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Signing Up for Medicare After Age 65 and Possible Penalties

October 6, 2016

If you wait until after age 65 to enroll in Medicare, you could face penalties in some cases. Therefore, it’s important to understand these potential penalties and plan ahead to avoid them.

Many people are automatically enrolled in Original Medicare, Part A and Part B, if they’re receiving Social Security Administration (SSA) or Railroad Retirement Board (RRB) benefits and turn 65 years old. Those who receive SSA or RRB disability benefits generally also qualify. If you have not paid Medicare taxes during at least 10 years in which you or your spouse worked, or if you’re not yet receiving Social Security or Railroad Retirement Board benefits when you qualify for Medicare, the Social Security Administration (or the RRB) generally will not automatically enroll you in Medicare. You must initiate enrollment.

In most cases, anyone who is a U.S. citizen or a legal resident who has lived at least five continuous years in the United States is entitled to a Medicare Initial Enrollment Period that lasts seven months —commencing three months before the month of your 65th birthday, including your birthday month, and concluding three months after that month.

Use the Initial Enrollment Period to sign up for Medicare Part A and Part B at age 65 if you’re not eligible for automatic enrollment, and any of the following is true:

  • You are retired or not working, and you’re not receiving SSA or RRB benefits.
  • You do not have health insurance from an employer for whom you or your spouse is still working.
  • You are a citizen living outside the United States and its territories and are not working. In some cases you may not be eligible to receive Medicare coverage; read here for more information.

To avoid late penalties if you’re in any of the above circumstances, you may want to enroll in  Medicare Part A and Part B at age 65 even if you haven’t worked long enough to get Part A without paying a premium, or if you receive retiree benefits or COBRA coverage from a former employer. The late enrollment penalties for Part A and Part B can be significant:

  • If you don’t qualify for premium-free Medicare Part A, and you don’t sign up during your Initial Enrollment Period, your monthly premium may go up 10%. You pay the higher premium for double the number of years you were eligible for Part A but didn’t sign up.
  • If you wait to sign up for Medicare Part B, or if you drop Part B and then enroll later, your Part B premium could increase by 10% for each full 12-month period that you could have had Part B but didn’t sign up. However, in some cases you might qualify for a Special Enrollment Period (discussed below) and might avoid the penalty.

If you didn’t sign up for Medicare during your Initial Enrollment Period, then you can usually enroll during the annual General Enrollment Period (January 1 to March 31). Penalties may apply.

For more information on Medicare late enrollment penalties, see Medicare Late Enrollment Penalty.

Special Enrollment Periods (SEPs)

In most cases, you will be able to delay signing up for Part B beyond age 65 for as long as you have group health insurance from an employer or union for whom you or your spouse still actively works. When you (or your employed spouse) eventually stop working or your health coverage ends (whichever is earlier), you may be entitled to a Special Enrollment Period to sign up for Part B without a penalty. This period lasts for up to eight months from that date, but you can enroll earlier to prevent a break in coverage. Medicare benefits begin the first day of the month after you enroll.

Note that COBRA and retiree health plans aren’t considered “coverage based on current employment” and generally don’t qualify you for a SEP.

As an active-duty service member, or the spouse of an active-duty service member, you might be able to sign up for Medicare Part B without a penalty even if you’re over age 65. Generally you must have Part B coverage to keep your TRICARE (health insurance for military members and their families) coverage.

If you’re an active-duty service member, or the member’s spouse:

  • You don’t have to sign up for Part B to keep your TRICARE coverage as long as the service member is on active duty.
  • To keep continuous TRICARE coverage, you must enroll in Part B before the active-duty service member retires.
  • If you have Medicare because you’re 65 or older (or disabled), you can generally get Part B during a Special Enrollment Period.

Signing up for Medicare Part D (prescription drug coverage)

If you have prescription drug coverage that is “creditable” — meaning that Medicare considers it of at least equal value to prescription drug coverage under Medicare Part D — you don’t need to enroll in a stand-alone Medicare Part D Prescription Drug Plan or a Medicare Advantage Prescription Drug plan when you turn 65. Your current insurance plan can tell you whether it’s creditable or not.

If you lose creditable coverage — whether it’s from a current or former employer, union, COBRA, Veterans Affairs, or the military’s TriCare-for-Life system — you’ll typically have a two-month period to enroll in a Medicare Prescription Drug Plan without a penalty. But if you voluntarily drop such coverage after your two-month enrollment period expires, you generally have to wait until the Annual Election Period (Oct. 15 to Dec. 7 each year) to sign up for a Medicare plan providing Part D prescription drug coverage offered by a Medicare-approved private insurance company.

You may also get a Special Election Period to enroll in a stand-alone Medicare Prescription Drug Plan, or a Medicare Advantage Prescription Drug plan, without a penalty if you do so within two months of returning to the United States after living abroad, or within two months of being released from prison.