Medicare Decoded: Understanding Parts A, B, Supplements, and Advantage — Plus IRMAA and Special Enrollment Rules

March 31, 2026 | By: Travis | Harmony Wealth Group

For most Americans, Medicare is one of the most important — and most confusing — financial decisions they will ever face. With multiple parts, private plan options, income-based surcharges, and narrow enrollment windows, making the wrong choice can cost thousands of dollars a year. This guide breaks down everything you need to know: how Medicare works, what it costs, how your income can affect your premiums, and how to protect your enrollment rights if life throws you a curveball.

Medicare Part A: Hospital Coverage

Medicare Part A covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health services. For most people, Part A is premium-free — you qualify if you or your spouse worked and paid Medicare taxes for at least 40 quarters (10 years). If you have fewer than 40 quarters, you can purchase Part A coverage.

Key 2026 Part A costs:

Inpatient hospital deductible: $1,736 per benefit period
Days 1–60: $0 coinsurance after deductible
Days 61–90: $434/day coinsurance
Days 91+: $868/day (lifetime reserve days)
Skilled nursing facility days 21–100: $217.50/day coinsurance

Note: A “benefit period” begins the day you are admitted and ends when you have been out of the hospital or skilled nursing facility for 60 consecutive days. There is no limit to the number of benefit periods you can have.

Medicare Part B: Medical Coverage

Medicare Part B covers outpatient medical services, doctor visits, preventive care, lab work, durable medical equipment, and some home health services. Unlike Part A, Part B requires a monthly premium for all enrollees.

Key 2026 Part B costs:

Standard monthly premium: $202.90 (up from $185.00 in 2025)
Annual deductible: $283
After deductible: Medicare pays 80%, you pay 20% of covered services
No out-of-pocket maximum under Original Medicare alone

The absence of an out-of-pocket maximum under Original Medicare is a critical planning consideration. Without a Medicare Supplement or Medicare Advantage plan, there is theoretically no cap on what you could owe in a catastrophic year.

Medicare Supplement (Medigap): Filling the Gaps

Medicare Supplement plans — also called Medigap — are sold by private insurance companies to cover the costs Original Medicare does not pay, including the 20% coinsurance, hospital deductibles, and in some cases foreign travel emergencies. Medigap plans are standardized by federal law, meaning a Plan G from one insurer offers the same benefits as a Plan G from another — only the premium differs.

Medicare Advantage (Part C): The All-in-One Alternative

Medicare Advantage plans are offered by Medicare-approved private insurers and bundle Part A, Part B, and usually Part D (drug coverage) into a single plan. Most Medicare Advantage plans also include extras such as dental, vision, hearing, and fitness benefits not covered by Original Medicare.

Key Features of Medicare Advantage

Network-based: Most plans use HMO or PPO structures, requiring you to use in-network providers or pay more for out-of-network care.
Out-of-pocket maximum: Unlike Original Medicare, Advantage plans are required by law to cap your annual out-of-pocket exposure (in 2026, the federal maximum is $9,350 in-network).
Premium variation: Many plans have $0 monthly premium, but you still pay your Part B premium.
Prior authorization: Many services require insurer approval before you can receive care — a key difference from Original Medicare.

Choosing between Original Medicare + Medigap versus Medicare Advantage is one of the most consequential decisions a retiree makes. The right answer depends on your health needs, provider preferences, travel habits, and financial situation.

IRMAA: When Higher Income Means Higher Medicare Premiums

If your income exceeds certain thresholds, you will pay more for Medicare Part B and Part D. This additional charge is called the Income-Related Monthly Adjustment Amount, or IRMAA. It is a sliding-scale surcharge based on your Modified Adjusted Gross Income (MAGI).

The Two-Year Lookback Rule

IRMAA is calculated using your MAGI from two years prior. For 2026, Social Security uses your 2024 tax return to determine your IRMAA tier. This lookback can create unexpected premium spikes — especially for recently retired individuals whose income has dropped significantly since the tax year being evaluated.

Example: If you sold a rental property or had a large Roth conversion in 2024, that income will affect your 2026 Medicare premiums — even if your 2025 income was much lower.

2026 IRMAA Brackets (Based on 2024 MAGI)

Individual MAGI	Joint MAGI	Part B Premium	Part D Surcharge
≤ $109,000	≤ $218,000	$202.90	$0.00
$109,001 – $136,000	$218,001 – $272,000	$284.10	$14.50
$136,001 – $163,000	$272,001 – $326,000	$365.70	$37.90
$163,001 – $191,000	$326,001 – $382,000	$447.30	$61.40
$191,001 – $205,000	$382,001 – $410,000	$528.90	$84.70
$205,001 – $500,000	$410,001 – $750,000	$610.50	$91.00
Above $500,000	Above $750,000	$689.90	$91.00

Source: CMS 2026 Medicare Parts A & B Premiums and Deductibles Fact Sheet

How to Request an IRMAA Exception — Form SSA-44

If you experienced a qualifying life-changing event that reduced your income after the tax year being used to calculate your IRMAA, you can appeal using Form SSA-44. The Social Security Administration will consider using a more recent tax year or income estimate to set your premium.

Qualifying life-changing events include:

Retirement or reduction in work hours
Death of a spouse
Divorce or annulment
Loss of income-producing property (through disaster, fraud, or similar circumstances)
Loss of pension income
Receipt of settlement from an employer due to closure, bankruptcy, or reorganization

To file: Complete Form SSA-44 and submit it to your local Social Security office along with documentation of the event and your most recent tax return or income estimate. Appeals should be filed as soon as the life event occurs. If your request is denied, you have 60 days to escalate to a formal hearing with the Office of Medicare Hearings and Appeals (OMHA).

Special Enrollment Periods (SEPs): Protecting Your Enrollment Rights

Missing a Medicare enrollment window can result in lifetime premium penalties and coverage gaps. Understanding when SEPs apply — and how to use them — is essential.

Part B Special Enrollment Period

If you delayed enrolling in Part B because you were covered under an active employer group health plan (your own or a spouse’s), you qualify for a SEP when that coverage ends. You have 8 months from the date employment or employer coverage ends to enroll in Part B without penalty. Important: COBRA and retiree health plans do not qualify as the basis for a Part B SEP.

Medicare Advantage SEPs

You may qualify for a Medicare Advantage SEP if you experience any of the following:

You permanently move out of your plan’s service area
Your plan is discontinued, loses its Medicare contract, or earns a low CMS Star Rating
You qualify for or lose eligibility for Extra Help (Low Income Subsidy)
You move into or out of a nursing home or long-term care facility
You newly qualify for Medicaid

Most Medicare Advantage SEPs provide a 2-month enrollment window from the qualifying event. The Annual Enrollment Period (October 15 – December 7) remains the primary window for switching plans without a qualifying event.

Medigap Special Enrollment Rights

Medigap has its own enrollment protections distinct from Medicare Advantage SEPs:

Open Enrollment Period: You have a 6-month guaranteed issue window beginning the month you turn 65 AND are enrolled in Part B. During this period, insurers cannot deny coverage or charge more due to pre-existing conditions.
Trial Right (Medicare Advantage to Medigap): If you enrolled in Medicare Advantage when you first became eligible and want to switch back to Original Medicare within the first 12 months, you have a guaranteed issue right to purchase any Medigap plan. This right lasts 63 days after disenrollment.
Guaranteed Issue Rights: Certain situations — such as your Medigap insurer going bankrupt or your plan being discontinued — trigger guaranteed issue rights regardless of age or health status.

Outside of these protected windows, Medigap insurers in most states can use medical underwriting — meaning they can charge more or deny coverage based on your health history. Timing your Medigap enrollment correctly is one of the most important Medicare planning steps you can take.

Where to Begin

Medicare decisions affect your healthcare access and your retirement budget for the rest of your life. The right combination of plans depends on your physicians, your prescriptions, your travel habits, and your income. Add in the complexity of IRMAA planning, lookback tax strategies, and enrollment window management — and it becomes clear why working with a knowledgeable advisor matters.

At Harmony Wealth Group, we help clients navigate Medicare as part of a comprehensive retirement income plan. If you are approaching 65, recently retired, or simply want to review whether your current coverage still makes sense, we invite you to schedule a complimentary Medicare planning review.

Sources

Disclosures

Investment advisory services offered through Brookstone Capital Management, LLC (BCM), a registered investment advisor. BCM and Harmony Wealth Group LLC are independent of each other. Insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents.

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