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When do I have to sign up for Medicare?

by Amanda Lambert | Contributor
December 28, 2022


Most people would agree that Medicare health insurance is beneficial for everyone who is eligible. The downside of Medicare is its complexity, and although the choice is usually considered a good thing, Medicare can be confusing.

In short, Medicare is health insurance for people 65 and older and some adults under 65 on disability. The choices you make will affect the cost, co-pays and accessibility of providers. Making an informed decision early on will save you stress later. We will cover everything you need to know when the time comes to enroll in Medicare.

Types and parts of Medicare

There are two main types of Medicare - Original Medicare, sometimes called traditional Medicare, and Medicare Advantage plans. Many people don't know which of these Medicare plans they have or the differences between them, leading to Medicare misunderstandings about coverage and costs.

Original Medicare

Original Medicare includes Medicare Part A and Part B. Medicare Part A is called hospital insurance and covers inpatient care, skilled nursing facilities (for short-term rehabilitation), hospice and home health.

Medicare Part B covers doctors and other health provider services, outpatient medical care, home health, durable medical equipment and preventative services.

Medicare Part D helps to cover prescription drug costs. Private insurance companies sell Part D plans.

Medigap plans (supplemental insurance)

Remember, you only need or are eligible for a Medigap plan if you have Original Medicare, not a Medicare Advantage plan. With Original Medicare, Part B customarily pays for 80% of the approved cost of services after you meet your deductible. Most people choose a Medigap plan to cover the 20% that Medicare Part B does not cover. Medigap plans are administered and sold through private insurance companies - each state has different companies you can select from to purchase a Medigap plan.

Premiums for Medigap will vary depending on the plan you choose. There can be up to 10 different Medigap plans to choose from, and each one will have a different percentage of coverage and cost. Most Medigap plan premiums increase year after year.

Medicare Advantage plans

In 2022, almost half of the eligible Medicare recipients have a Medicare Advantage plan (Medicare Part C). The main reason is the lower premiums offered by Medicare Advantage plans. Although you still have to pay the Part B premium, which is $164.90 for 2023, you do not have to purchase a Medigap or a prescription drug plan. The basics of Medicare Advantage plans:

  • Medicare Advantage is a Medicare-approved plan from a private insurance company that bundles plans which include Part A, Part B and usually Part D.
  • In most cases, you need to use the health providers who are in the plan's network. If you go outside the network, you will have co-pays.
  • You could have daily co-pay amounts in skilled nursing after the first 20 days.
  • Access to home health and skilled nursing could be restricted to specific companies that contract with your plan. On Original Medicare, you can use any company, clinic, hospital or provider that takes Medicare.
  • Medicare Advantage plans also offer some dental care, eyeglasses, hearing aid, home meal delivery and other benefits that Original Medicare does not provide.

Medicare eligibility

Medicare enrollment form

Everyone (or their spouse) who paid Medicare taxes while working for at least 10 years will not have to pay a premium for Medicare Part A and is eligible at age 65. If you or your spouse did not pay Medicare taxes, you could pay up to $506 a month in 2023.

You can get Medicare under the age of 65 if you are disabled and have received disability benefits for at least two years. You will automatically get Medicare Part A and Part B if you meet these criteria.

If you qualify for Medicare because you have end-stage renal disease, you will need to sign up for Medicare. If you have Lou Gehrig's disease, you are automatically signed up for Part A and Part B the month your disability benefits begin.

When do I sign up for Medicare?

You will automatically be enrolled in Medicare Part A when you reach 65 if you receive Social Security benefits. But if you are not receiving Social Security benefits, you will need to sign up for Medicare Part A and Part B up to three months before you turn 65 and three months after you turn 65, totaling a six-month signup period.

Now the important information. If you don't sign up during your six-month period, called your Initial Enrollment Period, you will have late enrollment penalties that are added to your Part B monthly premium when you sign up. You will pay an extra 10% each year you could have signed up for Part B but did not.

For Medicare Part D (your prescription drug plan), you could be subject to a late enrollment fee if you don't have credible drug coverage. Suppose you wait and purchase a policy after your enrollment period. In that case, the insurance company can consider preexisting conditions to deny you coverage or charge you more for the plan you do get.

There is no late enrollment penalty to sign up for a Medicare Advantage plan. But you can only sign up for a Medicare Advantage plan during the Medicare open enrollment period, which runs from Oct. 15 to Dec. 7 each year.

Consider the following example. You have signed up for a Medicare Advantage plan but are unhappy with your network of providers. You decide to return to Original Medicare with a Medigap plan during open enrollment. Upon reviewing available Medigap plans, you find that your premiums with some companies are now unaffordable due to consideration of your preexisting health conditions. Some companies tell you they won't insure you at all.

Unless you are covered under an employer-based health plan that you lose or move out of state, any changes to your existing Medicare plans must occur during open enrollment.

How does Medicare work with employer health coverage if I am still employed?

Most people sign up for Medicare Part A even when covered by their employer if there is no cost. The exceptions would be if they have not contributed enough taxes to qualify for free Medicare Part A and want to delay the premium or contribute to a Health Savings Account (HSA).

If you sign up for Part B while you still have employer-based health insurance, you could be forfeiting your right to buy a Medigap plan, with full federal protections, after your employment ends.

When you leave your employer-based health plan, you are not subject to the specific open enrollment period. Also, even if you have preexisting health problems, Medigap insurance companies must sell you a policy without charging more than they would for someone without those health conditions. This is the case as long as you buy your Medigap plan within six months of enrolling in Part B.

If you are still employed and have health insurance through your job, several different scenarios could affect you.

Scenario 1

You or your spouse are working at a job with more than 20 employees, and you have health insurance from your job.

You can wait until you stop working or lose your health insurance and sign up for Part B without penalty. If you have no premium for Medicare Part A, you can sign up when you turn 65 or later as long as you continue to have your work-related health insurance, and there will be no penalty. If you opt for Medicare while on your employer's health insurance, your job-based insurance pays first, then Medicare.

Scenario 2

You or your spouse work at a job with less than 20 employees, and you have health insurance from that job.

Ask your employer if you need to sign up for Part A and Part B when you turn 65. Most small businesses require you to sign up for Medicare when you turn 65. If you don't sign up for Part A and Part B when you should, your job-based insurance might not cover health care costs. If you decide to sign up for Medicare and keep your job-based health insurance, Medicare pays first, and then your employer-sponsored insurance pays second.

Scenario 3

You got COBRA after you signed up for Medicare.

Cobra pays second after Medicare.

You have COBRA coverage and aren't eligible for Medicare yet.

Sign up for Medicare at age 65 to avoid a Part B late enrollment penalty. COBRA coverage does not extend your time to sign up for Medicare. If you and your spouse are not employed, you will have a penalty for late Medicare enrollment after you leave your job while on COBRA.

How do I sign up for Medicare?

You can sign up for Medicare by calling 1-800-772-1213 to ask questions about whether you are eligible. You can also visit their website at

If you are already receiving Social Security

Suppose you already get benefits from Social Security or the Railroad Retirement Board. In that case, you are automatically enrolled in Medicare Part A and Part B starting the first day of the month you turn age 65. Your Medicare card will be mailed to you about three months before your 65th birthday. But don't forget to buy your Medigap plan during your initial enrollment period to take advantage of not being denied coverage due to preexisting conditions.

If you are not receiving Social Security benefits yet

You can apply for retirement benefits online if you are not getting Social Security. If you want to apply for Medicare only, call them at 1-800-772-1213.

What happens if I do not enroll in Medicare Part A at age 65?

The late enrollment penalty for Medicare Part A is 10% of any premium you owe. That amount stays in place for twice the number of years you were eligible to sign up for Medicare Part A but did not. There is no late enrollment penalty if you qualify for premium-free Part A. The issue is Medicare Part B, where there is a late enrollment penalty.

Can I decline Medicare?

You will lose your Social Security benefits if you decline Medicare Part A. However, you can decline Medicare Part B and a Medigap plan, but realize you will pay hefty late enrollment fees later if you change your mind. Enrolling in Part A is mandatory to keep your Social Security benefits.

If you get your health care through the VA, you may wonder if you should decline Medicare. The VA strongly recommends you sign up for Medicare when you can so that:

  • You will be covered in non-VA health care facilities.
  • If you lose your VA health benefits and have not signed up for Part B, you could have penalties.
  • Signing up for a Medicare Part D plan allows you to get prescriptions outside the VA mail order system at the pharmacy of your choice.

Medicare and your long-range financial plan

Medicare out-of-pocket costs (after Medicare reimbursement) can be much higher than people expect. For example, Original Medicare does not cover dental care, eyeglasses and hearing aids. Here are the basics of out-of-pocket costs for Original and Medicare Advantage plans:

  • There is no limit to out-of-pocket costs for Original Medicare, which is why most people purchase a Medigap plan to help offset expenses.
  • Medicare Advantage plans have out-of-pocket limits, depending on your plan and the company selling them. Your co-pays for out-of-network and other services in network can add up.

A careful long-range financial plan is critical when choosing a Medicare plan. Considerations include:

  • Your day-to-day expenses and the burden of high premiums.
  • Your current and future health care status and needs.
  • The health of your overall estate.
  • Your ability to pay out-of-pocket costs for home care which Medicare does not pay for.
  • Your ability to pay for assisted living that Medicare does not pay for.
  • If you should require a nursing home (not to be confused with skilled nursing), Medicare will not pay for your stay there.

Meet with a financial professional to evaluate Medicare plans in the context of your overall financial strategy. By doing so, you will make a well-informed decision that you can feel confident about.

Alliance America can help

Alliance America is an insurance and financial services company dedicated to the art of personal financial planning. Our financial professionals can assist you in maximizing your retirement resources and achieving your future goals. We have access to an array of products and services, all focused on helping you enjoy the retirement lifestyle you want and deserve. You can request a no-cost, no-obligation consultation by calling (833) 219-6884 today.

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