If you're approaching 65 years of age in the US, you've likely been thinking about Medicare -- the federal program that helps provide health care coverage to senior citizens and people with disabilities. You have a few months around your 65th birthday to apply for Medicare, but is it required? That depends on your current health insurance and employer.

Most Americans will enroll in a Medicare or a Medicare Advantage plan when they turn 65, and some will pay a significant penalty for late enrollment. But if you're 65 or older and still working with employer-based health insurance, you may not be required to enroll. 

Learn more about how Medicare works, what your options are and what penalties you could face for late enrollment after 65. For further reading, learn why the Inflation Reduction Act makes Medicare more powerful.

How does the Medicare program work?

The Original Medicare program consists of two main parts -- Part A for hospital insurance and Part B for general medical insurance -- along with supplemental private insurance for prescription drugs.

Part A. All Americans (and their spouses) who have had Medicare taxes deducted from their paychecks for 40 calendar quarters (10 years) receive Part A coverage at no cost. If you don't qualify for free Part A coverage, you can purchase it for $278 per month in 2024 if you've paid Medicare taxes for more than 30 calendar quarters, or $505 per month if not.

Part A covers surgeries, hospital stays, skilled nursing facilities and hospices, inpatient rehabilitation, lab tests and some home health care. 

Part B. For Part B coverage, all Medicare participants must pay a monthly premium, which starts at $174.70 in 2024 but rises with higher incomes. The cost is deducted from your Social Security payment or billed every three months. Part B is optional if you receive Part A for free, but if you need to pay for Part A, you'll also need to enroll in Part B.

Part B covers doctor and health provider services, outpatient treatment, medical equipment, preventive services and other medical and health services not covered by Part A. 

Part C. Medicare Advantage plans (also known as Part C plans) are privately held insurance programs that must offer at least equivalent coverage to Original Medicare Part A and Part B and often include Part D benefits as well (see below). 

Part D. Medicare Part D is a privately held insurance supplement for Medicare that adds coverage for prescription drugs. You must be enrolled in both Parts A and B to purchase a Part D plan.

Medigap plans are further private insurance plans that work with Original Medicare Part A and Part B to provide additional benefits or coverage.

How do I enroll in Medicare when I turn 65?

Medicare enrollment is managed by the Social Security Administration, and you can apply for Medicare during an initial period of seven months around your 65 birthday -- the three months before your birthday month, your birthday month and the three months after. 

After the initial enrollment period, you can enroll in Part A during the General Enrollment Period -- Jan. 1 to March 31 -- with no penalty if you qualify for premium-free coverage. If you need to pay a premium for Part A, you'll pay a penalty for enrolling late (see below). 

If you don't enroll in Part B during the initial period, you'll also have to wait until that January to March General Enrollment Period, and you'll pay a penalty that will last as long as you're enrolled in Part B. Enrolling in Medicare during the General Enrollment Period also means that your coverage won't start until July 1.

Americans who start receiving benefits from Social Security or the Railroad Retirement Board at least four months before turning 65 will automatically be enrolled in both Medicare Part A and Part B on the first day of the month they turn 65. If you want to delay Part B, you'll need to contact Social Security before your coverage starts.

If I'm 65 and older and get health insurance from work, do I have to enroll in Medicare?

No. If you're still working, your company employs more than 20 people and you have work-based health insurance, you do not need to enroll in Medicare until your existing health insurance expires. When you stop working or your employer discontinues its group insurance plan, you have eight months to sign up for Medicare, regardless of whether you have COBRA or another health insurance plan.

If you do enroll in Medicare and also have work-based insurance, your work insurance will pay first and Medicare will pay second.

If you work for a company that employs fewer than 20 people, you'll need to contact your company's HR department for the specifics of your health insurance program. It's likely that you can delay Medicare enrollment, but some employers require that people 65 and older must enroll in Medicare to receive company health insurance benefits.

For these smaller companies with less employees, Medicare pays first, and work-based insurance pays second.

If you turn 65 and don't have work-based health insurance, you'll need to enroll in Medicare within your seven-month initial enrollment period or pay a penalty that will make your premium more expensive.

Answering a few quick questions on the official Medicare website will help you determine if and when you need to enroll in Medicare. For even more details, a comprehensive fact sheet from the Centers for Medicare and Medicaid Services outlines many possible scenarios for those deciding whether or not to enroll in Medicare at 65.

If you want to completely opt out of Medicare Part A, it is possible, but you'll have to give up your Social Security benefits entirely, and pay back any benefits that you've already received.

What are the penalties for late enrollment in Medicare?

The penalties for late Medicare enrollment show up as increased Medicare monthly premiums. If you qualify for premium-free Medicare Part A, there is no penalty for late enrollment, though you'll have to wait until the General Enrollment Period of January to March to join.

If you need to pay for Part A and join after your initial enrollment period, you'll pay 10% more for your monthly premium for twice as many years as you delayed enrollment. For example, if you enroll in Medicare four years late, you'll pay the extra 10% every month for Part A for eight years.

Late enrollment in Medicare Part B can cost you more, and the penalty sticks around much longer. If you decide to enroll in Part B late, you can only do so during the General Enrollment Period and you'll pay an extra 10% per month for every year you delayed enrolling. The penalty for late Part B enrollment is permanent -- you'll keep paying the extra premium every month for as long as you receive Medicare benefits.

For Part D, you can delay enrollment if you have existing prescription drug coverage, but penalties start accruing after 63 days without coverage. You'll pay 1% more in monthly premiums for every month you delay enrolling in Part D.

After you join a Medicare plan, you'll receive a notice explaining any possible penalties. If you disagree with any penalties, you can file an appeal within 60 days of the date on the notice.

Can I change my Medicare plan after I've enrolled?

Yes. During the Medicare Open Enrollment Period (OEP), also called the Annual Election Period (AEP), you can change from a Medicare Parts A & B plan to a Part C plan, or vice versa. You can also switch Part C plans. Finally, you can join, drop, or switch to a Part D prescription drug plan. The Open Enrollment Period occurs every year between October 15 and December 7, and your updated coverage starts on January 1.

You can also make changes during Special Enrollment Periods (SPE), which occur after certain life events, like if you move or lose other coverage. You have the option to switch to another plan if your current plan changes its contract with Medicare. You can enroll in a new plan within 60 days of the life event.

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