Enrolling into Medicare can cause a lot of stress if you try to get it done at the last minute. Furthermore, if you are without credible coverage, you may incur a penalty that will follow you for your entire life. 

To avoid the stress and the hassle, you want to apply as early as you can. This guide will help you determine when that is.

Initial Enrollment

The Initial Enrollment Period opens three months before the month you turn 65 and closes three months after. Coverage always begins on the first of the month. If your birthday is October 15, 1960, Medicare will start October 1, 2025. 

If you are born on the first of a month, your effective date jumps to the first of the previous month. This gives you a 30-day head start. For example, if someone is born on Oct. 1, their Medicare will start Sept. 1. 

Apply for Medicare early. Miss the window and you may end up uninsured or have no proof of your coverage for a short (or a long) period of time. The government moves at cruise-ship speed so it often takes longer than a month to approve your application.

Furthermore, Medicare doesn’t cover everything, which is why Medicare Supplement Plans exist. However, an insurance agent, like myself, cannot enroll you in a Medicare Supplement Plan until you have been approved for Medicare. 

When you apply for Medicare early in your Initial Enrollment Period, you can enroll into a Medicare Supplement Plan in advance and have everything in place by the time you turn 65 and Medicare starts. 

Special Enrollment Periods

Special Enrollment Periods are triggered due to the loss of other credible healthcare insurance.

For example: Plenty of people keep working past 65 and keep their group health insurance from their employer. The day that group coverage ends, you enter a 60-day Special Enrollment Period. Sign up during that span to begin Medicare on the first of the next month without penalty.

When you retire and leave your employer’s health insurance, you have an opportunity to pick up Medicare right away. If you decide to switch to Medicare because it provides better benefits, leaving the group plan triggers the same Special Enrollment Period. 

Other special circumstances can trigger a Special Enrollment Period. A good example of this is changing zip codes during a major move, which could open new Medicare plan options for you. Contact me for questions about whether your special circumstance qualifies for a Special Enrollment Period. 

What Counts as Credible Coverage?

The vast majority of employer healthcare plans count as credible coverage and avoid a Medicare penalty. 

However, crucially, COBRA does not count as credible coverage. It provides you with the same policy, the same doctor network, but the federal rules do not count it as credible coverage for Medicare purposes. Consequently, if you remain on COBRA after turning 65 for 18 months, the government will deem this time not credible and impose a penalty on your Medicare premium for late enrollment. 

I usually recommend my clients enroll in Medicare over COBRA, even for a short period of time. If you slide onto COBRA after 65, the penalty clock starts.

Individual plans under the Affordable Care Act also count as credible coverage. However, it’s important to note that all ACA subsidies vanish after you turn 65, meaning that your affordable plan suddenly becomes expensive. The reason is the government is already subsidizing your costs through Medicare so Uncle Sam expects you to enroll into Medicare. 

What is the Dreaded Penalty? 

The Medicare Part B base premium for all Americans starts at $185 per month. If you delay enrollment without credible coverage, you will pay an extra 10% for every full year you waited. After two years, your monthly premium becomes $222, and the penalty does not go away.

That cash is better spent on the grandkids or a decent rod and reel.

General Enrollment

If you already sailed past 65 and missed every other window, your only option is the General Enrollment Period, which opens January through March. Remember that Medicare coverage always starts on the first of the month, meaning that if you apply in January, your coverage starts Feb. 1 and so on. 

To avoid all Medicare headaches, apply three months before you turn 65. Talk with your insurance agent to make sure your transition from an employer plan to Medicare happens seamlessly.

Feel free to reach out with questions. I would rather spend 10 minutes today than watch someone pay penalties for the next 30 years. 

Forward to anyone within five years of retirement. A single share could spare a friend a lifetime bill.