Dave Ramsey has spent decades telling Americans the truth about money, even when it’s uncomfortable. One message he repeats to seniors: Medicare costs more than most people expect.
Many retirees assume Medicare is fully covered after a lifetime of payroll taxes. It isn’t. Most people pay no premium for Part A (hospital coverage) if they worked at least 10 years, but Part B. which covers doctor visits and outpatient care. comes with a monthly premium. In 2026, the standard Part B premium is $202.90 per month. For higher earners, it goes up considerably through IRMAA surcharges.
Ramsey’s broader point: retirement planning that ignores healthcare costs is incomplete planning.
1. Sign Up on Time or Pay the Price
Missing Medicare enrollment deadlines is one of the most expensive mistakes a senior can make. Ramsey warns about this repeatedly because the penalties are permanent.
If someone delays signing up for Part B without qualifying coverage elsewhere, they face a 10% premium penalty for every 12-month period they were eligible but didn’t enroll. That penalty doesn’t expire. It follows them for life.
The Initial Enrollment Period opens three months before the month of a person’s 65th birthday and closes three months after. Missing it without a valid reason. like active employer coverage. locks in those extra costs.
2. Understand the Difference Between Original Medicare and Medicare Advantage
Ramsey encourages seniors to learn this distinction before they make a choice they’ll regret during a health crisis.
Original Medicare (Parts A and B) lets enrollees see any doctor or specialist who accepts Medicare, anywhere in the country.
Medicare Advantage (Part C) bundles coverage through private insurers, often with lower premiums and added perks like dental or vision. The catch is that most Advantage plans use networks. Travel frequently, live in a rural area, or need a specialist outside the network, and those extras can cost more than they save.
Neither option is universally better. The right one depends on health status, budget, and lifestyle.
3. Part D Is Not Optional if You Take Medications
Prescription drug coverage through Part D trips up a lot of people. Some skip it because they’re healthy and don’t take medications at the time of enrollment. Ramsey’s advice: sign up anyway.
Skipping Part D when first eligible and enrolling later triggers a late enrollment penalty, 1% of the national base beneficiary premium for every month without coverage. That adds up. And nobody knows when a diagnosis will suddenly make prescriptions necessary.
4. Medigap Can Be Worth Every Penny
Original Medicare covers about 80% of most approved costs. The remaining 20% has no out-of-pocket cap. For someone facing a serious illness or surgery, that gap can produce five-figure bills.
Medigap (Medicare Supplement) policies are designed to cover those leftover costs. Ramsey acknowledges that the monthly premiums feel like an extra expense, but for people with health conditions or anyone who wants predictability in their budget, Medigap can prevent a medical event from becoming a financial disaster.
The window to buy Medigap with no medical underwriting is during the open enrollment period right after signing up for Part B. After that window closes, insurers in most states can deny coverage or charge higher rates based on health history.
5. Medicare Doesn’t Cover Long-Term Care
This one catches seniors completely off guard. Medicare covers skilled nursing care under very specific, limited conditions. It does not pay for ongoing custodial care, assistance with bathing, dressing, or eating. in a nursing home or at home.
Annual costs for a private nursing home room now average close to $130,000 nationally in 2026, and that number climbs considerably in higher cost-of-living states. Ramsey recommends that people in their 50s seriously consider long-term care insurance before premiums become prohibitive.
6. Income Affects What Medicare Costs
The IRMAA surcharge catches higher-income retirees off guard. If modified adjusted gross income from two years prior exceeds certain thresholds, Medicare charges more for both Part B and Part D.
In 2026, individuals earning above $109,000 (or couples above $218,000) pay higher premiums on a sliding scale. Ramsey tells people to factor this into retirement income planning, especially Roth conversions or Social Security timing decisions that could push income into a higher bracket.
7. Annual Plan Reviews Can Save Real Money
Medicare Advantage and Part D plans change every year, premiums, formularies, and networks all shift. A plan that worked well in 2025 might look very different in 2026.
Ramsey urges seniors to treat the Annual Enrollment Period (October 15 through December 7) as a financial obligation, not an optional task. Spending an hour comparing plans on Medicare.gov can reveal better coverage at a lower cost. Staying in the same plan out of habit is a passive way to overpay.
8. Don’t Rely on Medicare Alone for a Retirement Healthcare Budget
Fidelity’s research estimates that an average couple retiring at 65 in 2026 will need approximately $345,000 to cover healthcare costs throughout retirement, and that number doesn’t include long-term care.
Ramsey’s position is that Medicare is a foundation, not a complete answer. A Health Savings Account (HSA), built up during working years through a high-deductible health plan, is one of the best tools for covering costs Medicare won’t touch. Contributions grow tax-free, and qualified withdrawals are tax-free. After 65, HSA funds can also be used for non-medical expenses without penalty (though regular income tax applies).
9. Get Educated Before You Enroll
Ramsey’s overarching Medicare lesson comes down to this: the people who end up in the worst financial shape are the ones who assumed Medicare would handle everything. It won’t.
State Health Insurance Assistance Programs (SHIPs) offer free, unbiased counseling to Medicare enrollees. Medicare.gov’s plan finder tool is genuinely useful. Spending a few hours learning the rules before turning 65 is worth more than scrambling to fix expensive mistakes after the fact. Ramsey has made a career out of saying that financial pain is usually avoidable, and Medicare is no exception.
