Turning 65 comes with a lot of mail. Much of it is about Medicare, and frankly, a lot of it is confusing. The one thing you really don’t want to do is miss your sign-up window, because the late penalties can stay with you for as long as you have Medicare.
Here’s a plain-English rundown.
First, the alphabet soup
- Part A is hospital coverage. Most people don’t pay a premium for it.
- Part B covers doctor visits and outpatient care. There’s a monthly premium.
- Part D is prescription drug coverage, sold by private insurers.
- Medicare Advantage (sometimes called Part C) is an all-in-one alternative to Original Medicare, offered by private companies.
- Medigap policies help pay the costs Original Medicare leaves behind, like deductibles and coinsurance.
Your sign-up window
Your Initial Enrollment Period is seven months long. It starts three months before the month you turn 65, includes your birthday month, and ends three months after.
If you’re already collecting Social Security when you turn 65, you’ll usually be signed up for Parts A and B automatically. If you’re not, it’s on you to enroll. It’s a good idea to put a reminder on your calendar a few months before your birthday.
What if I’m still working?
If you, or your spouse, are still working and covered by a large employer’s health plan, you may be able to hold off on Part B without a penalty and sign up later. That later window is called a Special Enrollment Period.
Talk to your benefits office before you decide, though, because the rules depend on the size of the employer and the kind of coverage you have. And if you’re putting money into a Health Savings Account, those contributions have to stop once your Medicare starts.
Why the penalties matter
Miss your window without other qualifying coverage, and your Part B premium can go up 10% for each full year you could have had it. Part D has its own penalty that grows the longer you wait. In most cases you’ll pay those higher premiums for as long as you have Medicare, which is why it’s worth getting the timing right the first time.
The official site, Medicare.gov, is a good place to compare plans once you’re ready.
Want to talk it through?
We go over Medicare and other health care costs in our free Retirement Readiness class. Bring your questions, and your spouse if you’d like.
A quick note: this is general information, not tax, legal or investment advice. The rules change from time to time, and your situation is your own, so check with a professional before you act on anything here.