Medicare & You Summary and Protecting Your Retirement

christopheromalley3
Sep 28
11 min read

Retirement planning is not just about how much money you save or how you invest it.

One of the biggest threats to your financial security in retirement is healthcare costs—and most people underestimate just how much they will spend. According to Fidelity, the average couple retiring at age 65 will need over $315,000 for healthcare expenses alone. That’s before long-term care, uncovered services, or unexpected crises.

Most retirees rely on Medicare for coverage once they reach age 65, but Medicare is not free, and it’s not simple. The program is spread across multiple parts, premiums vary depending on your income, and some benefits are excluded altogether. Worse, the wrong choices—or failing to plan—can trigger higher Medicare premiums (IRMAA surcharges), coverage gaps, and surprise out-of-pocket costs.

This section provides a deep dive into Medicare, based on the official Medicare & You 2026 Handbook (128 pages condensed here), with expert insights to help you coordinate your healthcare and retirement planning.

Why Medicare Planning Matters in Retirement

Most retirees assume Medicare will cover everything. It doesn’t.

You still pay monthly premiums.
You face deductibles, copays, and coinsurance.
Prescription drugs, dental, vision, hearing, and long-term care are only partly covered or excluded.
Higher income can increase your premiums significantly.
Choosing the wrong plan can result in denied claims, out-of-network penalties, or lifetime late-enrollment penalties.

Healthcare can quickly become your largest retirement expense. Without careful planning, Medicare costs combined with Required Minimum Distributions (RMDs) from your 401(k), IRA, or TSP can:

Push you into a higher tax bracket.
Trigger IRMAA surcharges on Medicare Part B and Part D.
Reduce your Social Security net benefits.

This is why integrating Medicare into your tax, income, and investment planning is essential.

1) Medicare at a glance -- Parts A, B, C, D (the Basics) Medicare

Part A (Hospital Insurance): Covers inpatient hospital stays, skilled nursing facility (SNF) care (limited), hospice, and some home health. Most people get premium-free Part A if they or their spouse paid Medicare taxes long enough; otherwise there’s a premium.
Part B (Medical Insurance): Covers medically necessary outpatient services, doctor visits, outpatient surgery, diagnostic tests, and certain preventive services. Part B has a monthly premium, which may be deducted from Social Security. You can delay Part B if you have employer coverage, but there are enrollment rules.
Part D (Prescription Drug Coverage): Offered by private plans; pays for prescription drugs. Plans differ by formulary (list of covered drugs), cost-sharing, and pharmacy networks. Out-of-pocket Part D spending is capped at $2,100 in 2026. This is an important protection for high drug users.
Part C (Medicare Advantage): Private plans that bundle Parts A & B and usually Part D. They often offer extra benefits (dental, vision, hearing, fitness) and out-of-pocket caps; but they may use provider networks and require prior authorization for some services. Coverage rules can be different from Original Medicare, so you must check the Evidence of Coverage (EOC) carefully.

2) Enrollment windows, deadlines, and penalties — get these right

The handbook is emphatic about timing — missing windows can cost you money:

Initial Enrollment Period (IEP): Six-month window around your 65th birthday (starts 3 months before the month you turn 65, includes your birth month, and ends 3 months after). This is when most people sign up for Parts A/B and Part D if needed.
General Enrollment Period (GEP): If you miss the IEP, you can sign up from January 1–March 31 annually, but you may pay a late enrollment penalty. Part B premiums may include a penalty for late enrollment.
Special Enrollment Periods (SEPs): Triggered by life events (loss of employer coverage, moving, gaining dual eligibility). SEPs avoid penalties if you qualify.
Annual Open Enrollment (Oct 15–Dec 7, coverage starts Jan 1): Switch Medicare Advantage or Part D plans. The handbook stresses reviewing options each year because plan networks, formularies and costs change.
Medicare Advantage Open Enrollment (Jan 1–Mar 31): If you’re in MA, you can switch once during this period.

Why it matters: If you delay Part D and go 63 days without credible coverage, you may face a permanent late enrollment penalty; if you delay Part B without SEP, you risk higher premiums or gaps. The handbook spells out the exact penalties and payback rules.

3) What Medicare covers — essentials and common gaps

Covered broadly (Original Medicare)

Inpatient hospital care (Part A): Rooms, meals, nursing; the handbook explains benefit periods, deductible amounts, and length of covered stay.
Outpatient services (Part B): Doctor services, lab tests, outpatient surgery, preventive screenings. Many preventive services are free when you use Medicare-approved providers.
Some home health and hospice services under specific conditions.

Important gaps to plan for

Long-term custodial care (assistance with daily living) is not covered; this is a key driver of out-of-pocket retirement risk. The handbook points you to long-term care planning resources.
Dental, hearing, and vision are mostly not covered by Original Medicare (unless closely tied to a covered procedure); some Medicare Advantage plans add these, but check limits and networks.

4) Medicare Advantage (Part C): benefits — and the tradeoffs

Medicare Advantage plans are popular because they often offer extra benefits and an annual out-of-pocket maximum — a meaningful protection Original Medicare lacks.

Advantages:

Bundled coverage (Parts A/B and often D).
Extra benefits (dental, vision, fitness, sometimes OTC allowance).
Clear yearly out-of-pocket maximums.

Tradeoffs:

Many MA plans require you to use network providers; lots of specialists are “out of network.”
Plans may require prior authorization for procedures and post-acute care. That adds administrative friction and risk of denials if the plan’s rules are stricter than Original Medicare. Medicare+1

Bottom line: Medicare Advantage can be great if the plan’s network and benefit design match your care needs. But the EOC matters deeply — we’ll talk later about researching carrier denial histories.

5) Medicare drug coverage (Part D) — formulary, tiers, deductible and the 2026 cap

Core facts from the handbook:

Part D plans vary in which drugs they cover (formularies), which pharmacies they use, and what you pay in copays/coinsurance. Always check the plan’s drug list and preferred pharmacies.
Out-of-pocket cap: For 2026 the handbook confirms the annual out-of-pocket limit for Part D is $2,100. Once you reach that limit, you no longer pay copays/coinsurance for covered Part D drugs for the remainder of the year. This is a major beneficiary protection against catastrophic drug spending.
Late enrollment penalty: If you go 63 days or more without creditable drug coverage, you may owe a permanent penalty added to your Part D premium. The handbook explains how the penalty is calculated and exceptions (e.g., “Extra Help”).

Practical tips from the handbook: compare plans with Medicare.gov/plan-compare, and confirm if your current non-Medicare coverage counts as “creditable.” If you take specialty drugs or expect high drug costs, check the out-of-pocket path carefully.

6) Costs, assistance, and IRMAA (income-related surcharges)

Premium basics:

Part A may be premium-free for those who qualify; Part B requires a monthly premium (the standard amount is posted each year). Medicare Advantage and Part D plans add plan premiums sometimes.

IRMAA — Income-Related Monthly Adjustment Amounts:

The handbook explains that if your income (from two years prior) is above certain thresholds, you may owe IRMAA surcharges in addition to the standard premiums. The handbook shows 2025 thresholds and tells you where to find updated figures — and it explains the 2-year lookback rule (you may be able to contest if income changes).

Extra Help & Medicare Savings Programs:

For low-income beneficiaries, the handbook details programs that reduce Part B/Part D premiums and cost sharing (Extra Help, Medicare Savings Programs) and explains how to apply. If you qualify, these programs significantly reduce out-of-pocket burdens.

Why this matters: higher taxable income in retirement doesn’t just increase income taxes — it can also raise Medicare premiums through IRMAA, which creates a direct link between retirement tax planning and healthcare costs.

7) Appeals, grievance procedures, and your rights

The handbook gives step-by-step guidance on:

Appealing denials (the multiple levels: plan reconsideration, independent review, Medicare Appeals Council, and federal court if necessary). Time limits for filing appeals are strict — often 60–120 days depending on the type of appeal — so act quickly.
Filing grievances (quality of service, access, provider behavior). The handbook explains how to contact your plan, how to escalate to CMS, and resources (State Health Insurance Assistance Program — SHIP) that provide free counseling.

Key takeaway: appeals are powerful — many denials are overturned at higher levels — but they require documentation and timeliness. Keep records and get help from SHIP or a beneficiary counselor if needed.

8) How to shop for plans (Step-by-step, per the handbook)

Inventory your needs: list prescriptions, preferred doctors/hospitals, and predictable care (PT, dialysis, durable medical equipment).
Use Medicare.gov Plan Compare: plug in prescriptions and providers to compare real costs, premiums, and networks.
Check Evidence of Coverage (EOC) and Summary of Benefits: these documents explain prior authorization policies, step therapy, utilization management, and appeals rights. Don’t sign up if the prior authorization rules are likely to interfere with your expected care.
Confirm pharmacy access and catastrophic coverage behavior: with Part D’s 2026 cap, check how plan formulary tiers and utilization affect when you hit the cap.
Ask about extra benefits and their limits: some MA plans advertise transportation, home meals, or dental — confirm actual limits and exclusions.

9) Research carriers — why plan-level and company-level history matters (and how to do it)

Important new point to add: the handbook explains enrollment, appeals and protections, but it cannot tell you whether a plan or carrier tends to deny claims or uses aggressive prior-authorization software. Independent reporting and research show this matters — a lot.

What the research shows:

Recent analyses and investigations document that Medicare Advantage insurers handle prior authorizations and denials at high volume — and that denials are sometimes substantial. One research brief found millions of prior authorization requests and material denial rates, with many denials reversed on appeal. KFF
Academic and journal reports show MA denials are rising, sometimes driven by more restrictive coverage rules than Original Medicare; one study found a notable share of denials were due to MA plan policies being more restrictive than Medicare’s coverage. High denial rates create financial and care risk for beneficiaries. JAMA Network

How this affects you:

A plan that denies care aggressively or routinely puts up barriers to services can cause delays in treatment, unexpected bills, or the need for time-consuming appeals — even when the service would have been covered under Original Medicare. JAMA Network+1

How to research a plan / carrier (handy checklist):

Check CMS Star Ratings and complaints: CMS posts plan performance and complaint data. High complaint rates or low stars are red flags. Medicare
Search news reports and investigations (e.g., ProPublica, KFF, Health Affairs, JAMA) for stories on denial patterns or restrictive practices. These outlets have documented aggressive denials and problematic prior authorization tech at some large insurers. ProPublica+1
Ask your doctors: doctors run into problematic plans and can tell you which carriers make care difficult.
Ask plans about prior authorization policies: request in writing how often certain services require authorization and how appeals are handled.
Look at network breadth for your key providers (if your hospital or specialists aren’t in network, that’s a deal breaker for many). Medicare

10) Practical examples & scenarios (what the handbook wants you to understand)

Scenario A — High drug user: A beneficiary with multiple specialty meds will benefit from checking the Part D formulary carefully and understanding how the $2,100 cap is reached and whether copays/tiers will push their total out-of-pocket faster. The handbook’s Part D section explains how manufacturer assistance, Extra Help, and plan formularies interact. Medicare

Scenario B — Frequent hospital/pacer/therapy needs: If you need frequent outpatient services or skilled nursing care, check MA plan authorization rates and EOC limits — Original Medicare covers many things but has no out-of-pocket maximum; MA plans can cap out-of-pocket but may restrict services. Evaluate which risk you prefer. Medicare

Scenario C — Higher income couple: IRMAA surcharges and Part D IRMAA can add thousands to premiums if your taxable income is high. The handbook directs you where to find IRMAA thresholds and how to appeal if your income changes. Tax and retirement planning matter because they directly affect Medicare costs. Medicare

11) Appeals and getting help — step by step (practical, from the handbook)

If your plan denies coverage: get the denial in writing and read the reason carefully. The EOC will tell you next steps.
File an internal plan appeal within the time window. Include medical records and a letter from your provider describing medical necessity.
If denied again, escalate to an independent review or a higher CMS level appeal. Many denials are overturned at higher levels — but you must follow deadlines.
Seek help from SHIP or a beneficiary counselor (free) to prepare appeals and navigate paperwork. The handbook lists state SHIP contacts.

Tip: keep a simple file (dates, names, docs, written denials) — it’s the difference between winning and losing an appeal.

12) Long-term care & Medicare — what the handbook repeats (and what it doesn’t cover)

Medicare is not a long-term care insurer. Custodial care (help with daily living) is not covered. Medicare covers skilled therapy or nursing for short, specific medical reasons, but not indefinite custodial care. The handbook points to community resources and long-term care planning tools.

Action item: If long-term care is a real possibility, the handbook recommends planning now (private LTC insurance, asset-based solutions, or dedicated family planning). These choices directly affect your retirement finances.

13) End-of-life, hospice, and patient protections (short summary)

The handbook explains hospice eligibility and services (comfort care, pain management, support services), and your rights to choose or refuse care. It also outlines patient protections and how to report provider concerns. These are critical sections for beneficiaries and caregivers and are clearly explained in the handbook.

14) The most important pages to keep handy (handbook quick index)

If you only keep a few pages printed from the Medicare & You 2026 PDF, save these:

The enrollment timelines section (Initial Enrollment, SEPs, GEP).
The Part D summary with the $2,100 out-of-pocket cap (2026).
IRMAA / premium assistance pages (shows thresholds and appeal process).
Appeals and grievances (how to appeal denials; SHIP contact info).
Medicare Advantage vs. Original Medicare comparison (networks and prior authorization risks).

15) Final, practical checklist — what to do this week (based on the handbook)

Download the Medicare & You 2026 PDF and sign up for electronic updates at Medicare.gov. Medicare
If you’re turning 65 soon: mark your Initial Enrollment Period dates and decide if you need Part D or employer coverage. Medicare
If you’re already on Medicare: during Oct 15–Dec 7 compare your MA and Part D plans — formularies and networks change every year. Medicare
If you have high drug costs: check the Part D formulary and calculate how close you are to the $2,100 cap for 2026. Medicare
If your income is high or fluctuates: talk with your tax advisor about IRMAA exposure and whether an appeal or adjustment may apply. Medicare
Research plan denial histories (CMS star ratings, complaint rates) and independent reporting (KFF, Health Affairs, JAMA) before choosing an MA or PDP plan. Ask doctors about carrier experiences. KFF+1

16) Why you should care about carrier denial history (conclusion + evidence)

The Medicare handbook arms beneficiaries with rules, rights, and process; but it cannot tell you how a particular insurer behaves. Independent research shows that some Medicare Advantage plans and large insurers have higher prior-authorization and denial rates, and that many denials are overturned on appeal — indicating that denials are sometimes administrative rather than clinical. Ignoring this reality can lead to delayed care, surprise bills, and hours of appeals work for you or your family. KFF+1

Do this: use the handbook to understand your rights, and use CMS data and independent reporting to choose the carrier most likely to approve necessary care promptly.

Sources & further reading (selected, authoritative)

Medicare & You 2026 handbook (official PDF) — full handbook and all handbook pages referenced above. (Primary source for enrollment rules, Part D cap, appeals and program descriptions). Medicare
Medicare.gov — IRMAA explanation and premium assistance (handbook references and thresholds; check for annual updates). Medicare
Kaiser Family Foundation / KFF reporting — data on prior authorization volumes and denial statistics in Medicare Advantage. Useful for plan research. KFF
JAMA Health Forum / Health Affairs reporting — academic studies and analyses showing rising denial patterns and comparisons between MA and Original Medicare. JAMA Network+1

Need help turning this into action?

If this handbook summary feels like a lot (it is — Medicare is complicated), here’s a suggested next step: schedule a short, focused review with a Medicare-savvy advisor who will:

Run plan comparisons for your specific prescriptions and providers.
Evaluate IRMAA exposure and whether a tax or income change may create higher Medicare premiums.
Check CMS complaints and independent reporting for plan/insurer denial patterns.
Help you file timely appeals if a service is denied.

Final Takeaway

Medicare is one of the most complicated and expensive parts of retirement. The wrong decisions can quietly cost you hundreds of thousands of dollars in extra premiums, taxes, and denied claims.

The solution is to coordinate your retirement accounts, Social Security, Roth strategies, and healthcare coverage under one unified plan—what we call the Family IPO™. This creates tax-free income, reduces IRMAA surcharges, and funds healthcare costs without draining your retirement accounts.

Call to Action

You’ve worked your entire life to build your retirement. Don’t let Medicare mistakes, taxes, or denied claims take it away.

👉 Schedule a strategy session today to see how we can:

Reduce or eliminate your Medicare surcharges.
Turn taxable retirement savings into tax-free income.
Protect your family from long-term care costs.
Build a 100-year income plan that covers healthcare and retirement for generations.

Your healthcare costs don’t have to control your retirement—if you plan now. 630-834-3794