Medicare Essentials: What Every Pre-Retiree Needs to Know Before Age 65

Every single day, about 11,400 Americans turn 65. That means thousands of people are entering Medicare only to discover it’s not as straightforward as signing up and moving on.

In a recent episode of Conquering Retirement, Tom and Brian Hamlin sat down with Medicare specialist Blake Franklin to break down how to structure your healthcare coverage once you leave employer insurance behind.

Blake’s biggest message? Medicare isn’t one-size-fits-all, and some of the decisions you make at 65 can’t easily be undone.

Beyond the Mic: What Medicare Really Covers

Most people are still confused about what Medicare actually covers. A 2025 Kaiser Family Foundation survey found that nearly two-thirds of Americans think Medicare pays for nursing homes and long-term care, but it doesn’t.

Here’s what Medicare actually covers:

• Hospital stays and skilled nursing care (Part A)
• Doctor visits, tests, and outpatient care (Part B)

What’s missing? The remaining 20% of costs, plus prescriptions, dental, vision, hearing, and long-term care.

So if you faced a $100,000 hospital stay, you could be on the hook for $20,000 out of pocket without extra coverage. That’s why having supplemental insurance isn’t optional; it’s essential.

Medicare Advantage vs. Medigap: The Decision That Locks You In

One of the most significant decisions at 65 is whether to go with Medicare Advantage or Medigap (supplemental insurance).

Medicare Advantage plans are run by private insurance companies. They usually bundle hospital, doctor, and prescription coverage together,  sometimes even dental and vision, and many advertise $0 monthly premiums. But there’s a tradeoff: you’ll pay copays for each service, have provider networks, and face annual out-of-pocket limits that can reach nearly $9,000.

Medigap, on the other hand, works alongside Original Medicare. It covers most of that 20% gap, offers nationwide doctor access, and provides predictable costs. Monthly premiums are typically $120–$300, and you’ll need a separate prescription plan.

Here’s the catch Blake emphasized: if you choose Medicare Advantage first, you may not be able to switch to Medigap later without medical approval. When you first turn 65, you have guaranteed rights to buy Medigap coverage, but if your health changes later, that option can disappear.

The Income Surprise Most People Miss

Many retirees are shocked to learn that your Medicare costs can go up based on your income.

If you had higher earnings a couple of years before retirement, you might owe an extra monthly fee on top of your premium. It’s called IRMAA, short for Income-Related Monthly Adjustment Amount, and it’s based on your tax return from two years ago.

That means a big sale, bonus, or retirement withdrawal at age 63 could make your Medicare more expensive at 65. A little tax planning in your early 60s can help avoid those surprise surcharges.

Practical Strategies for Medicare Success

Start early. Don’t wait until the last minute. Begin exploring your options around age 64 so you understand your timeline and choices.

List your doctors and prescriptions. This helps a Medicare specialist compare real costs across plans, not just premiums.

Work with a licensed Medicare advisor. They can review the 50+ plan options in your area, at no cost to you, and help you find the best fit.

Review every year. Medicare plans change annually between October 15 and December 7. Check your coverage and adjust if needed.

Look at total yearly costs, not just premiums. A “$0” plan can still cost thousands if you need care, while a plan with a steady premium might offer far better protection.

Final Thoughts

The right Medicare decisions can save you tens of thousands of dollars over a 20-year retirement. The wrong ones can quietly drain your savings.

Start early, get expert guidance, and revisit your coverage each year. When it comes to Medicare, planning isn’t just smart, it’s one of the best investments you can make in your financial future.

Listen to more episodes for more tips on effective retirement planning. 

Sources

• Alliance for Lifetime Income – Peak 65 Research (January 2025)
• Center for Retirement Research at Boston College – Healthcare Risk Perceptions Study
• Kaiser Family Foundation (KFF) – Medicare Advantage Premium 
• National Council on Aging (NCOA) – 2025 Medicare Cost Guide 
• Centers for Medicare & Medicaid Services (CMS) – Medicare.gov 
• Social Security Administration – IRMAA Guidelines (2025)