If it weren’t for Medicare, millions of older Americans today would struggle to have their health-related needs covered. But unfortunately, because Medicare is a complex program consisting of different parts, a lot of retirees end up unclear about its rules. And that’s a problem.

If you’re approaching retirement, it’s important that you understand Medicare’s ins and outs. Here are a few key pieces of information you need to have.

Image source: Getty Images.

1. Coverage isn’t free

You might assume that once you’re eligible for Medicare, you won’t have to pay for it. That’s absolutely false.

Most Medicare enrollees do end up getting Part A, which covers hospital care, for free. But Part B, which covers outpatient care, will cost you.

The standard monthly Part B premium is $174.70 in 2024. And it’s rising to $185 in 2025. However, if you’re a higher earner, you could end up spending more on Part B each month after being assessed an income-related monthly adjustment amount, or IRMAA.

Then there’s Part D, which covers prescription drugs. You’ll need Part D on top of Medicare Parts A and B, and there’s commonly (though not always) an added premium there. And if you’re on the hook for a Part B IRMAA, prepare to have the same thing happen with Part D.

You could also opt into a Medicare Advantage plan as an alternative to original Medicare. In that case, you won’t need a Part D plan. But your Medicare Advantage plan may charge its own premium.

2. Enrolling late will cost you

Medicare coverage kicks in when you turn 65, though you can sign up ahead of your 65th birthday. In fact, your initial Medicare enrollment window spans seven months. It begins three months before the month of your 65th birthday and ends three months after that month.

But if you don’t sign up for Medicare during that window, you risk a late enrollment. And for each 12-month period you’re entitled to coverage but fail to sign up, you’re assessed a 10% surcharge on your Part B premiums — for life. There are also penalties for a late enrollment in Part D, so pay attention to when you’re supposed to sign up for coverage.

3. HSA contributions are barred after Medicare enrollment

Health savings accounts (HSAs) are a great way to set money aside for medical expenses in a tax-advantaged manner. But you should know that once you enroll in Medicare, you can no longer make contributions to an HSA. This holds true no matter what type of Medicare coverage you enroll in.

Sometimes, employees who have group health coverage through their jobs keep their employer insurance but sign up for Medicare Part A alone as secondary hospital coverage because there’s no premium involved. Doing so, however, makes it so you’re unable to continue contributing to an HSA.

Rest assured, though, that HSA funds you bring with you into retirement can be spent once you’re on Medicare. The restriction relates to HSA contributions only.

There’s lots to know about Medicare, and some of that information may take some time to process. So do yourself a favor and start educating yourself on Medicare before your retirement nears. That way, you’ll be more prepared to manage your healthcare costs, as well as the enrollment process.

The $22,924 Social Security bonus most retirees completely overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $22,924 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.

View the “Social Security secrets” »

The Motley Fool has a disclosure policy.