• Medicare is a federal program that helps you pay for healthcare once you reach age 65 or if you have certain health conditions.
  • You don’t have to sign up when you turn 65 years old if you continue working or have other coverage.
  • Signing up late or not at all might save you money on monthly premiums but could cost more in penalties later.
  • Planning before you retire can help you avoid overpaying for health coverage during retirement.

Medicare is a public health insurance program that you qualify for when you turn 65 years old. This might be retirement age for some people, but others choose to continue working for many reasons, both financial and personal.

In general, you pay for Medicare in taxes during your working years and the federal government picks up a share of the costs. But some parts of the program still come with a monthly fee and other out-of-pocket costs.

Keep reading for help deciding when to sign up for Medicare. We’ll also review how that may change if you choose to keep working, what it will cost, and how to avoid penalties if you delay enrollment.

Retirement age is not a number that’s set in stone. Some people may have the option to retire early, while others need — or want — to keep working. The average retirement age in the United States in 2016 was 65 for men and 63 for women.

Regardless of when you plan to retire, Medicare has designated age 65 as the starting point for your federal health benefits. If you choose to retire early, you’ll be on your own for health coverage unless you have specific health issues. Otherwise, you’re advised to sign up for Medicare programs in the few months before or after your 65th birthday.

If you continue working after age 65, different rules apply. How and when you sign up will depend on what kind of insurance coverage you have through your employer.

What if you keep working?

If you have healthcare coverage from your employer, you may continue to use that health insurance. Because you pay for Medicare Part A through taxes during your working years, most people don’t pay a monthly premium.

You’re usually automatically enrolled in Part A when you turn 65 years old. If you’re not, it costs nothing to sign up. If you have hospitalization insurance through your employer, then Medicare can serve as a secondary payer for costs not covered under your employer’s insurance plan.

If you have an insurance plan through your employer because you’re still working, you may qualify to sign up late under a special enrollment period and avoid any penalties.

Discuss your retirement plans well in advance of your retirement date with the benefits administrator at your workplace in order to best determine when to sign up for Medicare. They might also give you tips on how to avoid penalties or additional premium costs.

Medicare programs can help cover your healthcare needs during your retirement years. It is automatically offered when you turn age 65. While Medicare isn’t necessarily mandatory, it may take some effort to opt out of.

You may be able to defer Medicare coverage, but it’s important to if you have a reason that makes you eligible for deferment or if you’ll face a penalty once you do enroll.

While you can decline Medicare altogether, Part A is usually premium-free for most people and won’t cost you anything if you decide not to use it. Declining Medicare completely is possible, but if you do, you’ll be required to withdraw from all of your monthly benefits This means you can no longer receive Social Security or Railroad Retirement Board benefits and repay anything you have already received when you withdraw from the program.

Most people don’t pay a monthly premium for Part A, but you will still have to plan to pay a portion of your inpatient care costs if you’re admitted to a hospital for care.

Other Medicare parts, like Part B, also come with costs that can add up. You’ll need to pay monthly premiums, copayments, coinsurance, and deductibles. You can pay for premiums and other Medicare costs in several ways.

While you could budget and save for healthcare throughout your life, other programs can help:

  • Paying with Social Security. You can have your Medicare premiums deducted directly from your Social Security benefits. Plus, certain protections can keep your premium increase from exceeding your cost of living increase from Social Security. This is known as the hold harmless provision, and it could save you money from year to year on your premiums.
  • Medicare savings programs. These state programs use Medicaid dollars and other funding to help you pay your Medicare costs.
  • Extra Help. The Extra Help program offers additional help paying for prescription medications under Part D.
  • Don’t delay your enrollment. To save the most money on your Medicare costs, make sure you qualify for a special enrollment period before you delay signing up.

The timing of when you choose to enroll in Medicare depends on several factors:

  • If you’ve already retired and are approaching your 65th birthday, you should plan to sign up for Medicare as soon as you are eligible to avoid late enrollment penalties.
  • If you’re still working and have insurance through your employer, you may still elect to participate in Part A because you likely won’t have to pay a premium. You may, however, want to wait to sign up for other Medicare programs that would charge you monthly fees and premiums.
  • People who continue working and have health insurance through their employer, or who have a working spouse who has health insurance coverage, are usually eligible for special enrollment periods and can avoid paying late enrollment penalties.
  • Even if you have insurance through an employer plan, you may still want to consider starting Medicare coverage because it can cover costs not paid for by your primary plan.

Once your (or your spouse’s) employment or insurance coverage ends, you have 8 months to sign up for Medicare if you’ve chosen to delay enrollment.

To avoid late enrollment penalties, only delay enrolling in Medicare if you’ll be eligible for a special enrollment period. If you don’t qualify, your late enrollment penalty will last for the duration of your Medicare coverage.

Important Medicare Deadlines

  • Initial enrollment. You can get Medicare as you approach your 65th birthday. Initial enrollment is the 7-month period that starts 3 months before you turn 65 years old and ends 3 months after. If you’re currently working, you can get Medicare within an 8-month period after retirement or after opting out of your employer’s group health insurance plan and still avoid penalties. You can also enroll in a Medigap plan any time during the 6-month period that begins with your 65th birthday.
  • General enrollment. For those who miss initial enrollment, there’s still time to sign up for Medicare from January 1 through March 31 each year. But you may be charged with an ongoing late-enrollment penalty if you choose this option. During this period, you can also change or drop your existing Medicare plan or add a Medigap plan.
  • Open enrollment. You can change your current plan any time from October 15 through December 7 annually.
  • Enrollment for Medicare add-ons. From April 1 through June 30 you may add Medicare Part D prescription drug coverage to your current Medicare coverage.
  • Special enrollment. If you have a qualifying event, including a loss of health coverage, moving to a different coverage area, or divorce, you may qualify to enroll in Medicare without penalty for 8 months following this event.
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  • The federal government helps subsidize your healthcare costs through a variety of Medicare programs after age 65.
  • If you keep working, you can delay enrollment in these programs or pay for your healthcare through a combination of public and private or employer-based programs.
  • Even with these programs, you may be responsible for a share of your healthcare costs.
  • Plan ahead for healthcare in your retirement to avoid higher costs or late enrollment penalties, especially as they apply to Medicare programs.