How To Enroll In Medicare And When You Should Start Your Research Process
Getting older means making more decisions, from planning for your kids’ futures to mapping out your retirement years. One of the most important decisions that you’ll make as you prepare to retire or head into your 60s is what to do about health insurance. If you’ve been working, then you probably have a plan through your employer. Most people do. But once you turn 65, you become eligible for Medicare, a government-backed program designed specifically for seniors. There are also other reasons that you might be eligible for Medicare, which can muddy the waters when you’re researching your options for coverage.
Medicare is administered by the Centers for Medicare and Medicaid Services (CMS), but technically speaking, you’ll enroll via Social Security. In this article, we’ll outline eligibility guidelines so that you can sign up with confidence, and as always, if you have any questions about how to sign up, or what plan might be best for your needs, we’re always available toll free to answer any questions you might have. We’ll also highlight the importance of enrolling on time to avoid penalties and delays in coverage. Here’s what you need to know about eligibility and Medicare.
Who is eligible to receive Medicare benefits?
Two groups of people are eligible for Medicare benefits: adults aged 65 and older, and people under age 65 with certain disabilities. The program was created in the 1960s to provide health insurance for senior citizens. Older Americans had trouble finding affordable coverage, which spurred the government to create a program specifically for this portion of the population. It’s an entitlement program in that the federal government finances it to some degree, but it’s also supported and financed directly by the very people who use it. You’re eligible for Medicare because you pay for it, in one way or another.
To receive Medicare benefits, you must first:
- Be a U.S. citizen or legal resident of at least five (5) continuous years, and
- Be entitled to receive Social Security benefits.
That means that every U.S. citizen can enroll in Medicare starting at age 65 (or earlier based on disability, which we’ll discuss below). When we say “Medicare,” we’re referring to original Medicare. This comprises Parts A and B. Part A covers hospital care while Part B covers medical care. There are four parts to the program (A, B, C and D); Part C is a private portion known as Medicare Advantage, and Part D is drug coverage. Please note that throughout this article, we use Medicare as shorthand to refer to Parts A and B specifically.
Medicare was created with senior citizens in mind, but the program evolved to include people with disabilities. If you qualify for Social Security disability payments, then you’ll be enrolled automatically into the Medicare program after a set amount of time. People with Amyotrophic Lateral Sclerosis (ALS or Lou Gehrig’s disease) or end-stage renal disease (ESRD) also qualify for Medicare. For people with ALS, Medicare enrollment is automatic and starts the same month as your disability benefits.
To qualify for Medicare based on ESRD, you first need to meet the following qualifications:
- Your kidneys no longer work;
- You’ve had a kidney transplant or you need regular dialysis; and
- One of the following: you meet the work criteria under Social Security, the Railroad Retirement Board or government employee guidelines; you’re eligible for or are already receiving benefits from Social Security or the Railroad Retirement Board; or you’re the spouse or dependent child of a person who meets one of the first two requirements
If you qualify for Medicare based on a disability or medical condition like ESRD, you don’t have to be 65 years old. Typically, enrollment is automatic for people with disabilities. If you think you might qualify based on a medical condition or disability, contact Social Security for specific information and guidelines.
Another important note to take into consideration: You don’t have to be retired to sign up for Medicare, especially Part A. We’ll go over the reasons why it’s a good idea to sign up when you’re first eligible, but know that you can delay enrollment if you’re still working, usually without a penalty. Even people who get enrolled automatically can opt out of coverage. Medicare is not mandatory. However, it is a good, affordable option for health insurance if you qualify.
When should you enroll for Medicare?
Just because you qualify for something doesn’t mean you need to sign up, right? Not always. In the case of Medicare, it’s actually better to sign up sooner rather than later. While it’s true that Medicare isn’t mandatory, there are fees for signing up outside of your initial eligibility window. Also known as the initial enrollment period (IEP), this 7-month window gives you some flexibility in enrolling in Medicare once you qualify.
If you don’t get automatic enrollment (discussed below), then you must sign up for Medicare yourself, and you have seven full months to enroll. The IEP starts three months before the month you turn 65 and ends three months after the month you turn 65.
Initial Enrollment Period (IEP)
Starts 3 months before the month you turn 65 and runs for three months after your birthday month. Examples:
December 1st – June 30th
March 1st – September 30th
June 1st – December 31th
September 1st – March 31st
Coverage start dates vary based on when you sign up. If you sign up during the first three months of your IEP (i.e., before your birthday month), then your health insurance will take effect on the first day of your birthday month. If your birthday falls on the first of the month already, then your coverage will start on the first of the previous month. The longer you wait to sign up, the later your coverage will start, which is why it’s a good idea to check your eligibility and enroll as soon as you’re able.
This initial signup period applies to people who don’t get automatically enrolled. People who are already enrolled in Social Security and those with disabilities will be automatically enrolled into original Medicare depending on their situation.
Here’s A Chart On How Medicare Enrollment Works Under Different Scenarios
|If you…||Then you…||And coverage will start…|
|Don’t have a disability and won’t be receiving Social Security or Railroad Retirement Board benefits for at least four months before you turn 65||Must sign up for Medicare benefits during your 7-month IEP||On the first day of your birthday month as long as you enroll before your birthday month; otherwise, you may face a delay of up to three months|
|Will be receiving retirement benefits from Social Security or the Railroad Retirement Board at least four months before you turn 65||Will be enrolled automatically into Parts A and B||The first day of your birthday month|
|Are under 65 with a disability||Will be enrolled automatically into Parts A and B||On the 25th month that you receive Social Security disability benefits (or 25th month of receiving certain Railroad Retirement Board disability benefits)|
|Have ALS (Lou Gehrig’s disease)||Will be enrolled automatically into Parts A and B||The same month that you start receiving disability benefits|
|Have end-stage renal disease (ESRD)||Must sign up for Medicare benefits once you meet the qualifications for this condition||On the first day of the fourth month of dialysis treatments (usually) – but situations can vary, so if you have ESRD, check with Social Security|
Can You Delay Medicare Enrollment Even If You Are Eligible?
The short answer here is yes, you can choose when to sign up for Medicare. Even if you get automatically enrolled, you can opt out of Part B since it requires a monthly premium. But there are good reasons to join on time when you first become eligible.
A Delay In Coverage Can Result In Increased Costs, Especially Long Term
First, signing up during your initial eligibility window guarantees that you have coverage sooner. Waiting to enroll in Medicare until after your 65th birthday (but still within the IEP) can mean waiting for effective coverage for up to three months after you turn 65. Three months might not sound like a long time, but when you need medical care or prescription drugs, that 3-month gap can be expensive.
If you don’t sign up at all during your initial eligibility window, then you’ll have to wait until the general enrollment period to enroll, which runs from January 1 through March 31 each year. Coverage then starts in July.
Here’s An Example Scenario:
- You turn 65 in June, but you choose not to sign up for Medicare during your IEP (which would run from March to September).
- In October, you decide that you would like Medicare coverage after all. Unfortunately, the next general enrollment period doesn’t start until January.
- You sign up for Parts A and B in January.
- Your coverage starts in July, over a full year from when you turned 65.
During those 13 months that you didn’t have health insurance, a lot could happen. If you didn’t have another qualifying kind of health insurance, such as job-based coverage, then you would also face penalty fees for delaying enrollment – not to mention the added stress of not having health insurance for over a year.
Penalty Fees For Not Enrolling On Time
Another major reason to sign up on time is to avoid penalty fees for enrolling outside of your eligibility window. Most people get Medicare Part A for free because they’ve paid into the system during their working lives. You must have earned 40 work credits to qualify for premium-free Part A, and almost everyone has by the time they’re eligible.
For the small percentage of Medicare enrollees who pay for this portion, Part A costs $259 a month (if you’ve earned 30 to 39 work credits) or $471 a month (if you’ve earned less than 30 work credits) in 2021. These amounts increase to $274 or $499, respectively, in 2022. If you fall into these categories and must pay for Part A coverage, then you will face a penalty fee for late enrollment if you don’t sign up during your initial eligibility window. That fee is 10 percent on top of your premium, and it lasts for twice the number of years that you could have had Part A but didn’t.
- Example Scenario: You wait to enroll in Part A for one year, you don’t qualify for premium-free Part A, and you don’t qualify for a special enrollment period. You would have to pay a 10 percent penalty fee on top of your premium for two full years (2x the one year you delayed coverage).
That’s an extra $27 or $50 a month for coverage if you have to pay for Part A in 2022. For Part B, the penalty can be even more burdensome. Everyone pays for Part B coverage, even people who get enrolled automatically, which is why people who qualify for automatic enrollment can opt out of Part B.
How much you pay for Medicare Part B depends on when you enroll and your annual income, a topic we discuss more fully elsewhere. But the standard premium for Part B enrollees in 2021 is $148.50 a month. That increases to $170.10 a month in 2022.
Now, let’s say you choose to delay enrollment. If you don’t sign up for Part B when you’re first eligible (during that initial 7-month window outlined above), and you don’t qualify for a special enrollment period, then you will face a penalty fee when you do enroll. The Part B penalty breaks down as follows:
- You’ll pay an extra 10 percent for every full, 12-month period that you could have had Part B coverage but chose not to, and
- The penalty lasts for as long as you have Medicare Part B.
Costly Example Scenario: If you waited three years to sign up for Part B, then you would pay 30 percent on top of your regular premium, and it lasts forever (as long as you have Part B). Since the Part B premium usually increases somewhat each year, a 30 percent surcharge could add up. This would also be on top of any income-related surcharge you would pay if you earned above the standard threshold. You can see how signing up when you’re first eligible makes the most sense, especially if you aren’t still working or you don’t qualify for another type of creditable coverage.
What About Medigap Plans?
Original Medicare covers a good portion of your care, but it’s not exhaustive. There’s a wide range of services that Parts A and B don’t cover, including dental and vision care. About a third of Medicare enrollees choose the private version of the program – Medicare Advantage – because it tends to cover more than its original counterpart. But if you like the flexibility of original Medicare and don’t need the benefits that Advantage affords, but you still want additional coverage to offset your out-of-pocket costs, then consider adding a Medigap supplemental policy to your plan.
Medigap insurance, as its name suggests, covers some gaps left by original Medicare. Parts A and B require copays, coinsurance and deductibles, which can add up over time. And since Medicare requires Part B enrollees to cover 20 percent of their costs without any caps in place, you may face higher bills without some protection in place. Medigap offers that protection. With a supplemental plan in place, you may have coverage for:
- Copays and Coinsurance
- Deductibles for Part A, B or both
- Medical services while traveling
- Additional time in the hospital
This is just a sampling of the benefits that Medigap offers. There are 10 plan types, labeled A through N, and each plan type is standardized in all but three states (Massachusetts, Minnesota and Wisconsin). You can read more about Medigap here or Medicare.gov, but we’re mentioning it in this article because there’s a relatively brief window of time to enroll in Medigap with open eligibility.
Medigap Eligibility in 2021
Eligibility for Medigap lasts for six months, starting from the month you turn 65 and have Medicare Part B in place. In other words, you must be 65 and enrolled in Medicare to sign up for a Medigap policy. Once you’re 65 and enrolled in Part B, you have six months to enroll in Medigap without being subject to medical underwriting. During this initial eligibility window, you can:
- Buy any Medigap policy regardless of health history
- Buy a plan knowing that you’ll pay the same rate as someone without any medical problems
- Buy any Medigap plan available in your state as long as it’s sold by an approved Medigap seller
Once that 6-month window closes, you can still sign up for Medigap, but the conditions change. Outside of the initial signup window, you’re no longer guaranteed coverage if you have medical problems. And if you find a plan at all, it will likely cost much more because it’ll be based on medical underwriting. The best time to sign up for supplemental coverage through a private Medigap policy is when you first become eligible – i.e., when you turn 65 and enroll in Medicare Part B.
What If You Need Help With Other Medicare Costs, Like Prescription Drug Coverage?
We’ve focused our discussion on original Medicare, which is Parts A and B. But there are two other portions of Medicare that also have eligibility requirements, so we want to touch on those portions here. Part C, also known as Medicare Advantage, is the private portion of Medicare. These plans are sold by private companies but still adhere to the guiding principles of the federal Medicare program. They’re also an increasingly popular choice, with about a third of enrollees now choosing the private option over traditional Medicare. Medicare Part D, added to the Medicare lineup in 2003, covers prescription drugs. You can sign up for Part D if you have original Medicare. Many Medicare Advantage plans cover prescription drugs as well.
Medicare Advantage Plan Eligibility For 2022
Here’s what you need to know about eligibility for Parts C and D:
|If you…||Then you can…|
|Qualify for Medicare because you’re turning 65||Sign up for Medicare Advantage or Part D during your 7-month initial enrollment period (IEP)|
|Qualify for Medicare because of a disability but aren’t 65||Sign up for Medicare Advantage or Part D during the 7-month period that starts 3 months before your 25th month of disability payments, includes that 25th month, and ends 3 months after the 25th month of disability payments|
|Qualify for Medicare because of a disability and you’re 65||Sign up for Medicare Advantage or Part D during the 7-month period that starts 3 months before the month you turn 65, includes your birthday month, and ends 3 months after your birthday month|
|Don’t have Medicare Part A, and you enrolled in Part B during general enrollment (January 1 to March 31)||Sign up for Medicare Part D only, from April 1 to June 30|
|Have Medicare Part A, and you enrolled in Part B during general enrollment (January 1 to March 31)||Sign up for Medicare Advantage only, from April 1 to June 30|
You can also switch to Medicare Advantage (from Original) or join a Part D drug plan during the Medicare annual open enrollment period, which runs from October 15 through December 7 each year. And if you already have an Advantage plan, you can use the Medicare Advantage Open Enrollment Period (January 1 to March 31 each year) to make a one-time change to your coverage.
Eligibility for Medicare Advantage depends on enrollment in original Medicare. In other words, you must first be enrolled in Medicare Parts A and B to sign up for Medicare Advantage.
Medicare Advantage itself doesn’t charge a late enrollment penalty if you sign up outside your eligibility window, but you would still be responsible for late fees for Parts A and B if you enrolled late since Advantage requires enrollment in Parts A and B. Medicare Part D does impose a penalty fee for signing up outside your initial eligibility window. If you go for 63 consecutive days or more outside of your 7-month IEP without creditable drug coverage, you may owe a penalty fee on top of any regular Part D premiums you have.
Creditable Drug Coverage Includes:
- A Part D drug plan
- A Medicare Advantage plan with drug coverage
- Another Medicare health plan that covers prescription drugs
- A plan from an employer or union
“Creditable” means that the plan pays at least as much as a standard Medicare drug plan would pay. If you have creditable coverage in place, then you wouldn’t pay a penalty for signing up for Part D outside of your initial eligibility period. The penalty for Part D late enrollment requires some math:
- The penalty for not signing up on time for Part D is 1 percent x the number of full months you didn’t have coverage, multiplied by the “national base premium,” which changes each year.
- In 2022, the national base premium for Part D will be $33.37.
- Let’s say you waited two years to sign up for Part D, and you don’t have creditable coverage.
- Penalty calculation: 1% x 24 months = 24% (your penalty).
- $33.37 (base premium) x 24% (your penalty) = $8.01
Medicare rounds the penalty to the nearest $.10. That additional $8.10 per month would be added onto your premium, which may or may not be similar to the national base premium. Part D plans are sold by private companies, so premiums vary based on several factors. The penalty fee would also be recalculated each year to account for changes in the national base premium. As with the Part B late enrollment penalty, the Part D penalty lasts for as long as you have a Medicare drug plan.
Now That You’re Eligible For Medicare, What Should You Do?
If you’re eligible for Medicare now or will be soon, now’s the time to research your options for getting covered. Original Medicare offers a variety of benefits, notably that it’s accepted nationwide without the need for networks. But Medicare Advantage may provide you with benefits that its original counterpart doesn’t cover, such as medical coverage abroad and added benefits like dental and vision. Adding Medigap supplemental insurance to your original Medicare could also boost your coverage if you don’t want or need the added benefits of Medicare Advantage.
If you’re not sure where to start, check out our other articles on Medicare, speak with an agent about your needs or visit the official program website at Medicare.gov for useful information on how to get started. Keep in mind that initial Medicare eligibility lasts for seven full months for most enrollees. Plan ahead to maximize your time and your health benefits.
As always we appreciate your feedback and if you ever have any questions, you can use our toll-free-number to connect with a licensed Medicare professional.