Medicare for planners: Parts A, B, D, Medigap, and what each costs you
Medicare is the biggest change to a retiree's health insurance, and most of it is arranged in a few months around a 65th birthday. For retirement planning the useful questions are narrow: which parts you will pay for, what they cost, what the deadlines are, and what a plan should assume. Runway adds Medicare costs to your withdrawal plan automatically once someone in the household turns 65. Here is what it is adding, and what it isn't.
What are Parts A, B, C and D?
- Part A covers inpatient hospital care and some other services. Medicare.gov lists the Part A premium as "$0 for most people" who paid Medicare taxes for at least 10 years, with a $1,736 deductible for each hospital stay in 2026.
- Part B covers doctors, outpatient care and many preventive services. The 2026 standard premium is $202.90 a month (up from $185.00 in 2025), and the annual deductible is $283, per the CMS 2026 fact sheet. After the deductible you generally pay 20% of approved amounts.
- Part D covers prescription drugs through private plans. Premiums and deductibles "vary by plan," and Medicare.gov gives a 2026 out-of-pocket limit of $2,100.
- Part C, Medicare Advantage, bundles Parts A and B (and usually D) into a plan from a private insurer instead of Original Medicare. You can't use Medigap with it.
The figures above are from Medicare.gov's costs page and the CMS fact sheet.
What is Medigap?
Medigap (Medicare Supplement Insurance) is sold by private insurers and helps pay your share of Original Medicare costs. You need both Part A and Part B to buy one. The timing matters: "Under federal law, you get a 6 month Medigap Open Enrollment Period. It starts the first month you have Medicare Part B and you're 65 or older." During it an insurer can't refuse to sell you a policy or charge you more because of your health; after it, you may not be able to buy one, or it may cost more.
When do I have to sign up?
Your Initial Enrollment Period is a seven-month window: the three months before the month you turn 65, the month itself and the three months after. Missing it has a price. Medicare.gov's penalty page says that for Part B "You'll pay an extra 10% for each year you could have signed up for Part B, but didn't," and that the penalty is added to your premium permanently. For Part D, "You'll pay an extra 1% for each month" you delay without creditable drug coverage. Working past 65 with employer coverage changes the rules, so check with your employer's plan administrator before delaying. If you're also funding an HSA, note that your contribution limit becomes zero once you enroll (details here).
What does Medicare add to a retirement plan?
Runway adds the standard Part B premium for everyone in the household who is 65 or older, plus any income-related surcharge (IRMAA). It uses $202.90 a month in today's dollars. For the sample couple Runway loads (Pat 65, Alex 64, $95,000 of spending), that is:
| When | Part B premiums |
|---|---|
| The first year (only Pat is on Medicare) | $2,435 |
| Every year after (both on Medicare) | $4,870 |
| Total from 65 to 95 | $143,653 |
For this couple the surcharge never applies: their income stays below the first IRMAA line, so the total is the plain premium. But a big enough income in one year can change that, even if only for a year or two. If the couple fills the 22% tax bracket with Roth conversions, they cross the first IRMAA line in two years and the surcharge adds $4,594; if they fill the 24% bracket, it adds $21,950 ($12,710 at Pat's age 67 and $9,240 at 68):
| Roth conversion strategy | Medicare cost, 65 to 95 | IRMAA surcharge included |
|---|---|---|
| No conversions | $143,653 | $0 |
| Fill the 12% bracket | $143,653 | $0 |
| Fill the 22% bracket | $148,247 | $4,594 |
| Fill the 24% bracket | $165,604 | $21,950 |
That's the reason conversions and Medicare belong in the same conversation. The surcharge is set by your income from two years earlier, so the cost of a conversion shows up two years later. See the IRMAA guide for the tiers and the lookback.
What isn't included?
The premium isn't the whole cost of being on Medicare, and Runway doesn't try to price all of it. The plan adds Part B and any IRMAA surcharge. It does not add:
- Part D plan premiums. These vary by plan, and the engine only includes Part D in the IRMAA surcharge. Add your plan's premium to your spending.
- Medigap or Medicare Advantage premiums, which vary by plan, age and location.
- Deductibles and coinsurance: the $283 Part B deductible, the 20% coinsurance, the Part A hospital deductible, and drug costs up to the $2,100 cap.
- Dental, vision and hearing, which Original Medicare mostly doesn't cover.
- Long-term care, which Medicare doesn't pay for. See the long-term-care post.
The practical consequence: the spending number you enter should already include the premiums and expected out-of-pocket costs that Runway doesn't add itself, since Runway adds Part B and IRMAA only. An HSA, if you have one, can pay Part B and Part D premiums tax-free after 65, and Runway's plan uses an HSA balance for the Part B premium (more).
See Medicare in your withdrawal plan. The Healthcare page shows the Part B premium and any IRMAA surcharge for each year, including the income two years earlier that set it.
Try the plannerHow were these numbers computed?
The coverage details and prices are quoted from Medicare.gov and the CMS 2026 fact sheet. The Part B figures come from Runway's engine on the sample couple, married filing jointly, plan through age 95, with the standard Part B premium of $202.90 a month held constant in today's dollars. The conversion rows run the same household with Roth conversions up to the stated bracket in every year it applies, with Pat claiming Social Security at 69 and Alex at 68. The IRMAA surcharge uses the 2026 tiers and a two-year income lookback, in the way the IRMAA guide describes.