When to apply for Medicare

Key points

• Medicare is a federal health insurance program for those 65 and older and select others with disabilities.
• Medicare has four parts — which parts you choose will depend on factors such as whether you’re still covered by an employer health plan.
• Three months before you turn 65 is when to apply for Medicare, and there are penalties if you don’t sign up on time, except under certain circumstances.
• You can enroll, or make changes to your existing Medicare plan, during the annual general enrollment period or a special enrollment period, if you qualify.

As you enter your 60s, it’s time to start thinking about your health insurance in retirement. You may be used to getting health coverage through your job or through a policy you selected on a health insurance exchange. But once you reach age 65, you are eligible for Medicare, the federal health insurance program.

How do I sign up for Medicare?

You can sign up for Medicare during the initial enrollment period, the general enrollment period or the special enrollment period.

The initial enrollment period

This starts when you first reach eligibility for Medicare, which is generally when you turn 65. The initial enrollment period starts three months before your 65th birthday and ends three months after the month you turn 65. This period is when most people sign up for Medicare Part A and Part B.

The general enrollment period

This takes place each year from Jan. 1 to March 31. It is for anyone who missed their initial enrollment period or delayed enrollment for some reason. You may have to pay a monthly late enrollment penalty, unless you qualify for a special enrollment period. 

Special enrollment periods

This allows you to sign up for Medicare Parts A and B outside of your initial or general enrollment period under certain circumstances, such as having health insurance through your job or your spouse’s job.

You can also make changes to your existing Medicare plan during a special enrollment period, if you qualify.

Who is eligible for Medicare?

You are eligible for Medicare coverage once you turn 65. You can apply for Medicare up to three months before your 65th birthday so your coverage will start in your birthday month.

If you are already collecting Social Security, you don’t have to do anything to sign up for Medicare Part A and Part B — you’ll be enrolled automatically.

If you don’t sign up for Medicare once you’re eligible, you may need to pay a late enrollment penalty. The amount and nature of the penalty will depend on which part of Medicare you failed to sign up for.

“You will generally want to sign up for Medicare Part A when eligible,” said Seth Mullikin, a certified financial planner and founder of Lattice Financial. “An exception to this general rule would be if one was contributing to an HSA as part of a high-deductible health plan and didn’t need the coverage.”

That’s because once you enroll in Medicare, you’ll no longer be able to contribute to your HSA. An HSA is one of the only accounts out there that has a triple tax advantage: You contribute pre-tax dollars, the money grows tax-free and withdrawals are tax-free if you use the money for qualified medical expenses. If you want to keep contributing to yours to reap these benefits, it might make sense to hold off on enrolling in Medicare.

However, Mullikin added that even if you do enroll in Part A on schedule, there are some situations where it may make sense to delay enrolling in Medicare Part B.

“One will likely want to delay Medicare Part B if they have coverage through an employer,” said Mullikin. “Delaying Medicare Part B will save you the monthly premium you would otherwise pay.” 

You should decide whether to enroll in Part B during your initial enrollment period.

“If you delay Part B, you should notify the Social Security Administration so that you are not subject to a late penalty when you do sign up,” said Mullikin.

Late enrollment penalties

If you don’t sign up for Medicare as soon as you’re eligible — unless you have comparable coverage like health insurance through an employer — you may have to pay a higher monthly premium. 

Medicare Part A late enrollment penalty

If you are not eligible for free Medicare Part A, and you sign up late, you’ll have to pay a 10% higher premium for double the number of years since you first became eligible. 

So if you sign up for Medicare Part A three years after turning 65 and get a late enrollment penalty, you’ll have the higher premium for six years.

If you receive Medicare Part A for free, you will not be penalized for signing up late.

Medicare Part B late enrollment penalty

Everyone pays a premium for Part B, so anyone who signs up late will be hit with a penalty. For each year after eligibility you wait, your premium will increase by 10%. 

You’ll pay that higher premium for the rest of the time you’re enrolled in Medicare Part B.

Medicare Part C late enrollment penalty

There is no penalty for signing up late for Medicare Advantage, also known as Part C.

Medicare Part D late enrollment penalty

If you don’t join Medicare Part D when you first get Medicare and go 63 straight days or longer without Medicare Part D coverage (or coverage from a similar prescription medication provider), you’ll pay an added penalty with your premium. 

For each month you didn’t have drug coverage, your premium will increase by 1%. That’s 12% after a year. And you’ll pay this penalty each month for as long as you have Part D, even if you change plans. 

About Medicare

Medicare has four parts: Medicare Part A, Medicare Part B, Medicare Advantage (Medicare Part C) and Medicare Part D.

Medicare Part A

This is hospital insurance that covers in-patient care if you are hospitalized as well as nursing home care, hospice and in-home care. Part A is free for most people who worked and paid Medicare taxes for at least 10 years (or were married to someone who did), but depending on your circumstances, you may need to pay a premium.

Medicare Part B

This is medical insurance, which covers things like preventive care, outpatient care, primary care and specialist appointments and medical equipment. Medicare Parts A and B together are known as Original Medicare. Everyone must pay a premium for Part B.

Medicare Part C

This is also known as Medicare Advantage, which is a private medical plan that is affiliated with Medicare. It is an alternative to Original Medicare and sometimes has lower out-of-pocket costs than original Medicare. Medicare Advantage can also provide benefits Original Medicare doesn’t, such as dental, hearing and vision services.

Medicare Part D

This is coverage for prescription drugs, including vaccinations. Medicare Part D is included in a Medicare Advantage Plan or in addition to Original Medicare coverage. Private insurers provide prescription drug coverage following Medicare rules.

Learn more: How much does Medicare Part D cost?

I signed up for Medicare, now what?

Mullikin said that one of the most common mistakes he sees when it comes to signing up for Medicare is “sticking with a plan that no longer makes sense.”

Medicare is not simply a set-it-and-forget-it plan once you turn 65.

“Whether one chooses traditional Medicare, Parts A, B and D or a Medicare Advantage plan, Part C, the benefits may change over time,” he said. “People should review their coverage during each enrollment period to ensure they are in the best plan.”

Learn more:Medigap vs. Medicare Advantage