The Parts of Medicare Explained (2025): How to Choose the Right Plan Without Getting Overwhelmed
👉 Want to learn how to retire without the worry of running out of money in retirement? Click here to watch this video
Why This Matters — And Why You Should Listen to Me
If you’re approaching 65, you're probably flooded with mailers, commercials, and “urgent notices” trying to steer you into a Medicare plan — many from insurance companies who care more about commissions than clarity.
I’ve helped many retirees navigate the Medicare maze — and here's what I've learned: Most people choose wrong, not because they're careless, but because the system is complicated on purpose. What investors appreciate about working with me is that I simplify the process into a plan that aligns with your healthcare needs, financial goals, and tax strategy — not just what’s trending or cheapest.
By the end of this article, you’ll understand the 4 Parts of Medicare, the difference between Medigap and Advantage, and how to choose the plan that’s right for you in 2025 — without the stress.
Key Takeaways
Medicare Part A & B = Original Medicare
Part C = Medicare Advantage
Part D = Prescription Drug Coverage
You must choose between Medigap + Part D OR Medicare Advantage — not both
IRMAA can increase your premiums based on income
Mistakes can be costly and hard to reverse — especially after enrollment windows close
What Is Medicare, Really?
Think of Medicare like a build-your-own healthcare system for retirees.
You start with the foundation — Original Medicare (Part A & B) — and then choose whether to supplement it or replace it with an Advantage Plan. Add prescription drug coverage and you're set.
Let’s break it down.
🏥 Part A: Hospital Coverage
2025 Premium: Usually free if you worked 10+ years
Deductible: $1,676 per 60-day benefit period
Covers:
Inpatient hospital stays
Skilled nursing (first 20 days)
Hospice care
✅ Essential — you get this automatically if you qualify
🩺 Part B: Medical Coverage
2025 Premium: Starts at $185/month
Deductible: $257 per year
IRMAA Surcharges: Apply if your MAGI exceeds $106,000 (single) or $212,000 (joint)
Covers:
Doctor visits
Lab tests
Surgeries
Outpatient care
⛔ Does not have a cap on out-of-pocket costs — this surprises many people
💊 Part D: Prescription Drug Plans
2025 Premiums: Vary by carrier and coverage level
Penalty Warning: You must enroll in Part D (or have creditable coverage) within 63 days of Medicare eligibility or pay a lifelong penalty
📌 Many Advantage Plans include Part D, but if you choose Medigap, you’ll need to add a stand-alone Part D plan
🧩 Part C: Medicare Advantage (All-in-One Plans)
Offered by private insurers like Humana, Aetna, and UnitedHealthcare — Part C replaces Parts A and B with one bundled plan.
Includes:
Hospital + medical coverage
Often includes dental, vision, hearing
Usually includes drug coverage (Part D)
PPO and HMO versions
You still pay your Part B premium — but your plan is administered by the insurance company, not Medicare
Medigap vs. Medicare Advantage: What’s the Right Fit?
There are two main pathways once you enroll in Medicare:
Option 1: Original Medicare + Medigap + Part D
Ideal if you want freedom of provider choice, predictable costs, and travel flexibility.
Pros:
No network restrictions
Accepted anywhere Medicare is
No referrals required
Good for snowbirds or frequent travelers
Cons:
Monthly premiums for Medigap and Part D
Must shop for drug plan separately
📌 Plan G is the most popular Medigap plan for new enrollees in 2025
Option 2: Medicare Advantage Plan (Part C)
Ideal if you want one plan, lower upfront costs, and can stay in a provider network.
Pros:
Low or zero premiums
Includes dental/vision in many cases
Built-in drug coverage
Cons:
Must use network providers
Copays at time of service
Emergency-only coverage outside your area
Prior authorizations and referrals often required
Real Life Example: Don’s Medicare Dilemma
Example
Don, a 66-year-old retiree in Florida, had just wrapped up a 35-year career. He wasn’t sure if he should go with a Medicare Advantage plan his friend recommended — zero premium, dental, and gym included — or a Medigap policy that cost over $160/month.
Here’s what we uncovered:
Don had pre-existing heart issues — Advantage plans would require referrals and prior authorizations for his care.
He traveled to see his kids in three different states — Advantage plans had limited out-of-state networks
His income from Social Security + Roth IRA withdrawals was under IRMAA thresholds, so no surcharge
💡 We chose Original Medicare + Plan G Medigap + a Part D drug plan — more upfront cost, but full freedom and lower risk long term.
He said, “I thought that ‘free’ plan was too good to be true. Now I know it was.”
Understanding IRMAA: Don’t Let Your Income Blow Up Your Premiums
In 2025, if your 2023 Modified Adjusted Gross Income (MAGI) exceeds certain thresholds, you'll pay more for both Medicare Part B (medical coverage) and Part D (prescription drugs). This added cost is called IRMAA — Income-Related Monthly Adjusted Amount.
👉 IRMAA is based on your income from two years prior to the coverage year.
So for 2025 Medicare premiums, the Social Security Administration looks at your 2023 Modified Adjusted Gross Income (MAGI).
Why?
Because 2023 is typically the most recent year with a completed tax return when they calculate your 2025 Medicare costs. This two-year lag is built into the system and applies every year.
Here’s what that looks like for individual filers in 2025:
If your income is $106,000 or less:
Part B premium: $185/month
Part D surcharge: $0
If your income is between $133,000 and $167,000:
Part B premium: $370/month
Part D surcharge: $35.30/month
If your income is between $200,000 and $500,000:
Part B premium: $591.90/month
Part D surcharge: $78.60/month
👉 Actionable Tip: Use Roth conversions before age 65 to strategically manage your taxable income in retirement. Investors I’ve worked with have saved thousands over time by planning ahead to avoid or reduce IRMAA surcharges.
What If You’re Still Working at 65?
Here’s the deal:
If you or your spouse has group health coverage from a company with 20+ employees, you can delay Medicare without penalty.
If not, you’ll need to enroll when first eligible to avoid late penalties.
If you’re contributing to an HSA, stop 6 months before enrolling in Medicare Part A to avoid tax penalties.
What Should You Do Next?
Here’s a simple roadmap:
Start Planning at Least 6 Months Before 65
Meet with a Medicare expert (like the team at Move Health who I partner with). Build a Medicare game plan that fits your health, budget, and retirement timeline.
Apply for Parts A & B
Do this 60–90 days before your start date.
Choose Medigap + Part D or Medicare Advantage
Be honest about how you use healthcare — the wrong fit will cost more later.
👉 Want to learn how to retire without the worry of running out of money in retirement? Click here to watch this video
FAQs
What’s the difference between Medigap and Medicare Advantage?
Medigap supplements Original Medicare. Medicare Advantage replaces it. You can’t have both. One offers more flexibility, the other offers lower premiums but more restrictions.
What if I miss my Medicare enrollment deadline?
You may face permanent late penalties and gaps in coverage. Always enroll within your Initial Enrollment Period unless you have creditable coverage from an employer.
Can I change plans later?
Yes — during Medicare’s Annual Enrollment Period (Oct 15–Dec 7) or Medicare Advantage OEP (Jan 1–Mar 31), but changes can be limited depending on your situation.
Disclaimer: Case studies are hypothetical and do not relate to an actual client of Lock Wealth Management. Clients or potential clients should not interpret any part of the content as a guarantee of achieving similar results or satisfaction if they engage Lock Wealth Management for investment advisory services.