I'm turning 65: Medicare basics

What Medicare is

Medicare is the federal health insurance program for people aged 65 and older. Medicare.gov explains that it also covers some younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant). It is different from Medicaid: Medicare is based mainly on age or disability, while Medicaid is based on limited income. Some people qualify for both.

Turning 65 is the point at which most people first deal with Medicare, and it comes with decisions and deadlines that are easy to underestimate. This pathway gives the shape of those decisions. Medicare.gov, and the free counselling service described at the end of this page, are the places to work through your own situation.

The parts of Medicare

Medicare.gov describes Medicare in parts, each covering different things:

• Part A (hospital insurance) helps cover inpatient hospital stays, care in a skilled nursing facility, hospice care and some home health care.
• Part B (medical insurance) helps cover services from doctors and other health care providers, outpatient care, home health care, durable medical equipment and many preventive services.
• Part D (drug coverage) helps cover the cost of prescription drugs, including many recommended shots or vaccines. It is offered by private companies approved by Medicare.
• Medicare Advantage, also known as Part C, is a Medicare-approved plan from a private company that offers an alternative to Original Medicare for health and drug coverage. These plans include Parts A and B, and usually Part D.

Many people get Part A without paying a premium because they or a spouse paid Medicare taxes while working for long enough. Part B has a monthly premium for most people. This site does not state premium or deductible amounts, because they change each year; Medicare.gov publishes the current figures.

Two main ways to get coverage

Medicare.gov describes two main ways to get Medicare coverage:

• Original Medicare is Part A and Part B, run by the federal government. You can use any doctor or hospital in the United States that takes Medicare. You can add a separate Part D drug plan, and you can buy supplemental coverage, called Medicare Supplement Insurance or Medigap, from a private company to help with out-of-pocket costs.
• Medicare Advantage bundles Part A, Part B and usually Part D in one plan from a private company. These plans often have networks, which means you may need to use doctors who are in the plan's network, and they may offer some extra benefits that Original Medicare does not.

Which suits a person depends on their doctors, prescriptions, budget, travel and health. This site does not recommend one over the other. Your State Health Insurance Assistance Program offers free, unbiased help comparing them.

The seven-month window

Your first chance to sign up is your Initial Enrollment Period. Medicare.gov explains that it usually lasts seven months: it begins three months before the month you turn 65, includes the month you turn 65, and ends three months after that month.

When you sign up within the window affects when coverage starts. Medicare.gov explains that if you sign up in the three months before your birthday month, coverage usually starts on the first day of your birthday month. If you sign up in your birthday month or the three months after, coverage starts the month after you sign up. Signing up early in the window therefore avoids a gap.

If you miss the Initial Enrollment Period and do not qualify for a Special Enrollment Period, Medicare.gov explains that you can sign up during the General Enrollment Period, which runs early each year. Coverage then starts later, and a late enrollment penalty may apply.

Automatic or not

Medicare.gov explains that if you already get Social Security or Railroad Retirement Board benefits when you become eligible, you are generally enrolled in Part A and Part B automatically and receive your Medicare card in the mail before your birthday month. You can usually choose to turn down Part B in that case, though doing so has consequences for later enrollment.

If you are not getting those benefits yet, for example because you are still working or have chosen to delay Social Security retirement benefits, you need to sign up yourself, usually through Social Security. Medicare.gov describes the ways to do this.

If you are still working

Many people keep working past 65, and some have health coverage through their own or a spouse's current job. Medicare.gov explains that if you have coverage based on current employment, you may be able to delay Part B without a penalty, and then sign up later during a Special Enrollment Period. That period lasts eight months and starts when the employment or the coverage ends, whichever happens first.

Two details matter here, and both are worth confirming with official help before deciding:

• The coverage must be based on current employment. Medicare.gov is clear that COBRA and retiree health coverage do not count as coverage based on current employment for this purpose, so they do not protect you from the Part B late penalty.
• The size of the employer affects how job-based coverage and Medicare work together, including which one pays first. The employer's benefits office and Medicare.gov can explain how this applies.

Late enrollment penalties

Medicare.gov explains that if you do not sign up for Part B when you are first eligible, and you do not qualify for a Special Enrollment Period, you may have to pay a late enrollment penalty. The Part B penalty adds 10 percent to the monthly premium for each full 12-month period you could have had Part B but did not, and you generally pay it for as long as you have Part B.

A separate penalty can apply to Part D if you go a continuous period of 63 days or more without Part D or other creditable drug coverage after your Initial Enrollment Period ends. Creditable coverage means drug coverage that is expected to pay, on average, at least as much as standard Medicare drug coverage. Job-based plans usually tell members each year whether their drug coverage is creditable. A late penalty can also apply to Part A for people who have to buy it.

Medicare and Marketplace plans

People who have bought a plan through the Health Insurance Marketplace before 65 need to plan the switch. HealthCare.gov explains that once you are eligible for premium-free Part A, you generally can no longer get a premium tax credit for a Marketplace plan. It also explains that it is against the law for someone who knows you have Medicare to sell you a Marketplace plan. Ending a Marketplace plan is done through the Marketplace, and timing it to the day Medicare starts avoids a gap.

Questions to take to official help

Medicare.gov is the official source. It also lists your State Health Insurance Assistance Program, known as SHIP, which provides free, unbiased, one-on-one Medicare counseling.

Next pathway: Self-employed: buying your own plan on the Marketplace