It’s easy to focus your retirement planning on your finances and give little thought to healthcare. Medicare, the federal health insurance program for older and disabled Americans, is waiting in the wings to provide at least basic coverage.

But Medicare is complex, and enrollment can only happen at certain times. It doesn’t cover all medical expenses or long-term care. You will likely pay premiums for coverage, so it’s useful to consider your needs and options in advance. Understanding the enrollment process, rules, timing, and how Medicare meshes with other coverage you may have can help avoid costly mistakes and penalties.


Medicare eligibility begins at age 65. People younger than 65 who are disabled become eligible after 24 months of Social Security or Railroad Retirement Board disability payments. Those with end-stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS) may also qualify.

If you are drawing Social Security, you will automatically be enrolled in Medicare, receiving a packet a few months before turning 65 or in your 25th month of disability.

If you turn 65 and are not yet drawing Social Security, you will need to sign up for Medicare. There is a seven-month window for initial enrollment, beginning three months before the month when you become eligible and extending three months after. If you or your spouse is still working and you’re covered by an employer-sponsored health plan, you can delay and take advantage of a special enrollment period later. But there are some limitations and special rules, as discussed below.

Coverage Options

Traditional Medicare has two components: Part A covers the costs of hospitalization, a stay in a skilled nursing facility, hospice care, and some home healthcare. Part B covers doctors’ services, outpatient care, medical supplies, and preventive services. You can add on Part D to cover prescription drug costs.

Part A is generally mandatory and free for those who have worked and paid the payroll taxes for Medicare. Others can buy into Part A. Everyone pays for Part B coverage. Premiums start at $144 and increase with income.

Alternatively, you can opt for Medicare Advantage, an all-in-one plan including Parts A, B, and usually D. Offered by private insurance companies following Medicare rules, these plans may be less expensive but may also limit your care to a specified provider network.

If you are drawing Social Security when you reach eligibility, you will automatically be enrolled in Part A and B, but can decline Part B. Likewise, if you need to sign up, you should take Part A but can opt to pass on Part B. It’s critical to make this decision carefully. Before you decline it, be sure you don’t need it or can get it without paying a late enrollment penalty later.

Generally, you may qualify for a Special Enrollment Period (SEP) if you have other health coverage and lose it—either by leaving employment or for several other reasons. You can enroll in Part B during a SEP with no penalty. However, if you don’t qualify for special enrollment and decide you want Part B later, you will pay for the delay. Your monthly premium may go up 10% for each 12-month period you didn’t sign up after eligibility.

The longer you wait, the more you will pay if you change your mind. Typically, you will pay this higher premium for as long as you have Part B. Note that if you have retiree health plan or COBRA coverage through a former employer, you will not qualify for the SEP.

Coordinating Coverage

The other important factor to consider when choosing your coverage is how Medicare works with other employee or retiree health insurance you or your spouse may maintain.

At, you can find a detailed list of different situations that explain who pays first for healthcare services, depending on your specific circumstances and combination of coverage. Your employer plan or other coverage may require you to get Medicare when eligible.

As always, consider your anticipated health needs and review exactly what Medicare covers and what providers you can choose before enrolling. Typically, with original Medicare you can choose any hospital, physician, or facility that takes Medicare. Medicare Advantage plans may offer preferred provider network-type arrangements that cover more of the cost if you obtain services from contracted providers. You can add a Medigap policy on top of your plan to provide more comprehensive coverage.

  • Toni L. Shears