The Critical Medicare Planning Guide

How to Make Smart Enrollment, Coverage, and Tax Decisions — and Avoid Hidden Costs

Most people spend decades planning for retirement — saving diligently, optimizing investments, and running projections — but overlook one of the biggest financial decisions they’ll ever make: how to handle Medicare.

For many, Medicare is something you “just sign up for at 65.” But the truth is, the program is filled with timing traps, hidden taxes, and irreversible choices. A single mistake — enrolling too late, choosing the wrong plan, or ignoring income thresholds — can quietly cost you thousands of dollars a year.

Whether you’re approaching retirement, already enrolled, or still working and delaying coverage, understanding the structure of Medicare is essential. This guide walks you through everything you need to know for 2025, including updated premiums, enrollment timelines, Medigap strategies, and income-based surcharges — plus special sections for business owners and those still working past 65.

1. Understanding the Medicare Landscape: Parts A, B, C, and D

Original Medicare (Parts A & B)

Part A covers hospital care, skilled nursing (short-term), hospice, and limited home health. For most people, it’s premium-free if you’ve paid Medicare taxes for 40 quarters. If not, the premium can be up to $518/month in 2025, with a deductible of $1,676 per benefit period.
Part B covers outpatient services — doctor visits, lab work, preventive care, and durable medical equipment. The standard Part B premium is $185/month in 2025 (up from $174.70 in 2024), and the annual deductible is $257. After that, Medicare covers 80% of approved services.

Medicare Advantage (Part C)

A private insurance alternative that bundles Parts A, B, and often D. It typically offers lower premiums (sometimes $0) but restricts you to a network of providers and may require referrals or prior authorization.

Prescription Coverage (Part D)

Original Medicare doesn’t cover prescription drugs, so a separate Part D plan is needed. Plans differ by formulary and region, so annual review is critical to avoid overpaying.

Key Takeaway

Original Medicare plus a Medigap and Part D plan offers the broadest access and flexibility. Medicare Advantage plans can be cheaper upfront but come with trade-offs in network and coverage.

2. Enrollment Timing: Don’t Miss Your Window

You have a 7-month Initial Enrollment Period (IEP) — three months before, the month of, and three months after your 65th birthday. Missing this window can lead to lifetime penalties and delayed coverage.

Once you enroll in Part B, a 6-month Medigap Open Enrollment Period begins. During that time, you have guaranteed issue rights — insurers can’t deny you coverage or charge more based on health history. Afterward, medical underwriting can apply.

If you’re still on employer coverage after 65, you can delay Part B (and avoid penalties), but your Medigap window won’t start until you enroll. The timing of your decision is critical to cost and coverage.

3. What to Do if You’re Still Working at 65

More Americans are working past 65 than ever before, and Medicare rules don’t always make that easy to navigate. If you’re covered under an employer group health plan — your own or your spouse’s — your options depend on the size and structure of that plan.

Step 1: Determine Whether You Need to Enroll in Medicare

If your employer (or spouse’s) has 20 or more employees, that plan remains primary and you can usually delay enrolling in Part B without penalty.
If the employer has fewer than 20 employees, Medicare becomes primary, meaning you must enroll in Part A and B or risk unpaid claims.

Step 2: Decide Whether to Enroll in Part A

Part A is premium-free for most people, so many enroll even if they’re still working.
But if you contribute to a Health Savings Account (HSA), you cannot have any part of Medicare and continue contributing tax-free. Stopping HSA contributions six months before enrolling in Medicare avoids tax penalties.

Step 3: Plan for the Transition

When you retire or lose employer coverage, you have an 8-month Special Enrollment Period (SEP) to sign up for Part B without penalty.
Be sure to review your prescription coverage as well — if your employer’s plan isn’t “creditable” (as good as Medicare Part D), you’ll need to enroll in Part D to avoid penalties later.

Bottom line: Working past 65 can be smart — but it requires coordination. The biggest mistakes come from assuming employer coverage automatically integrates with Medicare. It doesn’t.

4. Medigap Plan Pricing: Predictability vs. Cost

Medigap (or “Medicare Supplement”) plans fill the gaps left by Original Medicare — deductibles, coinsurance, and copays. The benefits are identical across all insurers, but premiums vary by pricing model.

How Premiums Are Calculated

Attained-Age Rated

Starts lower but increases as you age — often steeply.

Issue-Age Rated

Based on your age at purchase; premiums don’t rise just because you age.

Community-Rated

Everyone pays the same regardless of age (other factors like smoking or zip code still apply).

Which to Choose

Avoid attained-age if possible — premiums can double in later years.
Issue-age or community-rated policies usually offer better long-term stability.
Plan G remains the most comprehensive plan available for new enrollees in 2025.

In many states, Plan G premiums range from about $120 to $200 per month — a difference of $1,000 per year or more for identical coverage. Comparison shopping is essential.

5. The IRMAA “Stealth Tax”: Why High-Income Retirees Pay More

If your income is high, Medicare costs more. The Income-Related Monthly Adjustment Amount (IRMAA) adds surcharges to your Part B and Part D premiums based on your Modified Adjusted Gross Income (MAGI) from two years prior.

2025 IRMAA Thresholds

Filing Status	MAGI (2023 return)	Monthly Part B Premium
≤ $106,000 (single) / $212,000 (joint)	$185 (standard)	$2,220
Up to $133,000 / $266,000	$259	$3,108
Up to $166,000 / $332,000	$334	$4,008
Up to $199,000 / $398,000	$409	$4,908
Up to $499,999 / $749,999	$484	$5,808
≥ $500,000 / $750,000	$628.90	$7,547

Part D adds another $13–$81/month depending on your income bracket.

Managing IRMAA

Capital gains, Roth conversions, or large withdrawals can trigger IRMAA two years later.
If your income falls due to retirement, marriage, divorce, or death of a spouse, file Form SSA-44 within 60 days to request a reduction.
Time conversions, withdrawals, and charitable giving to manage your two-year income lookback.

6. Original Medicare vs. Medicare Advantage

Option	Advantages	Drawbacks
Original Medicare + Medigap + Part D	Nationwide access, predictable costs, strong travel flexibility	Higher premiums, more components
Medicare Advantage (Part C)	Lower premiums, extra perks (vision, dental, gym)	Narrow networks, prior authorizations, limited travel coverage, harder to switch back

If you value freedom and provider choice, Original Medicare with Medigap typically wins.

7. Long-Term Care and International Coverage

Neither Original Medicare nor Medicare Advantage covers long-term custodial care — help with bathing, dressing, or assisted living. Address this gap early with long-term care insurance or hybrid life-LTC policies while you’re still insurable.

If you travel internationally, note that Medicare provides almost no coverage abroad. Some Medigap plans offer limited emergency benefits, but frequent travelers should consider global health coverage or medical evacuation insurance.

8. Annual Reviews: Why Medicare Isn’t “Set and Forget”

Your health, prescriptions, and income change — and so do plan costs. Reviewing your coverage annually ensures you aren’t overpaying.

Annual Checklist:

Project income two years ahead to anticipate IRMAA.
Reevaluate Medigap or Advantage plans for price or network changes.
Review your Part D plan each fall with the Medicare Plan Finder tool.
Confirm travel or part-time residence coverage.
Update long-term care and charitable giving strategies.

Even a small change can save hundreds annually.

9. Special Considerations for Business Owners

If you’re self-employed or own a business, Medicare planning gets more complicated. Income volatility and liquidity events can create IRMAA surprises.

What to Watch

Business sale or buyout: Capital gains can spike MAGI for two years.
Roth conversions: Helpful long-term but increase short-term IRMAA.
Entity structure: Pass-through income may inflate MAGI even post-retirement.
Employer coverage: If you maintain group insurance through your business, confirm whether it qualifies to delay Part B without penalty.

Smart Moves

Model your income two years ahead.
Spread a business sale or conversion across multiple tax years.
Use donor-advised funds or charitable giving to offset gains.
Align Medicare and tax planning — they’re two sides of the same coin.

10. Putting It All Together

Focus Area	Action Step	Why It Matters
Enrollment	Mark your 7-month and 6-month Medigap windows.	Avoid penalties and underwriting.
Still Working	Confirm employer size, HSA eligibility, and creditable coverage.	Prevent penalties and maintain HSA benefits.
Medigap IRMAA	Compare Plan G pricing models.	Keeps costs predictable.
IRMAA	Project MAGI and file SSA-44 when eligible.	Avoids hidden surcharges.
Long-Term Care	Plan funding early.	Protects your family and legacy.
Annual Review	Review every fall before open enrollment.	Keeps your plan optimized.

11. Why This Matters Now

Healthcare costs are rising faster than general inflation. The Part B premium rose 6% in 2025, while IRMAA brackets barely changed — meaning more retirees are paying surcharges simply for lack of planning.

A thoughtful Medicare strategy isn’t just about coverage — it’s about control: control over your costs, your doctors, and your freedom to live retirement on your terms.

Disclaimer

All written content is for information purposes only. Opinions expressed herein are solely those of Adviso Wealth, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.