Turning 65 marks an important milestone. It’s the age you become eligible for Medicare – healthcare the federal government provides for retirees.
I. Medicare Part A, B, C and D
Part A – Also called Original Medicare, Medicare Part A covers your stays in hospitals and skilled nursing facilities, some health services and hospice care. Part A has no premiums as long as you have 40 qualifying quarters of contribution during your life, similar to qualifying for Social Security benefits. You may also qualify based on your spouse, even if you’re divorced or your spouse passed away. If you don’t meet any of these conditions, you have to pay monthly premiums.
Part B – Covers doctors’ services, outpatient care and medical equipment. There are monthly premiums for Part B.
Part C – Also called Medicare Advantage plans (or Medicare Health Plan), Medicare Part C allows private health insurers to provide Original Medicare benefits (Part A and Part B) through their networks (HMOs, PPOs and fee-for-service). The insurers must offer the same benefits as Original Medicare, but can have different coverage restrictions, costs, limits, etc. This coverage is optional.
Part D – Provides prescription drug coverage through private insurers. The government subsidizes the costs of prescription drugs and the cost of Part D insurance to reduce costs for retirees. If you have a Medicare Advantage plan, then you can bundle it with Part D. If you have Original Medicare, Part D is separate policy. This coverage is optional.
II. When to apply
Part A and B
Depending on your circumstances, you’re either enrolled automatically in Part A and B, or you must enroll yourself. You’re enrolled automatically if you are:
- Already receiving Social Security benefits.
- A railroad worker.
- Under 65 but receiving certain disability benefits.
If you fall into one of the above groups, you’ll receive a Medicare card three months before your 65th birthday. If you don’t, you need to enroll yourself. There’s a seven-month initial enrollment period (IEP) that begins three months before you turn 65, goes through your birth month, and continues for the three months following your birth month.
By enrolling during your IEP, you can receive Medicare benefits while continuing to delay Social Security benefits. If you don’t enroll during your IEP, you can enroll only during the annual general enrollment period from January 1 through March 31.
Generally, you enroll in Medicare Part A and Part B at the same time. If you’re still covered by either your spouse’s or your own employer plan, or you’re going to receive retiree health benefits from your former employer, you can delay enrolling in Medicare Part B until this coverage ceases. Otherwise, you’ll be subject to a late enrollment penalty if you sign up for Medicare Part B after the deadline. If you enroll in Medicare Part A late, you’re penalized only if you don’t qualify for free premiums (it isn’t common to not qualify for free premiums).
Part C and D
You sign up for Medicare Part C and D during your IEP as well. Since this coverage is optional, you won’t be subject to a penalty for delaying. You can make changes to the coverage during open enrollment each year from October 15 to December 7.
III. How to apply
Part A and B
You can apply for Medicare three ways:
- Online at socialsecurity.gov
- By phone at 1-800-772-1213
- In person at your local Social Security office
Part C and D
Once you find the private insurer to get either Part C or D, you can generally apply online, by phone or by paper enrollment.
IV. Other Considerations
Health Savings Accounts
To avoid being subject to a tax penalty, you should stop contributing to your health savings account at least six months prior to applying for Medicare. You can keep the funds in your HSA and make tax-free withdrawals for qualifying medical expenses after enrolling in Medicare.