At 65, you stop shopping the individual or employer markets for primary health coverage and enter Medicare, the federal program that covers almost every American over that age. (Younger people qualify after 24 months on Social Security Disability, or immediately with ALS or end-stage renal disease.) Medicare is not one product but four, sold under one roof, and the choices you make in your first months of eligibility lock in penalties — and sometimes underwriting protections — that follow you for life. It deserves its own treatment because, unlike everything above, almost none of it can be undone if you get it wrong.
Covers inpatient stays, skilled nursing after a hospitalization, hospice, and a sliver of home health. Premium-free if you (or a spouse) paid Medicare payroll tax for at least 40 quarters. It has a per-benefit-period deductible and daily coinsurance on long stays, not the annual deductible most people expect.
Covers physician visits, outpatient care, durable medical equipment, and most preventive services. Funded by a monthly premium ($202.90 standard in 2026) plus a $283 annual deductible. The premium is income-tested through IRMAA (below) and rises sharply for high earners.
A private bundle that replaces Original Medicare (Parts A+B), usually adds Part D, and often dental/vision/gym extras. Enrollees agree to a network and prior-authorization rules in exchange for capped out-of-pocket exposure and lower or zero premium beyond Part B.
A standalone drug plan attached to Original Medicare, or bundled inside an Advantage plan. Premium plus deductible plus tiered cost-sharing, with a statutory annual out-of-pocket cap — $2,100 in 2026 — on covered drugs, the indexed descendant of the $2,000 cap that the Inflation Reduction Act of 2022 phased in starting in 2025. Also income-tested through IRMAA.
There is no Part E. “Medigap” is the informal name for Medicare Supplement policies, which are a separate, optional, private insurance product on top of Original Medicare, discussed below.
The structural choice: Original Medicare + Medigap, or Medicare Advantage. This is the decision that matters, and it is not equally reversible in both directions. With Original Medicare you can see any provider in the country who accepts Medicare, with no referrals and no network. The catch is that Parts A and B leave coinsurance and deductibles uncapped — a long hospital stay or a serious illness can run open-ended. You close that hole by buying a Medigap policy (Plans G and N are the common modern choices; Plan F is closed to new enrollees) which pays most or all of those gaps in exchange for a monthly premium that rises with age. You also buy a standalone Part D drug plan. The result is predictable cost, total provider freedom, and the highest premium total.
With Medicare Advantage (Part C), a private plan administers your benefits. Premiums are low or zero (you still pay the Part B premium underneath), there is a hard annual out-of-pocket maximum, and drugs and extras are bundled in. The cost is a closed network, prior authorization on expensive care, and exposure to coverage decisions made by the plan rather than Medicare itself.
The asymmetry that traps people: when you first enroll in Medigap during your six-month Medigap Open Enrollment window (triggered by Part B enrollment at 65 or later), insurers must sell you any policy at the standard rate regardless of health. Drop Medigap later, or skip it at 65 and try to buy it at 72, and outside a handful of states you face medical underwriting and can be refused or surcharged. Many people choose Advantage at 65 because it is cheaper, develop a condition, try to switch back to Original Medicare plus Medigap to regain provider freedom, and discover Medigap will not take them. Choose with that one-way door in mind.
If you have the capital, do not buy Medicare Advantage. This is not a balanced trade-off if you have liquid assets. Zero-dollar premiums and the gym membership are subsidized by something you actually need: access. Advantage is managed care. The plan owns your network, the plan adjudicates your prior authorizations, and the plan’s medical director — not you and not your physician — decides whether your stage III workup is covered this quarter. The premier referral institutions in the country (MD Anderson, Memorial Sloan Kettering, the Mayo Clinic, and most academic medical centers) routinely refuse or sharply restrict Advantage contracts. When you need a second opinion at one of them, “out of network” becomes the most expensive two words in your life. Buy Original Medicare and pair it with Medigap Plan G (or, if you tolerate small co-pays in exchange for a lower premium, Plan N). Pay the premium. You are buying optionality and immediate access to the best medical infrastructure on the planet, and against the cost of a serious illness the premium is rounding error.
Concierge medicine and opt-out providers. Even Original Medicare plus the best Medigap policy does not insulate you from the tiered system. A growing share of elite primary-care physicians, specialists, and psychiatrists have formally opted out of Medicare. An opted-out provider requires you to sign a private contract acknowledging that Medicare will pay exactly zero for their services — and because Medigap is strictly secondary to Original Medicare, your Medigap policy pays zero too. The bill is yours. For DPC retainers and concierge-medicine memberships this is the entire point; the model exists precisely so the physician can practice without insurance-network friction. Budget for it as a fixed annual cost, the same way you budget for property tax, and stop expecting your Medicare card to function as a universal access pass.
Enrollment windows and the late-enrollment penalties. Three windows matter, and missing the first two costs money for the rest of your life:
The seven-month window centered on the month you turn 65 (three months before, your birthday month, three months after). Sign up here unless you are still actively covered by an employer plan from an employer of 20 or more, in which case you can delay Part B without penalty and get a Special Enrollment Period when that coverage ends. COBRA and retiree health do not count as active coverage — they will not save you from the penalty.
An eight-month window beginning the month after qualifying active employer coverage ends. Use it; don’t sit on it.
January 1 to March 31 each year, for those who missed both of the above. Coverage begins the month after enrollment.
The penalties are simple, permanent, and addable to your premium:
HSA contributions stop the moment Medicare starts. Enrollment in any part of Medicare, including premium-free Part A, ends your eligibility to contribute to a Health Savings Account (section “Health Savings Account (HSA)”). Spending the existing balance is fine forever; contributions are not. Two traps catch people who plan to keep working past 65: first, claiming Social Security at or after 65 auto-enrolls you in Part A whether you want it or not; second, when you eventually do enroll, Part A coverage is backdated up to six months (but not before your 65th birthday). HSA contributions made in that retroactive window become excess and must be removed with earnings. The defense is to stop HSA contributions at least six months before any Medicare or Social Security enrollment date, and not to claim Social Security if you intend to keep contributing.
The Income-Related Monthly Adjustment Amount surcharges Part B and Part D premiums for higher earners. Strip away the actuarial language and IRMAA is a progressive wealth tax dressed up as an insurance premium: the standard premium is heavily subsidized for low and middle incomes, and the subsidy is clawed back from successful retirees in escalating tiers. It is not collected by the IRS, but it behaves like a marginal tax sitting on top of your income tax — and unlike the income tax, it has hard cliffs. One dollar of MAGI above a threshold raises your premium by hundreds of dollars a month for the full year, per spouse on Medicare. Sustained over a long retirement, the cliffs are worth real money.
Three features make IRMAA a planning lever rather than a passive fact:
The Social Security Administration sets your 2026 premium from your 2024 MAGI as reported on your 2024 tax return (sometimes 2023 if the 2024 return is not yet filed). This means a 70-year-old’s Roth conversion this year sets her premium two years from now. It also means a one-time spike — a property sale, a Roth conversion, the year of an inherited IRA distribution — creates a single-year surcharge you can plan around, not a permanent one.
The brackets step. Crossing a threshold by $1 of MAGI imposes the entire next tier of surcharge on both Part B and Part D, for a full year. The implicit marginal tax on that last dollar can run into the thousands of percent. Treat the threshold like a wall, not a slope.
Each spouse on Medicare owes their own surcharge. A married couple crossing a tier pays roughly twice the published per-person figure. Singles use brackets that are sharply lower than half of the married thresholds (one of the engines of the widow’s penalty in section “The Widow’s Penalty”).
The mathematics of the 2026 cliffs. The 2026 baseline thresholds, set from your 2024 return, begin at $109,000 MAGI for single filers and $218,000 for married couples filing jointly. Consider a married couple sitting at exactly $218,000. Each spouse pays the $202.90 standard Part B premium and no Part D surcharge. Realize one more dollar of income — $218,001 — and they fall into Tier 1. The Part B premium jumps to $284.10 per month per spouse, and a $14.50 Part D surcharge is tacked on. Annualized, that single dollar of extra income costs $974.40 on Part B plus $174.00 on Part D, per spouse: $2,296.80 in new premium for the household. The implicit marginal rate on that last dollar is
At the top tier (MAGI above $500,000 single / $750,000 joint), Part B runs $689.90 per person per month and Part D adds another $91.00 — a married couple at that level pays roughly $18,700 a year in combined Medicare premiums, almost all of it subsidy for the rest of the system. Treat the threshold as a wall, not a slope.
Life-changing events. SSA will recompute IRMAA on a current-year estimate if you submit Form SSA-44 citing a qualifying life-changing event: marriage, divorce, death of a spouse, work stoppage or reduction, loss of pension, or loss/reduction of an income-producing property. A one-off realized gain or Roth conversion is not a qualifying event, no matter how much you wish it were. Plan accordingly: events that qualify earn you a refund; voluntary income spikes do not.
Levers that move IRMAA MAGI. IRMAA MAGI is AGI plus tax-exempt interest. The items that move it most:
Higher-octane levers. The bullets above cover what a textbook would call IRMAA management. The aggressive practice — the practice used by families with serious balance sheets — adds three more:
The planning move, year by year in retirement, is to fill the income up to — but not over — the IRMAA tier you have chosen to live in, using Roth conversions and discretionary realizations as the filler, while the higher-octane levers above suppress what is otherwise unavoidable. Done well, this turns IRMAA from a stealth tax into a calibration tool. Done badly, or ignored, it is a recurring fine for not paying attention. The integrated treatment lives in chapter “Tax-Efficient Decumulation”.