage on G/N (80%, capped)	County-anchored; out-of-network rules vary
Switching later	→ MA anytime during AEP	→ Medigap usually requires medical underwriting after your windows lapse — the one-way door
Best fit	Heavy or unpredictable utilization, chronic conditions, travel, “never argue with an insurer” preference	Tight monthly budgets, healthy + local, plans with strong local networks, value the extras

What the fork actually costs, in dollars

The table above is qualitative and every real decision turns on numbers, so here they are. Assumptions: 2026 Part B at $202.90/mo ✅ (common to both routes), Plan G at $178/mo ◻️, cheapest suitable PDP at $11/mo ◻️, an MA plan at $0 supplemental premium with the 2026 average in-network MOOP of ~$5,400 ◻️. The three ◻️ items are illustrative market quotes, not national constants — substitute your own county’s actual premiums before drawing any conclusion from the totals, because the Plan G figure in particular ranges from roughly $122 to $354/mo by state (ST-02 §4). Every total below is arithmetic on those assumptions.

	Original + Plan G + PDP	Medicare Advantage
Healthy year — routine care only	$2,434.80 Part B + $2,136 Medigap + $132 PDP + $283 Part B deductible = $4,985.80	$2,434.80 Part B + ~$200 of copays = $2,634.80
Bad year — major illness, out-of-pocket max reached, heavy drug costs	$2,434.80 + $2,136 + $132 + $283 + $2,100 drug cap = $7,085.80	$2,434.80 + $5,400 MOOP + $2,100 drug cap = $9,934.80
Bad year, MA at the 2026 legal in-network cap ($9,250)	—	$13,784.80

• In a healthy year, Medicare Advantage is cheaper by $2,351.
• In a bad year, Plan G is cheaper by $2,849 — or by $6,699 against a plan at the legal MOOP.

The break-even is the honest part: Plan G only wins on expected cost if roughly 45% or more of your remaining years are heavy-utilization years. For most people at 65 that is not the case, and on pure dollars, Medicare Advantage is the rational default.

So the case for Medigap is not primarily a cost case, and anyone selling it as one is overreaching. It is a case about the things the table can’t price: no networks and no prior authorization, identical coverage in all 50 states for travellers and snowbirds, no annual re-shopping, and — the big one — no future underwriting risk. You are buying the removal of variance and the preservation of optionality, not a lower expected bill. Notice too that the drug cap is separate in both columns: Part D costs never count toward an MA plan’s medical MOOP, which is why the bad-year MA figure stacks two caps.

The one-way door, spelled out: outside your 6-month Medigap open enrollment, the 12-month trial right, and a short list of guaranteed-issue events (plan exits your area, employer plan ends, etc.), Medigap insurers in most states can decline you or rate you up for health history. Choosing MA at 65 is cheap and often fine — but plan as if returning to Medigap later may not be available. State law can soften this — see State Notes.

Choosing within Medigap: newly eligible enrollees (post-2020) can’t buy Plans C/F, so the field is effectively Plan G (covers everything but the $283 Part B deductible), High-Deductible G (~$2,9XX deductible, premiums often $40–70/mo — excellent for self-insurers ◻️ verify current figure), and Plan N (lower premium; $20 office/$50 ER copays; doesn’t cover Part B excess charges). Also check the carrier’s rating method — community-rated and issue-age policies age better than attained-age ones, even when the day-one price is higher.

Choosing within MA: ignore the TV ads; use Plan Finder with your exact doctors + drug list, weight the plan’s star rating, its actual (not maximum) MOOP, and its prior-auth reputation. Assume you’ll re-shop every AEP — networks and formularies churn annually.

4. Part D in 2026: Better Than Its Reputation

The IRA redesign matured this year: the donut hole is gone, out-of-pocket drug costs cap at $2,100/year, costs can be smoothed monthly via the Medicare Prescription Payment Plan, and the first 10 negotiated drugs (Eliquis, Jardiance, Xarelto, etc.) carry Maximum Fair Prices starting January 2026. Remaining homework: formularies and preferred pharmacies still vary wildly — re-shop every October; the “wrong” PDP for your exact drug list routinely costs $1,000+/year over the right one.

5. Handoff from the ACA Bridge (HC-01 → here)

• Marketplace premium tax credits end when you become eligible for premium-free Part A — the month you turn 65 — regardless of whether you’ve enrolled. Cancel the exchange plan effective your Medicare start date; it will not cancel itself.
• Enroll in the first 3 months of your IEP so Medicare starts on time and there’s no gap.
• Buy the Medigap during its 6-month window even if you feel bulletproof — it’s the only time the door is fully open.
• The IRMAA lookback means your age-63 MAGI (Roth ladder finale years!) sets your age-65 premium: 2026 surcharges begin at $109k single / $218k MFJ of 2024 income and run the Part B premium up to $689.90/mo (HC-06 covers the SSA-44 appeal for retirement-related income drops — “work stoppage” is a qualifying life event, and most new retirees should file it).

6. Working Past 65 (and the HSA Trap)

• 20+ employee employer plan: you can delay Part B (and D, if drug coverage is creditable) penalty-free while actively covered; you get the 8-month SEP when employment ends. Under-20-employee plans: Medicare becomes primary — enroll on time.
• COBRA and retiree plans are NOT “current employer coverage” — they do not protect you from Part B penalties. This is among the most expensive misunderstandings in all of Medicare.
• HSA: contributions must stop the month Medicare begins — and if you enroll after 65, Part A backdates up to 6 months, so stop contributing 6 months before you file (prorate the year’s limit). Spending from the HSA remains fine forever, including on Part B/D premiums (HC-04).
• Delaying Social Security past 65? You must proactively enroll in Medicare — auto-enrollment only happens if you’re already drawing SS.

7. Three Scenarios

A. The clean handoff (65, retiring, from an ACA plan). Enrolls in A+B three months early, buys Plan G in the Medigap window ($178/mo, issue-age carrier), cheapest suitable PDP ($11/mo), cancels the marketplace plan effective the 1st. Files SSA-44 citing work stoppage to knock 2026 IRMAA off the 2024-income determination. Worst-case medical year ≈ premiums + $283 + $2,100.

B. The budget pick, eyes open (65, healthy, tight cash flow). Chooses a 4.5-star local HMO: $0 premium, $3,900 MOOP, dental cleaning benefit. Understands the one-way door, calendars the 12-month trial right as the “undo” deadline, and re-shops every AEP. Keeps a $9,250-shaped line in the emergency-fund math.

C. Working at a large employer to 68. Takes premium-free Part A at 65 only after confirming the HSA plan: she stops HSA contributions 6 months before her chosen Part A filing date (or delays Part A entirely to keep contributing — valid if not drawing SS). At retirement: 8-month SEP for Part B, 2-month window for Part D, Medigap open enrollment triggers off the new Part B date — full menu, no penalties, no underwriting.

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💡 Pro-Tips

1. Treat the Medigap 6-month window as use-it-or-lose-it — it is the single most valuable insurance-purchasing right you’ll ever hold.
2. File SSA-44 in your first retirement year — “work stoppage” resets IRMAA to your new, lower income instead of your peak-earnings lookback.
3. Buy penalty insurance: the cheapest PDP in your county beats a lifetime 1%/month surcharge, even if you take nothing.
4. Re-shop Part D (and MA) every October. Loyalty is a formulary tax.
5. Check the Medigap rating method (community/issue-age > attained-age for long holders), not just the day-one premium.
6. Snowbirds and travelers: Original + Medigap — it’s the only configuration that works identically in all 50 states.
7. Mark the MA 12-month trial right on a calendar the day you enroll — it’s your only guaranteed exit.
8. SHIP counselors are free and commission-less — use them over broker hotlines for the fork decision.

⚠️ Common Pitfalls

1. Original Medicare with no Medigap and no MA — unlimited 20% coinsurance exposure.
2. Assuming COBRA/retiree coverage delays Part B safely. It doesn’t; penalties and coverage gaps follow.
3. HSA contributions overlapping retroactive Part A after 65 — excess-contribution penalties.
4. Missing that PTC eligibility dies at 65 while the marketplace plan hums along uncancelled.
5. Joining MA “for the gym benefit,” then failing Medigap underwriting at 72 when it matters.
6. Skipping Part D as a healthy person — the penalty compounds for life.
7. Judging MA by premium instead of network + MOOP + prior-auth posture.
8. Forgetting Part D costs don’t count toward the MA medical MOOP — two separate caps.
9. Enrolling late in the IEP (months 4–7) and creating a coverage gap after the ACA plan ends.
10. Not enrolling at all because you delayed Social Security — Medicare doesn’t auto-start without SS.

✅ Actionable Checklist

Age 63–64

• Model IRMAA exposure: this year’s MAGI = your age-65/66 premium tier (HC-06, TX-02)
• If still working: confirm employer size (20+?) and whether drug coverage is “creditable” (get it in writing annually)
• If HSA-funding: pick your Medicare date and back off contributions 6 months prior

3 months before 65

• Enroll in A+B (ssa.gov/medicare) — or document the employer-coverage delay decision
• Decide the fork: Medigap+PDP vs. MA (Plan Finder with real doctors + drugs; SHIP consult)
• Shop Medigap quotes across carriers/rating methods; shop PDP by total annual cost, not premium

At 65 / Medicare start

• Buy Medigap inside the 6-month window (if that’s the lane)
• Cancel ACA/COBRA coverage effective the start date; confirm no gap, no overlap
• File SSA-44 if income dropped at retirement
• Calendar: AEP every Oct 15, and (if MA) the trial-right expiry

Every year after

• October: re-shop Part D/MA against the new formularies
• Recheck IRMAA tier vs. planned Roth conversions (TX-02)

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State notes (→ ST-01, ST-04): Medigap consumer protections vary more than any other item on this page. NY, CT, MA, and ME require year-round guaranteed issue or continuous open enrollment; several states (CA, OR, ID, IL, NV, and others) have “birthday rules” letting existing Medigap holders switch plans annually without underwriting; Washington goes further than most — current Medigap enrollees can switch among most Medigap plans year-round without new underwriting (◻️ verify plan-level details) — though none of this rescues an MA enrollee who never bought a Medigap while the door was open. A handful of states also ban Part B excess charges, which weakens the case for G over N there. Where you live at 65 quietly reshapes the whole fork decision.

Sources & further reading (verified Aug 2026)

• CMS 2026 Medicare Parts A & B premiums/deductibles releases; Medicare.gov Part D cost pages (national base premium $38.99; $615 deductible; $2,100 cap)
• KFF, Medicare Advantage in 2026: Premiums, Out-of-Pocket Limits, Supplemental Benefits, and Prior Authorization (avg OOP limit ~$5,421; 75% at $0 supplemental premium)
• CMS 2026 MA rate announcement (MOOP $9,250 in-network / $13,900 combined); US News & NCOA 2026 cost guides
• Kiplinger, Medicare Premiums 2026: IRMAA Brackets — via FN-02
• Medicare.gov Plan Finder; SHIP locator (shiphelp.org); SSA-44 (IRMAA life-changing event appeal)