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Healthcare in Retirement • Coverage • Costs

Medicare: A Plain-Language Guide for People Who Are Tired of the Mailers

What Medicare actually covers, when to enroll, what it costs in 2026, and how Medicare premiums interact with the rest of your retirement income — written by a fixed-insurance practice that does not sell Medicare.

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Educational content only. Hafnia Insurance Services does not sell Medicare Supplement (Medigap), Medicare Advantage, or Medicare Part D plans. We are not a Medicare-registered marketer. For Medicare enrollment, plan selection, or coverage decisions, contact Medicare directly at 1-800-MEDICARE, visit medicare.gov, or speak with California's free HICAP counselors.

Why We Wrote This Page

Medicare Is Confusing on Purpose

The Medicare landscape is dominated by sales pitches. Direct-mail brochures arrive weekly. Call centers chase enrollees. TV ads promise benefits that may or may not apply to you. The system is designed in a way that benefits whoever sells the plan you choose.

We don't sell Medicare. We help with retirement income planning — fixed annuities, indexed life insurance, and the income-coordination work that overlaps with Medicare in two specific places (IRMAA premium surcharges and HSA contribution rules). Everything else about Medicare is your decision, made with help from a licensed Medicare broker, the federal Medicare resources, or California's free HICAP counseling service.

We wrote this page for a simple reason: most of our prospects ask Medicare questions during retirement-income conversations, and we wanted to point them somewhere honest. This is that somewhere.

If you need help selecting a Medicare plan, this page is not that resource — Section 7 lists the right resources for that.

Medicare's Four Parts

A and B and C and D — What Each One Actually Covers

Part A — Hospital Insurance

Covers inpatient hospital stays, skilled nursing facility care after a qualifying hospital stay, hospice care, and some home health care.

Cost: Most people pay no premium for Part A — they earned eligibility through 40+ quarters (10+ years) of Medicare-covered work history. The 2026 Part A inpatient hospital deductible is $1,736 (per benefit period, not per year). Days 61-90 of a hospital stay carry a $434/day coinsurance.

Part B — Medical Insurance

Covers doctor visits, outpatient care, preventive services, durable medical equipment, and most non-hospital medical services.

Cost (2026): Standard premium is $202.90/month. Annual Part B deductible is $283. After the deductible, Medicare typically pays 80% and you pay 20% with no annual cap on out-of-pocket spending. The lack of an out-of-pocket cap on Original Medicare is one of the main reasons most beneficiaries add either a Medicare Supplement (Medigap) policy or enroll in Medicare Advantage.

Part C — Medicare Advantage

Private insurance plans that bundle Parts A, B, and (usually) D into a single plan, often with extra benefits (vision, dental, fitness, sometimes flex cards). These plans are run by private insurers under contract with CMS.

Cost: Premiums vary widely; many plans have $0 monthly premium beyond the standard Part B premium. The trade-off is that Medicare Advantage plans use networks (HMO, PPO) and require referrals or prior authorization for many services. They have annual out-of-pocket limits, which Original Medicare does not.

Part D — Prescription Drug Coverage

Either standalone Part D plans (added to Original Medicare + Medigap) or built into a Medicare Advantage plan.

Cost (2026): Average standalone Part D premium is approximately $34.50/month, but varies widely by plan. Under the Inflation Reduction Act, beginning in 2025 there is a $2,000 annual out-of-pocket cap on prescription drug spending in Part D — a major change that's still being absorbed by many retirees.

Medigap — Medicare Supplement Insurance

Not a "part" of Medicare itself, but the most common companion to Original Medicare. Medigap policies (sold by private insurers under standardized federal letter-named plans — A, B, D, F, G, K, L, M, N) cover some or all of the gaps in Original Medicare (deductibles, coinsurance, copays). Once you choose a Medigap plan, your out-of-pocket costs become predictable. This is one of the major decisions retirees make when they first enroll.

This is where licensed Medicare brokers earn their fee. They know the Medigap landscape carrier-by-carrier and the differences between the lettered plans. We do not.

Original Medicare vs. Medicare Advantage

The Choice That Matters Most

The biggest single decision most new Medicare beneficiaries face is the choice between Original Medicare (Parts A and B, usually with a Medigap supplement and a standalone Part D plan) and Medicare Advantage (Part C, which bundles everything).

Both are legitimate paths. They look very different in practice.

Original Medicare + Medigap + Part D

Doctor and hospital choice is broad. You can see any provider in the country who accepts Medicare. No referrals.
No prior authorization for most services covered by Original Medicare.
Predictable out-of-pocket costs with the right Medigap plan.
Higher monthly cost — Part B premium + Medigap premium + Part D premium, often $250-$450/month combined.
Switching back to Medicare Advantage later is easy. Switching from Medicare Advantage back to Medigap can be very difficult due to medical underwriting in most states (including California) outside of an initial guaranteed-issue period.

Medicare Advantage

Often $0 monthly premium beyond Part B. Dental, vision, fitness benefits often included.
Annual out-of-pocket cap (varies by plan) — provides upside protection.
Network restrictions — usually HMO or PPO. Out-of-network costs can be high or not covered.
Prior authorization required for many services; processed by the private insurer.
Plan benefits and networks change every year, requiring annual review during open enrollment.

The "right" choice depends on your health status, your travel patterns, your tolerance for prior authorization, your tolerance for monthly premiums, and your willingness to review the plan annually. There is no universally correct answer. Anyone who tells you otherwise is selling something.

Enrollment Timing

Get the Dates Right

Medicare enrollment is governed by specific windows, and missing one can cost you for life.

Initial Enrollment Period (IEP)

Begins three months before your 65th birthday month, includes your birthday month, and continues three months after — a 7-month window. For most people without employer coverage, this is the right time to enroll.

Special Enrollment Period (SEP)

If you have creditable employer coverage at age 65 (your or your spouse's active employment, with a group plan that covers at least 20 employees), you can typically delay Medicare enrollment without penalty. When that coverage ends, you have an 8-month SEP to enroll in Part B without penalty. Get this confirmed in writing from your HR department before relying on it.

General Enrollment Period (GEP)

January 1 - March 31 each year, for those who missed both IEP and any applicable SEP. Coverage starts the month after enrollment. Late enrollment penalties typically apply.

Annual Enrollment Period (AEP)

October 15 - December 7 each year. The window for switching between Medicare Advantage plans, switching between Advantage and Original Medicare, or changing Part D plans. Coverage starts January 1.

Medicare Advantage Open Enrollment Period

January 1 - March 31 each year. If you're enrolled in a Medicare Advantage plan, you can switch to a different Advantage plan or back to Original Medicare during this window. (One change allowed.)

Late Enrollment Penalties (Important)

Part A penalty: 10% added to your Part A premium (if you have one) for twice the number of years you were eligible but didn't enroll.
Part B penalty: 10% added to your Part B premium for each full 12-month period you delayed enrollment without creditable coverage. This penalty lasts as long as you have Part B — meaning it's permanent.
Part D penalty: 1% of the national base beneficiary premium per month of delay without creditable drug coverage. Also generally permanent.

The Part B late penalty is the one that catches people. A person who delayed Part B for 5 years without creditable employer coverage would pay a 50% surcharge on the standard Part B premium for the rest of their life — that's about $100/month extra in 2026 dollars, indexed forever.

IRMAA

Why Your 2024 Tax Return Affects Your 2026 Medicare Bill

This is the section every person near retirement should read carefully.

IRMAA stands for Income-Related Monthly Adjustment Amount. It's a Medicare premium surcharge added to Parts B and D for Medicare beneficiaries with higher incomes.

The mechanics:

IRMAA is calculated on Modified Adjusted Gross Income (MAGI) from your tax return two years prior. Your 2026 IRMAA is based on your 2024 MAGI.
IRMAA applies to each spouse separately — if both spouses are on Medicare, IRMAA can apply twice.
The brackets adjust annually for inflation (except the top tier, currently frozen).
There is no phase-in. Crossing a bracket by even $1 of MAGI triggers the full surcharge for that bracket — what advisors call the "IRMAA cliff."

2026 IRMAA Brackets (Based on 2024 MAGI)

For most filers (single thresholds shown — joint thresholds are roughly double; the top joint tier starts at $750,000):

2024 MAGI (Single)	2026 Part B Premium	Part D Surcharge	Annual Couples Cost (vs. standard)
Up to $109,000	$202.90	$0	(standard)
$109,001 – $137,000	$284.10	$14.50	~$2,297 extra
$137,001 – $171,000	$405.80	$37.50	~$5,760 extra
$171,001 – $205,000	$527.50	$60.40	~$9,240 extra
$205,001 – $499,999	$649.20	$83.30	~$12,228 extra
$500,000+	$689.90	$91.00	~$13,419 extra

* "Annual couples cost" assumes both spouses are on Medicare and crosses the same bracket. Married filing separately and married filing jointly use different threshold tables.

Why This Matters for Retirement Planning

Many decisions retirees make affect MAGI:

Roth conversions add to MAGI in the conversion year — and trigger IRMAA two years later.
RMDs add to MAGI starting at age 73 — and increase as the RMD percentage grows with age.
Capital gains realizations (selling appreciated stock, real estate sale) can spike MAGI in a single year.
Part-time work income in retirement adds to MAGI.
Annuity distributions add to MAGI to the extent they include taxable gains.
Tax-exempt municipal bond interest is added back to MAGI for IRMAA purposes (caught many people off guard).

The Two-Year Lookback Creates Both a Problem and an Opportunity

The problem: A spike in income today shows up as higher Medicare premiums two years later — when you may have forgotten about the original event.

The opportunity: The years between retirement (often age 60-65) and Medicare eligibility (age 65) — and continuing through age 72 before RMDs begin — are typically the lowest-income years of a retiree's life. This is the window when Roth conversions are most efficient (lower current tax brackets, and conversions before age 63 don't affect future IRMAA because the two-year lookback only captures income from age 63 onward for those who enroll at 65). See our Roth Conversions page for more.

Life-Changing Event Appeals

If a major life event has reduced your income (retirement, death of a spouse, divorce, loss of pension income), you can file Form SSA-44 to request that Social Security use a more recent year's income to determine IRMAA. Many retirees miss this filing in their first year of retirement and overpay IRMAA for a year.

Where to Get Real Medicare Help

Resources That Actually Help

Medicare has free, objective, well-funded help available — most people just don't know where to find it.

Medicare.gov and 1-800-MEDICARE (1-800-633-4227)

The official source. Plan finder tool, drug formulary search, enrollment information, beneficiary publications. Available 24/7. The Medicare Plan Finder at medicare.gov/plan-compare is genuinely useful — it lets you input your prescriptions and find the lowest-total-cost Part D plan for your specific situation.

California's HICAP — Health Insurance Counseling and Advocacy Program

California's version of the federal SHIP (State Health Insurance Assistance Program). HICAP provides free, unbiased, one-on-one Medicare counseling from trained volunteers. They are funded by the state and federal government, do not sell anything, and have no incentive to recommend any particular plan.

Statewide phone: 1-800-434-0222
Find your local office: aging.ca.gov/hicap (the California Department of Aging)
Languages: Counseling is available in English, Spanish, and many other languages depending on the county

For most Californians making their initial Medicare decision, a HICAP appointment is the single best free resource available. It's also useful for evaluating whether to switch plans during AEP each fall.

Licensed Medicare Brokers

Independent brokers who represent multiple carriers can compare Medicare Supplement and Medicare Advantage plans across the market and help with enrollment paperwork. The good ones are licensed in your state, represent multiple carriers (not just one), and disclose their commissions.

The California Department of Insurance maintains the licensing records for all California insurance producers, including those licensed to sell Medicare-related products. You can verify any broker's California license at insurance.ca.gov (license lookup). Look for an "accident and health" line of authority at minimum.

Your Employer's Retiree Benefits Office (If Applicable)

If you're retiring from a large employer (especially federal, state, or unionized employer), your former employer may offer retiree health coverage that coordinates with Medicare. This often includes its own counseling service. Use it.

State Health Insurance Assistance Program (SHIP) — for Out-of-State Family

If you have parents or relatives outside California, every state has its own SHIP. Find them at shiphelp.org.

Where Hafnia Fits

A Narrow Strip of Overlap

Hafnia Insurance Services does not sell, market, or recommend Medicare Supplement plans, Medicare Advantage plans, or Medicare Part D plans. Period.

What we do help with — when it overlaps with the retirement-income work we already do:

IRMAA Coordination

Many retirement-income decisions affect IRMAA premiums two years later. Multi-year Roth conversion strategies, the timing of RMDs, the use of QCDs to satisfy RMDs, the structuring of annuity income — all of these touch IRMAA. We can talk through how a fixed-insurance product might fit into an income strategy that also accounts for IRMAA exposure. The actual tax math belongs with your CPA.

Coordinating Annuity Income With Medicare-Triggered Income Changes

Some retirees use annuity income to "smooth" their MAGI — staying just below an IRMAA bracket while drawing predictable income. This works in some cases, not others. It is a planner-and-CPA conversation, not a sales pitch.

HSA Contribution Coordination

HSA contributions must stop the month before Medicare enrollment begins. Medicare enrollment back-dates retroactively up to 6 months in some circumstances — meaning some retirees must "undo" recent HSA contributions when they enroll. We don't run the calculation, but we can flag the issue and refer you to your CPA if it applies.

What We Don't Help With

Medicare plan selection (Original Medicare vs. Advantage, which Medigap letter, which Part D plan)
Medicare enrollment paperwork
Filing Form SSA-44 (IRMAA appeal)
Medicare claims questions, denials, or appeals
Coordinating Medicare with VA, TRICARE, or active-duty benefits

For all of those, the right resources are in Section 7 above.

Schedule a Discovery Call →

FAQ

Common Questions

For most people without active employer coverage, during your 7-month Initial Enrollment Period (3 months before, the month of, and 3 months after your 65th birthday). For people with creditable active employer coverage, you can typically delay Part B without penalty — confirm in writing with HR before relying on this.

No. Medigap policies only work with Original Medicare. You cannot have both. Medicare Advantage includes its own out-of-pocket cap and cost structure.

No. Medicare covers up to 100 days of skilled rehab after a qualifying hospital stay, with cost-sharing after day 20. It does not cover assisted living, memory care, or extended nursing home stays. See our Long-Term Care page for the full picture on LTC funding.

Medicare is federal health insurance for people 65+ and certain people with disabilities, regardless of income. Medi-Cal (California's Medicaid program) is income-based and covers a broader range of services, including long-term care. Some people qualify for both ("dual eligible"). The two programs have different rules, different enrollment processes, and different coverage.

You can keep using existing HSA dollars for qualified medical expenses indefinitely — including Medicare premiums (Part B, Part D, and Medicare Advantage premiums; not Medigap premiums). But you cannot make new HSA contributions while enrolled in any part of Medicare. Many retirees miss this and accidentally over-contribute.

No — IRMAA is recalculated every year based on the most recent two-year-prior tax return. If your income drops below the threshold, your IRMAA goes away (with the two-year lag). The Form SSA-44 life-changing event appeal can sometimes accelerate the relief.

Generally no, if you have creditable employer coverage from a large employer (20+ employees) where you or your spouse is actively working. Always confirm with HR in writing. Some smaller-employer plans require you to enroll in Medicare at 65; failing to do so can leave you without coverage.

These vary widely. Some employer retiree plans coordinate with Medicare and effectively act as Medigap; others do not. Some require you to enroll in a specific Medicare Advantage plan to receive employer benefits. Get the specifics in writing from your former employer's benefits office.

No. Both terms are political slogans, not current law. Medicare in 2026 has premiums, deductibles, copays, and out-of-pocket exposure for everyone, with low-income protections through programs like Extra Help and Medicare Savings Programs.

Annual updates from CMS in November, effective January 1. Premiums, deductibles, IRMAA brackets, and coinsurance amounts all change. Whatever you read about Medicare costs may be a year out of date — verify against medicare.gov or the CMS fact sheet for the current year.

Verify Anything You Read Here

Primary Sources

medicare.gov — official federal Medicare site
cms.gov — Centers for Medicare & Medicaid Services
medicare.gov/plan-compare — official Medicare Plan Finder
aging.ca.gov/hicap — California's free Medicare counseling service
shiphelp.org — SHIP locator for other states
socialsecurity.gov/forms/ssa-44.pdf — Form SSA-44 (Life-Changing Event request for IRMAA reduction)
insurance.ca.gov — California Department of Insurance license verification

If anything you read here conflicts with a primary source, the primary source wins. Medicare rules change every year. Tell us — we'll fix it.

Have Retirement-Income Questions That Touch Medicare?

For Medicare plan selection, the right resources are above (HICAP, Medicare.gov, licensed Medicare brokers). For retirement-income questions that overlap with Medicare — IRMAA coordination with Roth conversions, RMD timing, annuity income smoothing — that's the conversation we can help with. A 30-minute call. No cost. No pressure. No obligation. We work alongside your CPA and planner, not instead of them.

Book a Discovery Call 📞 858-345-9001