Medicare, our federal health insurance program, plays an important role in retirement planning for most Americans age 65 and older. While Medicare provides valuable coverage, the choices can be complicated, and making the right decisions at the right time is important. If you are already enrolled, the annual Open Enrollment Period is your main opportunity to review your coverage and make changes for the coming year. This year, Open Enrollment runs from October 15 through December 7. As that window approaches, it’s a good time to take another look at how Medicare works and some of the key decisions that can affect both your coverage and your costs.
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A Quick Medicare Refresher
Medicare has several different parts. Part A generally covers hospital care, while Part B covers doctor visits and other outpatient services. Together, these are known as Original Medicare. Part D provides prescription drug coverage.
If you have Original Medicare, you may also choose to add a Medigap policy to help cover some of the costs that Medicare doesn’t pay. Another option is Medicare Advantage, also known as Part C, which is offered by private insurance companies and combines Parts A and B, and often Part D, into one plan. Medicare Advantage plans may offer additional benefits but can be less flexible, as they usually come with restrictions around provider networks and coverage rules.
With that in mind, there are several important issues to consider as you review your Medicare coverage for the coming year.
Review Your Coverage Every Year
One of the biggest mistakes you can make is failing to review your coverage annually. Medicare is not something you should ‘set and forget’. Even if your plan worked well this year, it may not be your best option for next year. Premiums, deductibles, prescription drug coverage, provider networks and out-of-pocket costs can all change from year to year. Reviewing your plan’s Annual Notice of Change can help you determine whether your current coverage still meets your needs or whether it may make sense to make a change.
Consider More Than Just the Monthly Premium
It can be tempting to focus on the monthly premium when comparing Medicare plans, but your total costs can depend on much more than that. Make sure you also consider whether your doctors are in-network, how your prescriptions are covered, and what you could pay in deductibles and other out-of-pocket costs. If you travel a lot or live in more than one state, that can also influence your decision. A plan with a lower premium may end up costing more overall – or may simply not be the best fit.
Don’t Overlook the Impact of Income on Medicare Costs
Medicare premiums are not the same for everyone. Higher-income beneficiaries may pay an additional surcharge, known as the Income-Related Monthly Adjustment Amount, or IRMAA, on their Part B and Part D premiums. In 2026, higher Medicare premiums begin when modified adjusted gross income exceeds $109,000 for single filers or $218,000 for married couples filing jointly. Premiums increase further at higher income levels. Because IRMAA is calculated based on income reported two years earlier, doing a large Roth conversion, realizing significant capital gains, or taking a sizable distribution from a retirement account could increase your future Medicare costs. For that reason, the impact of IRMAA should be considered as part of your broader tax and retirement planning.
Medicare Is Part of the Bigger Retirement Picture
Medicare decisions can have a significant impact on both your health coverage and your overall financial plan. While we don’t advise clients on which plan to choose, we do consider the financial impact of Medicare as part of the planning process, particularly when it comes to IRMAA and how income-related decisions may affect future premiums. If you need help evaluating your coverage, a Medicare specialist can help you review your options, while we can help make sure those decisions are considered alongside the rest of your financial plan.
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