If you’re turning 65 soon, congratulations! You’ve reached an important milestone: you can finally enroll in Medicare. You might be even more excited than most if you’ve been postponing retirement until 65 in order to avoid paying for expensive health insurance. But even those who’ve already retired are likely looking forward to Medicare enrollment as well.

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But before you can check Medicare enrollment off your “Turning 65 Checklist”, it's important that you know how the process works. Unfortunately, Medicare enrollment is not straightforward, and making mistakes during the Initial Enrollment Period can result in financial implications like costly penalties, gaps in coverage, and/or insufficient coverage.

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Together, we’ll review the basic parts of Medicare, enrollment deadlines, how to enroll, and some common costs you can expect. With this guide in hand, and the help of your financial advisor, you’ll be able to go through the Medicare enrollment process from start to finish with confidence.

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What Am I Enrolling In?

Before diving into the timeframe specifics of Medicare enrollment, it’s important to first understand what you're actually enrolling in. Many pre-retirees mistakenly think that all Medicare is the same, but in reality, you have many decisions to make about the Parts of Medicare you’ll enroll in. The main components of Medicare include:

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• Part A (Hospital Insurance): Medicare Part A covers services like hospital inpatient care, hospice care, home health care, and some types of skilled, inpatient nursing home care (excluding long-term care).

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• Part B (Medical Insurance): Medicare Part B covers preventive and medically necessary services that diagnose or treat medical conditions. Examples of these services include doctor's visits, some outpatient services, some mental health services, and prescribed durable medical equipment.

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• Part C (Medicare Advantage): Medicare Advantage plans offer an alternative way of getting the same coverage found under Parts A and B (Original Medicare) plus additional coverage, including coverage for the 20% that Parts A and B don’t cover. Medicare Advantage Plans, which are often bundled with Part D, are provided by Medicare-approved private insurance companies. Individuals typically have dozens of Medicare Advantage Plans to choose from depending on the state they live in.

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• Medicare Supplement (“Medigap”): Medigap supplements Parts A & B (whereas a Medicare Advantage plan offers an alternative way to get Parts A & B) by paying for some of the costs for covered healthcare services and supplies, including copayments, coinsurance, and deductibles. Some Medigap policies also offer additional coverage on services not covered by Parts A & B.

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• Part D (Prescription Drug Coverage): Medicare Part D aids in covering the cost of prescription medications. This coverage is optional (penalties will apply if you delay coverage) but is available to anyone with Original Medicare (Parts A & B). Most Medicare Advantage Plans bundle in prescription drug coverage.

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When Can I Enroll?

There are lots of key dates to consider for Medicare enrollment depending on your unique circumstances. Reach out to your financial advisor for help with these steps or to talk through decision-making related to Medicare!

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Parts A and B Enrollment

Most individuals will be able to sign up for Parts A and B during their Initial Enrollment Period, which lasts for seven months. The Initial Enrollment Period begins three months before you turn 65 and ends three months after. So if you have an August birthday then your IEP is from May to November. When coverage begins depends on which month individuals enroll, but the earliest it can be is your birthday month and it will always start on the first of the month.

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Signing up for Medicare during the Initial Enrollment Period is not optional for most people. If you miss the Initial Enrollment Period, you might have to wait to sign up until the next General Enrollment Period, which may result in a delay in coverage and a lifetime late enrollment penalty. The longer you wait to sign up, the higher the penalty.

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Once individuals have enrolled, they can make changes to their Medicare coverage during the Open Enrollment Period, from October 15 to December 7 each year, or the General Enrollment Period, which happens annually between January 1st and March 31st, depending on their circumstances.

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In limited special circumstances, some individuals can make changes to their coverage or enroll in Medicare for the first time outside of the Initial and General Enrollment Periods, but only if they’re eligible for what’s known as a Special Enrollment Period. These special circumstances may include changing addresses outside your plan’s service area, losing certain existing coverages, or being offered coverage changes by your employer.

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Medigap, Medicare Advantage (Part C), and Part D Enrollment

Individuals will need to have enrolled in Parts A and B prior to signing up for a Medigap, Medicare Advantage, or a Part D plan.

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In most cases, you only have 60 days to enroll in these plans after you’ve enrolled in Parts A and B. Once you’ve selected either Medigap or Medicare Advantage, you have your entire first year as a Trial Right Period to possibly switch to the other if you’re not satisfied. After this time, you can only switch during limited times of the year and you may be subject to medical underwriting.

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How Do I Start the Enrollment Process?

Now that we’ve covered what Parts of Medicare you can enroll in and when you can enroll, let’s review how to sign up for Medicare. Thankfully, the process for signing up for Original Medicare is relatively simple. If you are already receiving Social Security benefits, you may already be enrolled in Original Medicare.

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Listed below are the various options available for individuals who are not currently receiving Social Security benefits:

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• Apply Online: The easiest (and often fastest) way to sign up for Medicare is to sign up online on the Social Security website. You’ll need to create a secure Social Security account to get started. Note: If you’re already collecting Social Security, you’ll automatically be enrolled in Parts A and B.

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• Call Social Security: You can also call Social Security at 1-800-772-1213 or 1-800-325-0778 if you’re using a teletypewriter. Individuals can also contact a local Social Security office in their area and reach out for assistance.

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• Railroad Retirement Board: It’s worth noting that if you or your spouse worked for a railroad, you have the option of reaching out to the Railroad Retirement Board. The Railroad Retirement Board can be reached at 1-877-772-5772.

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Enrolling in a Medigap, Medicare Advantage Plan, or a standalone Part D plan requires more effort. Because you likely have many plans available as options, this is a good opportunity to review your medical needs, research various plan options, and review potential costs.

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Once this process is complete, you can enroll in a plan online, contact the plan holder directly, or call 1-800-633-4227 (1-877-486-2048 for teletypewriter users) for assistance.

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What Costs Should I Anticipate?

When it comes to Part A coverage, most people don’t pay a premium, hence why it’s often known as premium-free Part A. Most people are eligible for premium-free Part A at age 65. Those who have paid Medicare taxes for a certain amount of time while working or anyone who is already receiving or will receive Social Security benefits or Railroad Retirement Board benefits qualifies for premium-free Part A.

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If you do have to pay for Part A coverage, you may be looking at a premium between $278 and $506 each month in 2023. The number will depend on how long you (or your spouse) worked and paid into Medicare taxes. Additionally, you’ll be subject to a deductible of $1,600 as well as a potential range of coinsurance payments.

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For Part B coverage, the standard premium for most individuals is $164.90 for 2023. However, you may pay a higher premium depending on your income. Additionally, you may also pay 20% of the Medicare-Approved Amount for most outpatient therapy, durable medical equipment, and doctor services (including ones rendered as a hospital inpatient), unless you have a Medigap or Medicare Advantage plan, which will provide a cap on total medical costs. With a Medigap Plan G, for example, you’ll be subject to only a $226 deductible.

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Monthly premiums vary by plan for Medigap, Medicare Advantage, and Part D. You can compare plan costs here.

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Get More Support With Medicare

This is a very big transition for many of our clients, and Medicare comes with key differences from employer-sponsored or Marketplace insurance. Although there are Medicare insurance agents who can help you, the commission-based nature of their services means that you might not always receive unbiased advice. If you’re turning 65 soon, ask your financial advisor about completing a HealthPlanning Analysis to ensure the enrollment process goes smoothly and you find the plan options that best fit your needs, preferences, and budget.