Q: I’m 62 years old and on track to retire when I’m 65. I know that I’ll eventually need to sign up for Medicare Parts A, B, and D, but when is the best time to start?
A: Your first opportunity to sign up for Medicare is your initial enrollment period, which begins three months before you turn 65
and ends three months after the month you turn 65. Unless you choose to continue working while still covered by an employer health plan, this is the best time for most people to enroll because it ensures you’ll avoid paying penalties for signing up too late, especially for parts A and B.
Enrolling in Medicare Part A is simple if you retire before age 65 or choose to retire within your initial enrollment period. You’ll automatically be signed up when you start receiving Social Security benefits. At that point, you’ll also have the option to sign up for Medicare Part B with no risk of incurring a penalty. You can enroll for Part D for the first time during its first enrollment period after signing up for Part A, from April 1st to June 30th each year.
If you or your spouse choose to continue working and delay collecting Social Security benefits to increase your monthly benefit amount, you can still sign up for Medicare Parts A, B, and D when you turn 65. If you choose to wait, you’ll also receive a special enrollment period where you won’t face any penalties. The special enrollment period gives you the option to sign up at any time while you’re still working and covered by your group health plan, within eight months of when you or your spouse stop working, or within eight months of the group plan ending while you or your spouse continue to work.
You can also receive a special enrollment period for other circumstances, such as failing to sign up because you got inaccurate information from your employer or were impacted by a natural disaster. More information on these situations is available on the Medicare.gov page titled “When does Medicare coverage start?”
If you fail to sign up during your initial enrollment period or a special enrollment period, you can still enroll in Medicare Parts A and B during what’s called the general enrollment period. The general enrollment period runs from January 1st to March 31st each year, but you’ll likely face steep penalties if you wait this long.
The late enrollment penalty for Medicare Part A requires you to pay an additional 10 percent on your premiums for twice the number of years you didn’t sign up. For Part B, you’ll pay an additional 10 percent for each year you could sign up but didn’t for the rest of your life, with potentially higher penalties depending on your income. For Part D, you’ll pay an extra 1 percent each month (12 percent a year) if you didn’t join a plan when you first got Medicare Part A or went 63 or more days without creditable drug coverage. Again, you also may face higher penalties depending on your income.
No matter when you sign up for Medicare, make sure you do it before you get hit with these penalties!
