Having health insurance coverage is essential. For many, this coverage comes through work, whether it’s your job or your spouse’s. But what happens when you are nearing retirement? Knowing when you will become eligible for Medicare and the best time to enroll will be key to your planning process. 

Who is eligible to apply for Medicare?

If you are age 65 and meet the following criteria, you are eligible for Medicare sign up:

• You are an American citizen or have been a permanent legal resident for five consecutive years or more.
• You or your spouse now qualify to receive Social Security Benefits or Railroad Retirement Board benefits.
• You or your spouse have worked as a government employee and paid Medicare payroll taxes while not paying into Social Security.

If you are age 65, a U.S. citizen or permanent legal resident, and do not meet the other criteria, it is still possible to participate in Medicare. You just may have to pay a monthly premium for each of the Medicare coverages you require.

Let’s take a closer look at how the Medicare enrollment process works for those who qualify.

I just turned 65. Do I need to sign up for Medicare, or will I be enrolled automatically?

The answer depends on whether you are already receiving retirement benefits as of three months before your 65th birthday. This is when your Initial Enrollment Period (IEP) begins. 

If you are collecting benefits – either Social Security retirement or Railroad retirement benefits – then you will be enrolled automatically in Medicare Part A and Part B. If you aren’t collecting benefits, then you will need to apply for Medicare. 

How does automatic Medicare enrollment work?

If you meet the criteria (immediately above) for automatic enrollment, then you should receive your Medicare card and additional information about your Medicare Part A and B benefits in the mail three months before your coverage begins. The packet will come from the Social Security Administration if you’re collecting social security benefits. The Railroad Retirement Board will send you your materials if you’re receiving Railroad retirement benefits.

You will be automatically enrolled in Medicare Part A (hospital insurance) and Medicare Part B (medical insurance). While you can opt out of Medicare Part B, it’s best not to do so unless you have medical insurance through either your employer or that of your spouse. Otherwise, if you do not have it and refuse Medicare Part B coverage, you may have to pay a premium penalty if you apply for coverage at a later date.

In addition, you will want to confirm whether your current employer-provided insurance becomes secondary once you qualify for Medicare. If so, then applying for Medicare may save money on your health care costs by providing primary insurance.

When to sign up for Medicare if you don’t qualify for automatic enrollment

While the Medicare enrollment age is 65, you become eligible to begin the process three months before your 65th birthday. Here are the enrollment periods you need to know:

• Initial Enrollment Period (IEP) – This starts three months before your 65th birthday, extends through your birthday month and the three months after. You can sign up for Medicare at any point within this seven-month timeframe.
  
  Note: If your birthday is on the first day of the month, then your initial enrollment period treats it as though it’s actually in the month prior. So if your birthday were on July 1, then your seven-month IEP would begin March 1 and extend through September 30th.
  
  Your Medicare coverage will kick in based upon when during your IEP you enrolled: 
  • If you sign up any time within the initial three months, then it begins the first day of the month you officially become eligible. (Unless your birthday falls on the first, then it begins the month before your birthday.)
  • If you wait till the fourth month of your Initial Enrollment Period, your coverage will start during the subsequent month. 
  • If you sign up while in the fifth month, your Medicare benefits will start the second month after the month you enrolled.
  • If you sign up while in the sixth or seventh month, your Medicare benefits will start the third month after the month you enrolled.        

Important Tip: While you may have seven months to enroll, it’s best to do so as early as possible – no later than the initial three months. This will ensure that you won’t have gaps in coverage or run into penalties. For Medicare Part B (medical insurance), there is a late enrollment penalty that could end up costing you for the entire period you have Medicare Part B.

For Medicare Part A (hospital insurance), if you’re eligible for premium-free coverage, then you can sign up at any time once you become eligible. Once it goes into effect, its coverage will be retroactive up to six months from your sign-up date, but won’t extend beyond the date you first became eligible. 

If you are required to pay premiums for Medicare Part A, or you wish to enroll in Medicare Part B, then you have to do so during your Initial Enrollment Period (IEP) or one of the enrollment periods below.

 

• General Enrollment Period (GEP) – If you did not apply for Medicare Parts A (when a premium is required) and Part B during your Initial Enrollment Period, then you can enroll from January 1st through March 31st. When applying for Medicare during this period, your coverage will begin July 1st. You may also incur higher premiums as a result of late enrollment. 

• Special Enrollment Period (SEP) – For those who qualify, this allows you to sign up outside of your Initial Enrollment Period without having to pay a penalty. 

For example, if you currently have group health plan coverage, you can enroll in Medicare Part A (and/or) Medicare Part B, if:

 

• You or your spouse are employed. (Or if you’re disabled, then a member of your family is employed.)
• You have coverage through that work in a group health plan.
   

In addition, once that employment ends or the group health plan through that employment ends, you will also receive an 8-month period in which you can sign up for Medicare Parts A (and/or) B without penalty. This begins the month immediately after the employment or group health plan coverage ends, whichever happens sooner.

The Bottom Line

If you’re wondering when to apply for Medicare, the answer is to be proactive. Know when your Initial Enrollment Period begins and whether you’ll be automatically enrolled or you’ll need to apply as soon as you’re eligible. Not only will you save yourself time and trouble, but you’ll also save on health costs and penalties.