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1. The Six-Step Medicare Framework

Most people mistakenly think Medicare enrollment is just “pick a plan, enroll, and you’re done.” In reality, the process involves six key steps:

1. Timing – Determine whether to enroll at 65 or delay, based on Social Security, employment, employer size, and HSA contributions.
2. Choosing a Path – Decide between Original Medicare (Parts A, B, D + Medigap) or Medicare Advantage.
3. Selecting Specific Plans – Match drug coverage, doctor networks, and costs.
4. Enrollment – Enrollment is handled through Social Security, not Medicare directly.
5. Adding Coverage – Layer in private plans (drug coverage, Medigap, Advantage benefits).
6. Annual Review – Reassess every year, since costs, coverage, and networks change annually.

📖 Reference: Medicare.gov – Basics

2. Key Enrollment Factors

• Social Security Benefits: If receiving benefits before 65, Part A (hospital) enrollment is automatic and mandatory.
• Employment Status: Active employer coverage may allow deferral of Part B; COBRA, retiree, or marketplace plans generally don’t.
• Employer Size: <20 employees → Medicare is primary; ≥20 → employer coverage is primary.
• HSAs: Once enrolled in any part of Medicare, HSA contributions must stop.
• Enrollment Periods:
  • Initial: 3 months before through 3 months after 65th birthday month.
  • Special: With proof of employer coverage beyond 65.
  • General: Jan 1–Mar 31 annually, with penalties if late.

📖 Reference: SSA – Medicare Enrollment Periods

3. Medicare Paths: Original vs. Advantage

Original Medicare (A + B + optional D + Medigap):

• Broad provider access nationwide (e.g., Mayo, Cleveland Clinic).
• Doctors usually in control; fewer prior authorizations.
• Medigap covers cost gaps but requires medical underwriting after initial eligibility.
• Predictable, budgetable costs.

Medicare Advantage (Part C):

• Run by private insurers, often with $0 premiums.
• Bundled benefits (dental, vision, hearing, gym).
• Risks: narrow networks, prior authorization delays, high out-of-pocket maximums (up to $9,350 in-network / $14,000 combined in 2025).
• Harder to switch back to Original Medicare with Medigap if health declines.

📖 Reference: KFF – Medicare Advantage vs. Original Medicare

4. Costs, IRMAA, and Penalties

• Part B Premium: $185/month in 2025, adjusted for income (IRMAA).
• IRMAA (Income Related Monthly Adjustment Amount): Based on tax returns from 2 years prior; can be appealed via SSA-44 if a life-changing event reduces income.
• Penalties:
  • Part B: 10% increase per 12 months delayed.
  • Part D: 1% per month without “creditable coverage,” permanent.

📖 Reference: Medicare.gov – IRMAA

5. Impact of the Inflation Reduction Act (IRA)

Starting in 2025:

• Part D out-of-pocket costs capped at $2,000 annually (previously ~$7,500).
• Insurers must absorb 60% of drug costs above the cap (vs. 15% before), leading to plan exits and premium hikes.
• Some Part D plans already dropped popular insulins; fewer carriers remain in the market.

📖 Reference: Congressional Research Service – IRA & Medicare

6. Practical Advisor Takeaways

• Client Conversations:
  • Stress that Medicare is not “set it and forget it.” Annual review is crucial.
  • Watch for employer coverage nuances, especially for clients at small firms or with HSAs.
  • Model IRMAA exposure in retirement income plans.
• Plan Reviews: Use Medicare.gov, or tools like Hey Mo (referenced in the session) to automate plan comparisons.
• Client Red Flags:
  • Delaying enrollment without creditable coverage.
  • Assuming Advantage = free.
  • Ignoring Medigap underwriting windows.

📖 Reference: National Council on Aging – Medicare Enrollment Pitfalls

✅ Bottom Line for Advisors:
Guide clients through all six steps, not just plan selection. Timing, path choice, and annual reviews are the highest-value areas where advisors can prevent costly mistakes, reduce penalties, and help clients budget health care costs effectively in retirement.