Regardless of your income or asset level, enrollment in Medicare is inevitable as we approach age 65. One might think a practice so commonplace would be widely understood by most Americans. In reality, enrollment in Medicare can be a confusing and stressful experience. In this blog, I identify several common steps that may help make the process a little less burdensome.
Determine Your Eligibility
Citizens of the United States and individuals who have been a legal resident of the United States for five or more years are eligible for Medicare upon turning age 65. Those under age 65 may be eligible if they have been on Social Security Disability for more than 24 months or have been diagnosed with certain eligible chronic conditions.
Enroll During Your Enrollment Window to Avoid a Gap in Coverage or Potential Penalties
- Initial Enrollment Period: If you are no longer working and do not have employer coverage, the initial enrollment period is a 7-month window that includes the 3 months before your 65th birthday, your birthday month, and 3 months after your birthday month. For example, if your birthday is in June, your initial enrollment period runs from March 1 through September 30.
- Special Enrollment Period: If you are working and have creditable employer coverage (not COBRA or retiree coverage) when you turn age 65, you may enroll in Medicare for up to 8 months after the end of employment or the end of employer coverage, whichever comes first.
- General Enrollment Period: If you fail to enroll during the initial or special enrollment period that applies to you, you may have to wait until the general enrollment period which runs from January 1 through March 31 each year. Your coverage would begin July 1, and you may be subject to penalties.
- Penalties: The penalty for Parts A and B is a 10% premium surcharge for each 12-month period you delay enrollment without qualifying coverage. Most people do not pay a premium for Part A (see below), and thus, do not pay a penalty for Part A. The penalty for Part D is a monthly surcharge added to your Part D premium if you go without creditable prescription drug coverage for 63 or more days after your initial enrollment period ends.
Understand the “Parts” of Medicare
- Part A: Hospital coverage
- Part B: Medical coverage for doctor visits and outpatient care
- Part C: Also known as Medicare Advantage. This coverage is offered by private insurance companies. It may include coverage for Parts A, B and D as well as dental and vision coverage.
- Part D: Prescription drug coverage
Determine Whether Original Medicare or Medicare Advantage is Best for You
- Original Medicare (Parts A & B)
- Pros:
- Covered with any doctor or hospital in the United States that accepts Medicare
- No referrals required for specialists
- Coverage is less likely to change each year
- Medigap eligible: Supplemental insurance to cover out of pocket costs not covered by Medicare such as deductibles, co-payments, and coinsurance
- Best time to buy is within 6 months of enrolling in Part B at age 65
- Cons:
- No prescription drug coverage, must enroll separately in Part D
- No cap on out of pocket costs unless purchase Medigap
- Pros:
- Medicare Advantage (Part C)
- Pros:
- All in one coverage, including Parts A, B, D, and often extra benefits such as dental, vision, and hearing coverage
- Annual cap on out of pocket expenses (For 2025: $9,350 for in-network and $13,300 for out of network)
- Monthly premiums may be lower
- Cons:
- Must use in-network providers for full coverage
- Referrals and pre-authorizations may be required for specialists
- Coverage may change from year to year
- Not eligible for Medigap; A Medigap plan cannot be paired with a Medicare Advantage plan
- Pros:
- Which Is Better For Me?
- Original Medicare may be better for those who travel frequently, want more flexibility with providers, or want Medigap coverage
- Medicare Advantage may be better for those who want bundled coverage, are comfortable with provider networks, or want lower premiums and spending caps
- Can I Change Plans?
- Yes, you can!
- Annual Enrollment Period: October 15 through December 7
- Switch from Original Medicare to Medicare Advantage or vice versa
- Join, drop, or switch a Part D prescription drug plan
- Medicare Advantage Open Enrollment Period: January 1 through March 31
- Applies to those already enrolled in a Medicare Advantage Plan
- Switch to a different Medicare Advantage Plan
- Switch to Original Medicare and join a Part D prescription drug plan
- Applies to those already enrolled in a Medicare Advantage Plan
Compare Premiums (see estimated premiums below)
- Part A:
- $0.00 per month: If you or your spouse worked and paid Medicare taxes for at least 40 quarters (10 years)
- $285.00 per month: If you or your spouse worked and paid Medicare taxes for 30-39 quarters
- $518.00 per month: If you or your spouse worked and paid Medicare taxes for less than 30 quarters
- Part B:
- $185.00 per month: Standard premium
- Plus Income Related Adjustment (IRMAA) based on Modified Adjusted Gross Income (MAGI) from 2 years prior (for 2025, use 2023 tax return)
- IRMAA premium can range from $259.00 to $628.90 per month in 2025 for Part B coverage based on MAGI
- The IRMAA premium is in addition to the standard Part B premium
- Can appeal for a reduction in the IRMAA premium if you had a qualifying life event
- IRMAA premium can range from $259.00 to $628.90 per month in 2025 for Part B coverage based on MAGI
- Plus Income Related Adjustment (IRMAA) based on Modified Adjusted Gross Income (MAGI) from 2 years prior (for 2025, use 2023 tax return)
- $185.00 per month: Standard premium
- Part C:
- Premiums for Part C coverage vary by plan
- Part C premium is in addition to the standard Part B premium
- Part D:
- Premiums for Part D coverage vary by plan
- IRMAA applies to Part D coverage as well
- IRMAA premium can range from $13.70 to $85.80 per month in 2025 for Part D coverage based on MAGI
Get Help!
- Use the Medicare Plan Finder Tool at Medicare.gov to compare options
- Consider working with a licensed Medicare advisor for personalized guidance
The Wealth Management team at EBS is here to help you consider how Medicare costs may fit into your overall financial plan.
This content is provided for informational purposes only and is not intended as legal, tax or investment advice. Please consult with qualified professionals for guidance specific to your situation.