Medicare Basics: What to Know Before You Make a Decision

Your guide to timelines, terminology, and Minnesota’s upcoming Medigap rule change

Navigating Medicare can feel overwhelming — especially when the mail, commercials, and advice from every direction start showing up all at once. At Fiat, our goal is to help you understand the essentials so you can make confident decisions that fit both your lifestyle and your long-term financial plan.

Below is a clear breakdown of the key Medicare definitions, enrollment timelines, important takeaways from our Inner Circle Workshop, and the Minnesota-specific change coming in 2026.

1. Your Initial Enrollment Period (IEP): Your First Chance to Enroll

During our workshop, we referenced a seven-month window, but here’s the correct version:

Medicare’s Initial Enrollment Period (IEP) is a seven-month window.

It includes:

• Three months before your 65th birthday month
  
  
• Your birthday month
  
  
• Three months after your 65th birthday month
  
  

During this time, you can enroll in:

• Medicare Part A
  
  
• Medicare Part B
  
  

If you’re already receiving Social Security at 65, Medicare usually enrolls you automatically. If not, you’ll need to complete the enrollment yourself.

2. Understanding the Parts of Medicare

Part A – Hospital Insurance

Covers inpatient hospital care, skilled nursing, hospice, and certain home health services.
Most people qualify for Part A at zero cost after working (or having a spouse who worked) at least 10 years.

Part B – Medical Insurance

Covers doctor visits, outpatient services, labs, imaging, and preventative care.
Part B has a standard monthly premium of $202.90 per month in 2026. Your income can affect this amount, meaning you may owe an Income-Related-Monthly-Adjustment-Amount (IRMAA) if your household MAGI exceeds certain thresholds. 

Part D – Prescription Drug Coverage

Covers prescription medications.
Part D is purchased through an insurance carrier either as a stand-alone plan or bundled with your Medicare Advantage or Cost plan. Due to new legislation, every Part D plan pays 100% for covered medications once the annual maximum out of pocket is met ($2,100 in 2026). Premiums vary by plan and are impacted by IRMAA.

Part C – Medicare Advantage

Bundled coverage that includes:

• Part A
  
  
• Part B
  
  
• Usually Part D
  
  
• Often extra benefits such as dental, vision, hearing, or wellness perks
  
  

Medicare Advantage plans must include an annual maximum out-of-pocket limit for medical care.

Medigap (Supplement Insurance)

Works alongside Original Medicare to help cover deductibles, coinsurance, and out-of-pocket costs.
Key notes:

• You can see any provider nationwide who accepts Medicare
  
  
• Plans are standardized and guaranteed renewable
  
  
• You must enroll in a separate Part D plan for prescriptions
  
  
• Medical underwriting applies unless you’re in a guaranteed-issue window
  
  

3. Medicare Advantage vs. Medigap: What to Consider

Medicare Advantage may be right for you if you:

• Prefer lower monthly premiums
  
  
• Want bundled coverage
  
  
• Don’t mind provider networks
  
  
• Want extra benefits like dental, vision, hearing, and over-the-counter drugs 

Medigap may be the better fit if you:

• Want freedom to see any doctor who accepts Medicare
  
  
• Prefer predictable out-of-pocket expenses
  
  
• Travel or live in multiple states
  
  
• Want fewer rules and no referrals
  
  

If choosing Medigap, remember: you will need Part D for prescriptions.

4. Enrollment Windows and Penalties

Important periods to understand:

• Initial Enrollment Period (IEP): Your first chance to enroll
  
  
• Annual Election Period (AEP): October 15 – December 7 each year

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• Special Election Period (SEP): 60 days following loss of other coverage. Example: Leaving your employer-sponsored plan to enroll in Medicare
  
  
• Part B Late Enrollment Penalty: Applies if you delay without employer coverage
  
  
• Part D Late Enrollment Penalty: Applies if you go too long without credible drug coverage
  
  

These penalties can be permanent, so timing matters.

5. Minnesota’s New Medigap Rule Coming in 2026

Starting in 2026, Minnesota will introduce:

A one-time Special Enrollment Period (SEP) for Medigap, available to residents ages 65–70.

This SEP allows:

• Enrollment in a Medigap plan without medical underwriting
  
  
• A guaranteed-issue opportunity, no health questions
  
  
• A premium surcharge will apply if using MN guaranteed-issue right to enroll in Medigap plan
  
  

It does not change Medicare Advantage rules, Part D, or any other enrollment timelines.

This is especially helpful for people who:

• Previously chose Medicare Advantage but want to switch to Medigap
  
  
• Missed their initial Medigap guaranteed-issue window
  
  
• Have health concerns that would typically restrict their options
  
  

More details will be provided as the state finalizes implementation in 2026.

6. Still Working at 65? What You Need to Know

If you’re working past 65, or covered under a spouse’s employer plan, your Medicare timing may be different.

Consider:

• Whether the employer has 20 or more employees
  
  
• Whether your employer coverage is considered “creditable”
  
  
• How your employer plan coordinates with Medicare
  
  
• Whether delaying Medicare makes financial sense
  
  

Getting this wrong can lead to penalties or coverage gaps, so a review with your advisor is always a good idea.

7. Need Additional Medicare Help? Here’s How We Support You

Fiat does not sell Medicare plans or provide one-on-one Medicare selection services, but we want you to feel supported with professionals who do this every day.

When clients need personalized Medicare guidance, we often refer them to M/Y Shoreline in Excelsior, as they specialize in helping retirees compare plans, evaluate coverage, and understand their options clearly.

If you live outside Minnesota — or if you simply want more than one resource — your advisor can connect you with additional Medicare professionals both in-state and out-of-state. We work with several trusted partners and are happy to point you in the right direction based on your situation.

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