Eligibility

If you’re nearing 65 or you’re already 65 or older, you will need to answer a few basic questions to see if you’re eligible for Medicare:

  • Are you a U.S. citizen or legal resident?
  • Have you have resided in the United States for a minimum of five years?
  • Have you worked at least 10 years in Medicare-covered employment or contributed the equivalent through self-employment taxes?

If you answered yes to all of these questions, you qualify to enroll in Medicare.

If you have had deductions taken from your paycheck, you’ll likely receive a Medicare card in the mail just before becoming eligible. Along with this will be information showing the benefits for both Part A (hospital care) and Part B (medical care). Part B is optional and can be declined. Most people who choose to have Part B must pay a monthly premium to participate.

If you meet the first two requirements, you’re still eligible for Medicare benefits. This is known as “voluntary enrollment.” People who elect this option must pay monthly premiums for both Medicare Part A and Part B benefits.

Enrollment

Here’s what you need to know if you’re approaching eligibility and want to enroll in Medicare.

Medicare Part A

Medicare Part A covers inpatient services such as hospitalizations and treatments. You can sign up for this program as early as three months before your 65th birthday and up to three months after that birthday.

In some cases, you may be automatically enrolled. If you already receive payments from Social Security or the Railroad Retirement Board, you’ll be enrolled in Medicare Parts A and B automatically beginning the month of your 65th birthday. However, your card may come in the mail as early as three months before your birthday.

If you don’t receive payments from Social Security or Railroad Retirement, you’ll need to sign up for Medicare as soon as you turn 65. It’s best to start this process three months before you turn 65. You can enroll online, make an appointment with your local Social Security office, or call the Social Security Admission at 800-772-1213. Each year after enrollment, you’ll have an opportunity to review your coverage and make changes.

You can enroll online if you’re 65 or will be 65 in three months. You must also meet some additional requirements to apply online. You cannot be currently receiving any Medicare benefits, Social Security retirement, survivors’ benefits, or disability benefits.

So, what if you do not enroll during your eligibility period?

  • First, you’ll be assessed a late penalty for each month you aren’t signed up.
  • Second, you won’t be eligible to sign up until the next general enrollment period from January 1 through March 31 of each year.

Medicare Part B

Medicare Part B covers services related to everyday, routine doctor care such as outpatient visits. Just like Part A, you’re automatically enrolled in Part B at age 65 if you receive Social Security or Railroad Retirement benefits. You will also follow the same steps for signing up for Part B as you will for Part A. However, you aren’t required to keep Part B.

If you don’t enroll in Part B once your employer healthcare coverage ends, you’ll have to wait until the General Enrollment period. Coverage may be delayed until July. You will accrue penalty fees every month that you don't have Part B.

You may elect to drop Part B coverage if you don’t want to pay the premiums. If you’re enrolled automatically in Parts A and B, you’ll receive a Medicare card with instructions for canceling Part B. It’s important to carefully read the information on the card before enrolling.

If you don’t cancel your Part B coverage, you’ll be responsible for paying the premium. If you’re still employed and have healthcare coverage, you may not need Part B. However, if you retire or lose you healthcare benefits for outpatient care, you will have just eight months to enroll in Part B without incurring a penalty.

Additional coverage

Medicare Part A and Part B will not cover all of your medical costs. Specific items, such as prescription drugs, premiums, and copayments, are considered out-of-pocket costs. You have the option to buy additional coverage from private insurance companies that fill in these gaps.

There are three different types of private insurance plans: Medicare Part C, Medicare Part D, and Medigap.

Medicare Part C

Medicare Part C, also called Medicare Advantage Plan, replaces Parts A and B. It’s offered through private insurers in conjunction with Medicare. Medicare Advantage Plans come in several forms:

  • Health Maintenance Organization (HMO)
  • Medicare Medical Savings Account (MSA)
  • Preferred Provider Organization (PPO)
  • Private Fee-for-Service (PFFS)

There are many different options, especially when it comes to Medical Advantage Plans. However, it comes down to several basic items. These plans may charge a higher premium, but offer the same benefits and coverage as traditional Medicare with a few added benefits. These benefits include prescription drug coverage and lower out-of-pocket costs. Medicare Advantage Plans are offered locally and regionally and restrict you to regional providers. Traditional Medicare is accepted nationally and allows you to see any provider that participates with Medicare.

You can enroll in Medicare Advantage by signing up during your initial enrollment period for original Medicare or at special times throughout the year. Be aware of these important dates:

  • General enrollment is from October 15 through December 7 of each year. During this period, you can switch from a traditional Medicare plan to a Medicare Advantage Plan.
  • From January 1 through February 14 of each year, you can dis-enroll from your Medicare Advantage Plan. You have until February 14 to enroll in a Medicare drug plan.

Medicare Part D

This part of Medicare is often referred to as supplemental coverage. It’s in addition to Parts A and B. It covers prescriptions and helps you manage and potentially reduce your out-of-pocket expenses related to the cost of prescription drugs.

Medicare Part D enrollment guidelines mirror those of Medicare Advantage Plans. To join a Medicare Part D drug plan, you need to find an insurer that offers this type of coverage. Once again, if you do not signup during your enrollment eligibility dates, you may have to pay a penalty fee for enrolling in a Part D plan after your initial eligibility window has passed.

Medigap

This is a supplemental plan that can help you offset the cost of copays and deductibles that original Medicare doesn’t cover. To enroll in Medigap, you need to contact a private insurer that is licensed to sell this coverage. Medigap doesn’t include prescription drug coverage and all members of your household need to apply separately.

Takeaway

Enrolling in Medicare may seem difficult, but it doesn’t need to be. If you do your research before enrollment, you’ll be well informed. If you still have questions about what coverage you will need and can afford, you can meet with a financial advisor or speak with a Medicare representative. Start planning early and you’ll feel more confident once enrollment begins.