If Medicare is on the horizon for you, it’s important to understand when and how you can enroll. Original Medicare is only the first step in your journey; you need this coverage in place before you can add a private Medicare option to help cover your expenses.
Understanding the Medicare age requirements and rules will help you be ready to enroll in the plan of your choice. Making a smart plan for your coverage can help you thrive in retirement and maximize your cash flow.
Before diving into a discussion of Medicare age, let’s first review who is eligible for Medicare. Original Medicare, the government health insurance program, is available to people who meet one of these criteria:
Permanent legal residents must have lawfully resided in the United States for at least five years in order to be eligible for Medicare. If you satisfy one of these two criteria, you are entitled to Medicare at some point in the future. The question becomes when, exactly, will you enter?
Medicare provides for three different triggers for entry into Medicare:
You will notice that nothing was said about work history; work history only has an impact on how much you pay for your Part A (hospitalization) benefits. Most people who work at least ten years will be able to enroll in Part A without paying any additional premium. Their payroll taxes over their working career pre-pay for Part A. If you didn’t work enough to qualify for premium-free Part A, you may be able to claim it through your spouse.
As for Part B, you’ll pay a monthly premium for that coverage once you actually enter the program; you don’t pay for it with taxes like you do for Part A. For most people, this happens at age 65.
Most people enter Medicare by turning 65 years old. This is commonly called “ageing in” to Medicare. When you turn 65, you become eligible to actually enter Medicare and begin using your benefits. When you enter the program in this way, your initial eligibility window is called your Initial Election Period (IEP). Your IEP lasts a total of seven months, including:
You can enroll in the program at any time during this election period. If you enroll before the month you turn 65, your coverage will begin on the first day of the month you turn 65. For example, if you turn 65 in June, your enrollment window lasts from March to September. If you enroll in March, April, or May, your coverage will start on June 1. If you enroll later, your coverage will be delayed up to three months (but your enrollment is still considered to be on-time).
If you are already receiving Social Security, your enrollment in Medicare will be automatic. You will be enrolled when you hit Medicare age. If you have delayed receiving Social Security, you will have to enroll automatically during your Initial Enrollment Period.
If you intend to continue working, and you have adequate coverage from your employer or spouse’s employer, you can choose to delay taking Part B without penalty.
It is possible to enter Medicare before your 65th birthday. This happens for reasons related to your health or physical condition. To enter before standard Medicare age, you must meet one of these criteria:
These are the only three ways to enter before your 65th birthday.
When you gain eligibility due to disability, your entry into Medicare will be automatic. Once you’ve met the 24 consecutive month requirement, your entry into the program will automatically happen on the first day of the 25th month that you receive disability payments.
Entry into Medicare with ALS has been simplified by recent legislation. Your entry into Medicare will occur as soon as your Social Security disability payments begin. There used to be a waiting period, but this has now been eliminated.
Early entry into Medicare due to ESRD is the most complicated scenario. Certain factors like needing a kidney transplant can speed your entry up. In most cases, though, you will enter Medicare when you’ve received dialysis for four months. It is possible to enter the first month that you’re on dialysis if you meet certain home training requirements.
If you enroll after your Initial Election Period, you can be subject to two different late enrollment penalties:
If you miss the enrollment window triggered by reaching Medicare Age, you could pay a penalty equal to 10% of the base Part B premium for each full year that your enrollment is late. This is a permanent penalty, and you’ll pay it for as long as you have Medicare coverage.
When you enroll in Part B late, you’ll also face a restricted entry window whenever you finally do sign up. You’ll have to enroll during the General Enrollment Period (GEP). The General Enrollment Period runs from January 1 to March 31 of each year. If you enroll during this window, your Part B coverage won’t be effective until July 1st.
This is a big gap of time to be without coverage, so it’s critical to enroll in Medicare Part B on-time. Not only will your coverage start sooner, you’ll also avoid paying the late enrollment penalty.
In the same way, you can become subject to a late enrollment penalty if you fail to sign up for a Medicare Part D drug plan when you’re first eligible. If you pass on this opportunity when you reach Medicare age, and then you decide to get this coverage later, you’ll have to pay the penalty. This late enrollment penalty is based on the total number of months that your enrollment was late. Just like with Part B, you’ll pay the Part D late enrollment penalties for as long as you have the coverage, so it’s a great idea to enroll on-time.
As noted earlier, in some circumstances, you might not want to claim your Medicare benefits when you’re first eligible. You would consider this if your employer coverage (or spouse’s employer coverage) would be less expensive than your Part B premium. You can safely delay taking Part B at normal Medicare age if your employer (or spouse’s employer) employs at least 20 people.
If you work for a small employer, you will probably need to enroll in Medicare when you first become eligible. If you have any questions about this, contact your employer and ask them if you need to take Medicare at 65.
If you are able to delay your benefits beyond Medicare age, you’ll have a Special Enrollment Period (SEP) whenever your employer coverage ends. This enrollment period will last a total of eight months, and it will begin when you retire. You can enroll in Part B and Part A (if you weren’t enrolled in Part A automatically) at any time during this eight month window. Your coverage will start on the first day of the month after you apply.
As long as your employer coverage was adequate (your employer had more than 20 employees), your enrollment will not be considered late if you delay taking Part B and D until after you lose employer coverage when you retire.
Regardless of whether you enroll before, at, or after Medicare age, you’ll also have the opportunity to enroll in a private plan once your coverage starts. Most people choose to enroll in a private plan when they reach Medicare age. You should consider this as a strategy to lower your out of pocket costs while you’re in Medicare. Because of the way Medicare was designed, you're expected to cover a certain amount of the costs for your coverage. The three main options for private coverage age:
You’re not allowed to have both Medicare Advantage and Medicare Supplement Insurance, so this tends to be the big decision you have to make. Your decision here will also impact how you will receive your Part D drug coverage.
Medicare Supplement Insurance, which is also frequently called Medigap, is a popular choice to help save money on out of pocket health care costs. In order to be eligible for Medicare Supplement coverage, you must be actively enrolled in Part A and B of Original Medicare. In many cases, you also have to be at least age 65. This is a state by state determination; each state can make its own rules when it comes to age. This means that even if you enter early due to disability or illness, you may not be able to enroll in Medigap until you reach standard Medicare age.
Medicare Supplement Insurance doesn’t cover prescription drugs, so if you choose Medigap, you’ll have to enroll in a standalone Part D drug plan.
Part D of Medicare provides two ways to get coverage for your prescription medications:
Standalone drug plans require that you be either enrolled in Part B or eligible for Part A in order to enroll. In other words, if you are age 65 or older and entitled to Part A (even if you haven’t taken it yet), or if you're actively enrolled in Part B (even if you’re younger than 65), you can get Part D coverage. Unlike with Medigap, there is no age restriction for standalone drug plans.
The eligibility rules for Medicare Advantage plans, which are also known as Part C, exactly match Original Medicare. There are no age restrictions at all, so if you become eligible for Medicare early, you’ll also be eligible for Part C. This means that you also have a seven month enrollment window to choose a Medicare Advantage plan. This window is called the Initial Coverage Election Period (ICEP). Just like your Original Medicare Initial Election Period, the ICEP is centered on the month you turn 65. If you enter Medicare before age 65 because of illness or disability, you’ll have the right to enroll in a Medicare Advantage plan at that time.
Many Medicare Advantage plans come with Part D drug coverage built-in. In most cases, you’re not allowed to enroll in a non-drug Medicare Advantage plan and a standalone Part D drug plan at the same time.
If you delay taking Part B (because you were working), you’ll have the chance to enroll in a Medicare Advantage plan as soon as you enroll in Part B after your retirement.
Once you’re enrolled in Medicare and have chosen a private plan, you’ll have additional opportunities to make changes to your coverage each year. The Medicare Annual Election Period (AEP) occurs from October 15th to December 7th of each year.
During AEP, you can make any of the following changes to your coverage, depending on your existing plan:
Medicare Supplement Insurance doesn’t have an annual enrollment period. You can theoretically enroll in or switch Medigap plans at any time of the year, although you might have to pass medical underwriting.
Whether you are just now approaching Medicare age, or have been enrolled for years, it’s always a good idea to review your coverage needs and the options available to meet them. Be sure to use both your initial enrollment windows as well as the annual opportunities to optimize your coverage. If you want help reviewing your options or comparing Medicare plans in your area, get help from a licensed health insurance agent today.
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