Starting Medicare: What you need to know after 65

It's more complicated than just turning 65

Published: October 16, 2014 11:15 AM

Understanding Medicare's different parts


Medicare comes in four parts, each of which covers particular services or types of insurance. Virtually everybody who gets Medicare eventually enrolls in the first two parts, which have been around since the program started in 1966.

  • Part A covers hospital inpatient care, some types of home health care, hospice care, and care in skilled nursing facilities. There is no premium for Part A if you or your spouse has earned at least 40 Social Security work credits. (Here are your options if you don't have those credits.)
  • Part B covers doctor services, outpatient hospital care, preventive care, and some types of home health care. You have to pay a monthly premium for Part B. In 2015, as in 2014, it's $104.90 for individuals with an income of less than $85,000 a year and couples with an income of less than $170,000. Higher-income beneficiaries pay more.

The second two parts were added later.

  • Part C, also known as Medicare Advantage, is an alternate way of getting your Part A and Part B benefits. Instead of the government paying your provider directly, Part C plans are run by Medicare-approved private insurance companies. If you elect to get your benefits through Part C, you must also be enrolled in Part A and Part B.
  • Part D covers prescription drugs. This is an optional benefit that is only available through private insurance companies. Most Medicare Advantage plans include Part D. 

For more details on exactly what each part of Medicare covers, see Medicare's website.

No matter how you choose to receive your Medicare benefits, you will receive certain preventive services for free, such as immunizations and screening tests for breast and colon cancer.

Signing up for Medicare for the first time

Must have: 'Medicare & You'

Before you do a single other thing, download a copy of "Medicare & You," the consumer handbook that Medicare puts out every year. It includes detailed and crystal-clear instructions for starting Medicare—but, inexplicably, Medicare won't mail a copy to you until you are already enrolled. Here's where to find it.

When you can enroll

The "initial enrollment period" for Medicare consists of the three months before, the month of, and the three months after your 65th birthday. If you want your coverage to start the month you turn 65, sign up during that first three-month period.

If you are already receiving Social Security, Medicare will automatically enroll you. If not, you must enroll on your own either online through or at a Social Security office.

When to enroll in Part A

Nearly everyone who becomes eligible for Medicare should enroll in Part A immediately, because it has no premium. This is true even if you are still working and have health insurance through your job. It will get you into the system and you'll start receiving "Medicare & You."

When to enroll in Part B

This is trickier. If you get it wrong, it can cost you money.

If you are already retired or will retire right at 65, the answer is simple: sign up for Part B the same time you enroll in Part A.  If you are still working, you're going to have to figure out the right time to enroll on your own.

It's really important not to mess this up. If you don't sign up for Part B when you should, you will be hit with a harsh late enrollment penalty. The penalty is a permanent increase in your Part B premium of 10 percent for every year that you should have been enrolled but weren't.

So for instance, if you sign up for Part B two years after you should have, your premium will be 20 percent higher.  

Tricky Part B situations

Look down this list to see if any of these situations apply to you. It will tell you what you should do about signing up for Part B.

You receive financial help to buy an individual health plan through your state's Health Insurance Marketplace. Once you become eligible for Medicare, you can no longer get a subsidy. If you keep the plan anyway you will get that late Part B enrollment penalty. Enroll in all parts of Medicare and cancel your Marketplace plan.

You have an individual health plan but don't receive a subsidy to help pay for it. If you keep this plan instead of enrolling in Medicare when you turn 65, you'll be hit with the late enrollment penalty. It doesn't matter where you got it or how long you've had it. Cancel it and enroll in Medicare.

You are still working at an employer with 20 or more employees. You can delay Part B enrollment without a penalty if you have health insurance through your own or a spouse's current job. Once the last working spouse leaves his or her job, even if they're getting COBRA or retiree insurance, it's time for both of you to sign up for Part B. You have eight months, starting the month after the job ends, to get this done without penalty. 

You are still working at an employer with fewer than 20 employees. Sign up for Part B at 65. Your employee health plan then becomes a "secondary" plan that pays for things only after Medicare has paid its share of the bills. Smaller workplaces like these are allowed to drop you from their employee plan after you reach 65. (That's against the law for for larger employers.) If you ignore this rule, and your group health plan finds out you're over 65, it may refuse to pay claims that Medicare would have paid.

You or your spouse is on COBRA. Once you turn 65 you must switch to Medicare or face the late enrollment penalty. But COBRA can still function as the main insurance for the younger spouse, and you can keep parts of your COBRA plan that Medicare doesn't cover, such as your dental benefit. Learn more about Medicare and COBRA.

You have a retiree plan. If you have a retiree plan from your old job, you must sign up for Part B when you turn 65. After you go on Medicare, the retiree plan becomes a secondary plan. But if your spouse isn't old enough for Medicare yet, he or she can still get the retiree plan if your former employer allows that.

You receive veteran's benefits. The Department of Veterans Affairs and Medicare operate independently of each other for the most part. Medicare won't pay for care you get at a VA facility. The VA won't pay for the share of your medical bills that Medicare doesn't pay. The VA encourages veterans to sign up for Medicare A and B to have the flexibility to seek care at non-VA facilities if need be. Moreover, if you are not in one of the VA's higher priority groups, you could lose your coverage suddenly if Congress decided to cut back the VA's budget. At that point, you would have to pay a penalty for late enrollment in Medicare Part B. Learn more about VA and Medicare.

You have TRICARE for Life. If your military service entitles you to TRICARE for Life, you must sign up for Part B when you turn 65. This is required regardless of whether you are working or have other sources of coverage. If you don't, you lose your eligibility for this valuable benefit. Learn more about how TRICARE works with Medicare.

You are on the Federal Employees Health Benefits Plan (FEHB). FEHB will continue to cover you after retirement, even if you don't take Medicare at all. But if you delay enrollment in Part B after retiring, and then change your mind later, you'll be hit with the Part B late-enrollment penalty. Because FEHB premiums can be substantial, you need to consider your options carefully. Learn more about how FEHB works with Medicare.

When to enroll in Part D, your drug plan

You should sign up for Medicare Part D at the same time that you enroll in Part B. It's important to be prompt. There is a permanent premium penalty for enrolling late.

There's one situation that will exempt you from this late enrollment penalty. That is if you have other drug coverage, such as an employer or retiree plan, that is as good as Part D coverage. (Your plan administrator can tell you whether your plan's drug coverage meets this qualification.)

How to pick a good Part D plan.

Your first big decision upon signing up for Medicare is whether to get your benefits through original Medicare, with a supplemental Medigap plan, or through a private Medicare Advantage plan. Our guide walks you through the differences and discusses the pros and cons of each.

Click on the image at right for rankings of health insurance plans nationwide. Use the tool to:

  • Choose a plan category such as private HMO or PPO, or Medicare HMO or PPO.
  • Choose a state.
  • Customize your search to compare plans' scores and their performance in measures such as consumer satisfaction and providing preventive services.

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