Key Points Most Medicare Part A enrollees do not pay a premium for hospital coverage. The costs associated with a hospital stay are increasing in 2026. A Medigap policy could help defray some of the costs associated with Part A. The $23,760 Social Security bonus most retirees completely overlook › Many seniors find that once they retire, their living costs decrease for the most part. But there's one expense that may get bigger and bigger for you in retirement -- healthcare. Part of the reason is ...

Table of Contents Expand Table of Contents During open enrollment, you can decide between Medicare Advantage, and Original Medicare with Medigap. triloks / Getty Images Close Key Takeaways Original Medicare (Part A and Part B) has its upsides. Unlike Medicare Advantage, it doesn't limit you to using a particular provider network. You can get care at almost all U.S. hospitals and doctor offices, and you rarely need prior authorization for medical services or supplies. Warning Six states are testing pre-autho ...

Core Insights - Medicare Advantage plans may deny certain care that original Medicare would cover, with a denial rate of approximately 6.4% for prior authorization requests in 2022, although many denials are reversed on appeal [1] - The out-of-pocket spending cap for 2026 is set at $9,250 for in-network expenses and $14,750 for out-of-network providers, with some plans potentially offering lower caps [2] - A 65-year-old retiring in 2025 is projected to spend an average of $172,500 on medical and healthcare expenses throughout retirement, excluding long-term care and other services [5] Medicare and Medigap Overview - Original Medicare consists of Part A (hospital coverage) and Part B (medical insurance), with many enrollees also opting for Part D (prescription drug coverage) and Medigap plans for additional coverage [4][7] - Medigap plans, offered by private insurers, cover costs that original Medicare does not, typically covering 20% of expenses that Medicare does not [7][9] - The best time to purchase a Medigap plan is during the initial enrollment period for Medicare, as pre-existing conditions cannot be used to deny coverage at that time [8] Financial Considerations - Monthly premiums for Medigap plans range from $32 to $550, with many individuals paying between $90 and $300 [9] - Medicare enrollees must pay for Part B coverage, projected to be $206.50 for 2026, while some plans may have premiums as low as $0 [2] - It is crucial for retirees to prepare financially for healthcare expenses, as these can be significant over the course of retirement [5][9]

Core Insights - Medicare Advantage plans have gained significant popularity, accounting for 54% of the marketplace nationwide, driven by aggressive marketing from major insurance providers since their inception in 1997 [2] - The open-enrollment process for nearly 70 million U.S. citizens over 65 begins soon, allowing them to renew or change their plans, highlighting the importance of cost management in Medicare options [3] - The choice between Medicare Advantage and traditional Medicare with Medigap plans is influenced by local market conditions, state laws, and individual health needs, leading to varying enrollment rates across different regions [8][10] Market Dynamics - Rochester, NY, has the highest Medicare Advantage penetration at 82%, while Wichita, KS, has only 44%, illustrating the local nature of market penetration [6][7] - State laws, such as New York's "guaranteed issue" policy, facilitate easier transitions between Medicare Advantage and Medigap plans, impacting enrollment choices [10][11] - The rising costs of Medigap policies and the challenges in switching from Medicare Advantage to Medigap are reshaping the insurance landscape, with major insurers scaling back their offerings [13][15] Consumer Behavior - Consumers often prioritize cost and provider availability when selecting Medicare plans, with many opting for Medicare Advantage due to lower initial costs despite potential long-term expenses [18][19] - The decision-making process is complex, with individuals like Jim Hutchison conducting extensive research to find the best coverage for their specific health conditions [5][25] - The trend of needing additional coverage for major illnesses among Medicare Advantage customers indicates a growing awareness of potential out-of-pocket costs [23][24] Future Outlook - The market is expected to see shifts in enrollment dynamics, with the Centers for Medicare & Medicaid Services predicting a drop of about 500,000 enrollees in Medicare Advantage next year [15] - The interplay between traditional Medicare and Medicare Advantage raises questions about the sustainability of the healthcare system for seniors, as rising costs and insurer exits could lead to a re-evaluation of coverage options [15][25] - As the industry evolves, consumer priorities will continue to shift, preventing either Medicare Advantage or traditional Medicare from completely dominating the market [24]

Core Insights - Turning 65 introduces significant milestones and critical decisions regarding health coverage and financial planning [1][2] Group 1: Medicare and Health Coverage - The six-month Medigap open enrollment period begins when enrolling in Medicare Part B, during which insurers cannot deny coverage or charge higher premiums, making it essential for retirees to act promptly [3] - Missing the Medigap enrollment window can lead to increased costs, limited options, or denials of coverage [3] Group 2: Financial Planning and Tax Implications - Converting pre-tax retirement accounts to a Roth IRA can have tax benefits, but large conversions may trigger IRMAA, increasing Medicare premiums based on income from two years prior [4] - Lump-sum payouts from unused vacation or sick time can elevate income above IRMAA thresholds, resulting in higher Medicare costs; spreading payouts across tax years may mitigate this [6] Group 3: Dental and Surgical Considerations - Medicare does not typically cover dental work, and standalone dental plans may have waiting periods, making it financially advantageous to complete major dental work before leaving employer coverage [5] - Planned surgeries, such as joint replacements, should ideally be handled before retirement to avoid significant out-of-pocket expenses [5]