Is It Time To Enroll In Medicare?

Plan smart to maximize coverage and avoid costly lifetime penalties

Mark your calendars, it pays to know when to enroll in Medicare.  The Medicare enrollment rules are complex and unforgiving.  Knowing when to enroll in Medicare can save you from costly lifetime penalties and prevent long periods spent uninsured.  Health care expenses are an often overlooked element of retirement planning.  In fact, an average 65 year-old couple retiring in 2018 can expect to need an average of $280,000 to cover medical expenses throughout retirement, according to a study by Fidelity Investments*.  Medicare premiums will make up a significant portion of this cost, so it makes sense to understand them.  First, let’s start with the basics.

The ABC’s of Medicare

Original Medicare – known as Part A and Part B – is administered by the Federal Government and is the way the majority of Americans receive Medicare.  Medicare Advantage (Part C) and Prescription Drug Insurance (Part D) were created with the passage of the Balanced Budget Act of 1997. Details on these programs are below:

  • Medicare Part A (Hospital Insurance) covers hospital, skilled nursing, and hospice care.   Part A is provided at no cost if you (or your spouse) are fully paid into Social Security by working for at least 40 calendar quarters (10 years).
  • Medicare Part B (Medical insurance) covers physicians’ visits and outpatient care.    You pay a monthly premium for this coverage – $134 in 2018 – which is deducted from your Social Security Benefits if you are receiving them.  Medicare Part B will generally cover 80% of costs, leaving patients responsible for the remaining 20%.  Notably, Part B premiums will be greater for high-income individuals.  If modified adjusted gross income exceeds $85,000 (single filing) or $170,000 (joint filing), premiums increase on a tiered scale up to a maximum of an additional $294.60 per month.
  • Medicare Part C (Medicare Advantage) allows private health insurance companies to provide Medicare benefits.  A Medicare Advantage plan will generally combine the benefits of Parts A and B with supplemental coverage (such as vision, dental or the remaining 20% of costs not covered by Part B).  In addition to your Part B monthly premium, you will pay a premium for a Medicare Advantage plan.  Medicare Advantage premiums and available benefits are based on the plan and determined by your insurer.
  • Medicare Part D (Prescription Drug Coverage) provides outpatient drug coverage for an average monthly premium of $41 in 2018, although premiums can range up to $100.00 depending on the type of coverage you choose.  Like Medicare Part B, premiums increase for individuals with higher income.  Surcharges range from an additional $13.00 to $74.80 per month beyond the basic premium.

Understanding Medicare Enrollment Windows

Knowing what Medicare Parts you want to enroll in is only half the battle: you need to know when to enroll.  Medicare offers numerous enrollment periods depending on your situation and you don’t want to miss your window.  Beneficiaries who miss their enrollment period can face long periods of time without coverage and will be penalized with lifetime increases in premium payments.  If you don’t enroll on time, for example, your Medicare Part B premiums will be permanently increased by 10% for each year you did not enroll while you were eligible.  Understanding Medicare’s enrollment windows and how they relate to you is crucial.  See the graphic on the next page for a detailed timeline.

To maximize Medicare coverage and eliminate lifetime penalties, enroll during the three months prior to your 65th birthday.

Initial Enrollment Period (IEP) – This is your first opportunity to enroll in Medicare; it is a seven month window which begins three months prior to your 65th birthday and ends the third month following your birthday month.   To maximize Medicare coverage and eliminate lifetime penalties, enroll during the three months prior to your 65th birthday.  Three months before your 65th birthday is the date you want to circle on your calendar.  If you enroll during this period, coverage starts on the first day of your birthday month.  The longer you wait after your IEP begins, the less amount of time you will be covered.  If you wait to enroll until your birthday month, coverage starts the following month.  Wait until the final two months after your 65th birthday (the end of the IEP), and your coverage begins three months after your enrollment.    In this example, by delaying your enrollment until the last minute, you will have lost up to six months of Medicare coverage.


If you miss the IEP outright, you will be subject to penalties and face a long period where you will not be covered.  Remember, your Part B premiums are increased by 10% for each year you did not enroll once eligible.  In addition, Part D premiums are increased 1% per month for each month you do not enroll.  These penalties are permanent: you will continue paying higher monthly Medicare premiums for life.  Once the IEP window has closed, you need to wait until the next General Enrollment Period begins to enroll, which is discussed below.


General Enrollment Period (GEP) – This is the window where whose who missed their IEP can enroll in Medicare.  It runs from Jan. 1 to March 31 of each year.  Coverage begins July 1, so if you are forced to wait until the GEP to enroll, in addition to paying penalties you may go many months without coverage.

Special Enrollment Period (SEP) – The Special Enrollment Period allows individuals to remain on their employer’s health plan past the age of 65 without enrolling in Medicare.  To qualify, you (or your spouse) must be working and covered by a group plan through the employer.  When you do stop working, you then have an eight-month window to enroll: this is your Special Enrollment Period.  There are two important caveats here: first, your employer plan must cover a group of 20 or more members, so for many small business you are not eligible for the SEP window and will need to enroll during your IEP.  Second, COBRA is not considered a qualifying employer plan.  So if you don’t enroll in Medicare on time because you are retired but on a COBRA plan, you will be considered to have missed your IEP and forced to pay penalties.  Special Enrollment Periods are also offered following certain major life events outside of retirement, such as if you move or you lose other insurance coverage.

Open Enrollment Period (OEP) – The Open Enrollment Period is the time of the year when you can change your Part D Prescription Program or Medicare Advantage plans or enroll in a Medicare Advantage plan for the first time.  The OEP enrollment window runs from Oct. 15 – Dec. 7 each year.  All changes take effect Jan. 1 of the next year.

Medicare Advantage Disenrollment Period (MADP) – If you want to cancel your Medicare Advantage plan outright you need to do it during this period.  The window runs from Jan 1. To Feb. 14 each year.  Beneficiaries who disenroll in a Medicare Advantage plan here can also add a new Part D Prescription Drug plan during this window.  Changes begin the first day of the following month.

Knowing when to enroll in Medicare is a crucial element of retirement planning that can save you costly lifetime penalties or long periods without health care coverage.  Visit for even more information and call us for additional assistance about how to fit Medicare into your retirement plan.


*Fidelity Viewpoints, Retiree Health Costs, June 2014.  Data here is obtained from what are considered reliable sources as of 3/31/18; however, its accuracy, completeness, or reliability cannot be guaranteed.

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