When and How Should I Apply for Medicare?

This is Part 3 of Medicare FAQs we're highlighting. Be sure to check out
Part 1: What's the Difference Between Medicare Parts A, B C & D?
Part 2: Can I Switch Medigap Plans?

Age 65 is the magic number around which Medicare enrollment revolves. Here’s how that may apply to you under different scenarios.

If You’re Already Receiving Social Security or Railroad Retirement Benefits

If you collected Social Security or Railroad Retirement benefits early (before Full Retirement Age), then you’ll be automatically enrolled in Medicare Parts A&B when you reach 65. You should receive your Medicare card about three months before your 65th birthday.

There are usually no further steps you’ll need to take unless you want to also enroll in Part D (prescription drugs) and/or a Medicare Supplement plan.

You do not pay for Medicare Part A (hospital insurance), assuming you’ve met eligibility requirements. Medicare Part B (medical insurance) premiums depend on your income level and will be automatically deducted from your monthly Social Security or Railroad Retirement benefit.

If You’re Receiving Social Security Disability

If you become permanently disabled and receive benefits from Social Security Disability, then you'll be automatically enrolled in Medicare Parts A&B around the 25th month of receiving benefits. The same applies to certain disability benefits from the Railroad Retirement Board.

Medicare enrollment is immediate upon receiving benefits if you have ALS, also known as "Lou Gehrig's Disease."

If You’re not yet Receiving Social Security or Railroad Retirement

If you’re not yet receiving Social Security or Railroad Retirement, then you'll need to enroll in Medicare yourself for when you reach age 65. You can do so online here or by phoning Social Security at 1.800.772.1213. (Yes, that sounds kind of funny to go to SS to enroll in Medicare, but recall that Part B premiums are deducted from your monthly Social Security benefit.)

You can sign-up during the Initial Enrollment Period. This is the 7-month period that begins three months before the month you turn 65 and ends three months after. For example, if you turn 65 on February 16, 2018, then your Initial Enrollment Period will be November 2017 through May 2018.

If you don’t enroll in Medicare Part B during this time, you may be penalized with permanently higher premiums when you do finally enroll. That is, unless you’re still working and eligible to defer enrollment because you’re in a group health plan.

Since Part B premiums are usually deducted from Social Security or Railroad Retirement benefits, if you’re not yet receiving those then you’ll need to make alternate payment arrangements until you begin collecting those benefits.

You’re Still Working at 65 and Covered Under Group Health Plan

Let me say at the outset, as you approach 65 it’ll be important to talk with HR or your employer’s benefits office about your health plan options and coordinating those with Medicare, if applicable.

In most cases, you’ll want to enroll in Medicare Part A at age 65 even if you’re still working. But if you (or your spouse) are still working and you have group health coverage through your employer (or spouse’s employer), you will not be penalized for deferring enrollment in Medicare Part B.

There are a couple of important exceptions:

Small employer exception

If you work for an employer with fewer than 20 employees, your employer may require that you enroll in Part B at age 65 even though you already have group coverage. In such a case, Medicare would become the primary payer (of claims) and your group health plan would be secondary.

HSA exception

In order to make tax-favored contributions to a Health Savings Account (HSA), it must be paired-up with a High-Deductible Health Plan (HDHP). And if you enroll in Medicare, that would give you two health insurance plans. The HSA rules only allow one plan and it must be an HDHP. You can continue to spend-down your HSA on qualified medical expenses, but regulations won’t allow further HSA contributions.

Once you stop working (or lose health coverage) and need to start Medicare Part B, you will have an 8-month Special Enrollment Period to do so without penalty. The enrollment period is only 63 days from coverage termination to enroll in Part D for prescription drugs.