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Section 1: Medicare Essentials 

Get Smart About the Enrollment Process

Unless you’re retired and already receiving Social Security, Medicare is not automatic





•  65 is a milestone birthday
•  Signing up for Medicare at the right time
•  Penalties for late enrollment
•  Signing up during a special enrollment period
•  How Medicare coordinates with job-based insurance
•  What is Medigap insurance?
•  When to buy a Medigap policy


65 is a milestone birthday



At age 65, you become eligible for Medicare, so you’ll need to set aside time around your birthday to go through its many options to determine the coverage that meets your health needs and budget.


The only time signing up for Medicare parts A and B is automatic is if you’re already receiving Social Security or Railroad Retirement Board benefits. And if you live in Puerto Rico and are receiving those benefits, only Part A will come to you automatically.


So it’s up to you to get ready — not only for what people think of as traditional Medicare, but also to choose prescription drug coverage, insurance to pay for other costs that Medicare doesn’t cover, or a plan that acts like the health maintenance organizations (HMOs) or preferred provider organizations (PPOs) you might have had at your job. You’ll have to do your homework.


You can sign up beginning three months before the month you turn 65. And you will have until three months after your birthday month to enroll. If you miss that deadline, you may end up paying more. 


Those who will get Part A hospitalization benefits for free because they’ve paid Social Security payroll taxes for 40 quarters or more can choose to delay enrolling in Part A without penalty. But delaying Part B can mean increased costs for the rest of your life.



Some new terms you’ll encounter in this article:


  • COBRA. A federal law that allows you to continue your employer-provided health insurance after you lose or leave a job. The caveats: You can receive the continued coverage for only a limited time, which differs depending on circumstances; you must pay both the employee and employer’s share of the premiums; and COBRA automatically becomes secondary coverage at age 65.
  • Coinsurance. The percentage of costs you pay for services after you’ve met your deductible.
  • Deductible. A set amount you pay annually for services you use before your insurance begins to pay.


  • Employer- or job-based coverage. Health insurance you receive while you’re actively working.
  • General enrollment period. The three months from Jan. 1 to March 31 each year when those who miss their initial enrollment period for Medicare can sign up. Coverage takes effect the month after you sign up during the general enrollment period.


  • Initial enrollment period. The seven months surrounding your 65th birthday, including the three months before your birth month and the three months after your birth month.
  • Primary coverage. The insurance that pays your medical bills first, up to the plan’s limits.
  • Retiree coverage. Health insurance from a former employer that kicks in after you retire from work. It generally will not be your primary coverage after you turn 65, and benefits vary depending on the company.
  • Secondary coverage. A supplemental insurer that pays only if the primary insurer didn’t cover the entire bill. And that secondary payer might not pay all uncovered costs.
  • Special enrollment period. A time when you can sign up or make changes to your Medicare plans because certain events have happened in your life.
illustration of a woman in front of a large computer screen that says enrollment on it

Signing up for Medicare at the right time



Timing is everything. It’s especially important when enrolling in Medicare. As you approach 65, you generally want to sign up during your initial enrollment period — unless you’re receiving Social Security and are automatically enrolled. This seven-month period includes the three months before the month in which you turn 65 and the three months after.

If you’re among the large majority of people who don’t have to pay premiums for Part A, you can enroll at any time during and after your initial enrollment period. Coverage will be retroactive for six months but no earlier than the first month you became eligible for Medicare.


If you don’t get on board with Part B during your initial enrollment period, your monthly premiums for this part of Medicare—which covers doctor visits and other outpatient services—may cost you more for the rest of your life. You’ll get a chance to enroll during Medicare’s annual general enrollment period, which runs from Jan. 1 to March 31 each year. Coverage takes effect the month after you sign up during the general enrollment period.


Here is some additional information to understand before you enroll.


Want to delay? If you or your spouse continue to work past age 65 and have health insurance through your or your spouse’s employer, you may not need to sign up for Medicare yet. But you’ll have to sign up within eight months of stopping that job-based coverage to avoid a late enrollment penalty. You can sign up before your employer coverage ends to ensure you have no gap in coverage.


Size matters. If you or your spouse work for a company with 20 or more employees, you can delay signing up for Medicare. But if your employer has fewer than 20 employees, you usually need to sign up at age 65 to avoid a coverage gap. For those small companies, Medicare usually becomes the primary coverage at age 65 and an employer plan is secondary, whether you sign up for Medicare or not.


Special rules for Tricare beneficiaries. If you're receiving benefits through Tricare military health care, you generally need to sign up for parts A and B of Medicare during your seven-month initial enrollment period to keep your coverage. There are a few exceptions: If you're among the small number of people who aren't eligible for premium-free Part A, you don't need to sign up. Also, if you or your spouse still serve on active duty, you don't have to enroll in Part B. However, you must enroll in Part B before the active-duty service member retires to avoid a break in coverage.


Rounding out VA coverage. If you have health care benefits through the U.S. Department of Veterans Affairs (VA) and no other coverage, sign up for parts A and B of Medicare within your initial enrollment period so you'll have coverage for non-VA doctors and hospitals.


Penalties for late enrollment



Parts A, B and D of Medicare may charge penalties if you enroll late and Medicare supplement plans may deny coverage or charge more if you apply late. Make sure you know your enrollment period dates and your options. You may delay enrolling without incurring penalties in certain situations.


Late enrollment penalties usually last for as long as you have Medicare. But if you're paying this penalty and qualify for and enroll in a Medicare Savings Program or the Extra Help program — both help low-income older adults pay for Medicare's out-of-pocket costs — you'll no longer have to pay the penalty.




Most people don’t pay a premium for Part A hospitalization coverage, but those who do may be penalized if they sign up after their seven-month initial enrollment period. The penalty is an additional 10 percent of the premium amount. It’s charged every month for twice the number of years enrollment was delayed.





Part B, which pays for doctor visits and outpatient medical care, charges a penalty when you sign up after your initial enrollment period unless you qualify for a special enrollment period, such as the end of health insurance from your employer or your spouse’s employer. The penalty is an additional 10 percent of the premium amount for each full 12-month period that enrollment is delayed. It’s charged every month for as long as you have Part B — generally the rest of your life.


Part D


The penalty for late enrollment in Part D, the prescription drug plan, is an additional 1 percent of the national base beneficiary Part D plan premium for each month you delay (this number, which is different from the average Part D premium, is calculated each year by the Centers for Medicare and Medicaid Services). You pay the penalty for as long as you’re enrolled in a Part D plan. You may delay enrolling in Part D without penalty if you qualify for the low-income Extra Help program or have other coverage that Medicare considers to be at least as good as a Part D plan. This could include employer coverage for workers or retirees.


You should receive a letter from your employer or insurance plan in September of each year letting you know if you have drug coverage considered comparable to a Part D plan. If you lose your drug coverage, you’ll be eligible for a two-month special enrollment period during which you can sign up for a Part D plan without a penalty.


Keep that letter, so when the time comes to enroll in Part D, you can show Medicare you did have prescription drug coverage considered equal to Part D.


Signing up during a special enrollment period


If you are 65 or older and delayed signing up for Medicare Part A or Part B because you or your spouse had health insurance at work, you will be able to sign up for Medicare during a special enrollment period and avoid a late enrollment penalty. This is available while you're receiving health insurance through your job or for eight months after you or your spouse stop working.


Keep in mind: This special enrollment period applies only to job-based coverage. Medicare does not count retiree health insurance or COBRA as job-based coverage. If you have retiree or COBRA coverage, you’ll need to sign up for Medicare at age 65 or potentially face a late enrollment penalty or gaps in coverage.


How Medicare coordinates with job-based insurance


When you have job-based insurance, some employers, generally those with fewer than 20 employees, can designate Medicare as a worker’s primary health coverage when the employee turns 65.


Then the job-based or other private insurance is considered secondary coverage, so it will pay for a medical claim only after Medicare has paid its share. If your job-based insurance becomes your secondary coverage, it’s important to sign up for Medicare during your initial enrollment period. Otherwise, you might find that you’re left with a lion’s share of the bill if you have a medical emergency.


If you have retiree coverage or COBRA, those health insurance plans also are considered secondary coverage. In that case, you also need to sign up for Medicare or risk having a gap in your coverage. There's an exception: If you're a retired federal employee, you can continue to receive primary coverage through the Federal Employees Health Benefits Program after age 65. But if you change your mind and decide to enroll in Medicare later, you may have to pay a late enrollment penalty.


If you work for a company with 20 or more employees, your job-based insurance is considered primary and Medicare is secondary.


Confused about your situation? Ask your benefits manager or human resources department if your job-based insurance is considered primary or secondary. Or seek help by calling 800-MEDICARE. 


What is Medigap Insurance?


If you have job-based insurance or coverage from Tricare or a retiree health plan, those benefits may help fill in the gaps in Medicare. Otherwise, a Medigap policy can help you pay for some of Medicare's deductibles, copayments and other out-of-pocket costs. These optional supplemental insurance policies work with original Medicare. The federal government requires a standard set of benefits, but private companies offer the plans.


The 10 standardized Medigap policy types pay some of the out-of-pocket costs that Medicare doesn’t cover, such as Part A’s hospital deductible or the 20 percent coinsurance in Part B. Each plan is designated with a different letter, such as Plan G. Several companies in your area may offer policies with the same letter designation and the same benefits, but premiums may not be the same.


When to buy a Medigap policy


You may apply for Medicare supplement insurance any time after you enroll in Medicare, but you have special benefits if you buy a policy during your Medigap open enrollment period. This one-time open enrollment period starts when you enroll in Medicare Part B at age 65 or older and lasts for six months.


During that time, you can buy any Medigap policy sold in your state, even if you have health problems. If you want to buy a new policy or switch policies afterward, insurers in most states can deny you coverage or charge a higher premium based on your health history.


Some states have their own rules governing Medigap policies, so if you didn’t sign up during your enrollment period, check with your State Health Insurance Assistance Program to ask about state-specific Medigap rights.


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