Medicare Enrollment: The Deadlines and Penalties That Catch Retirees

Medicare enrollment looks like paperwork and behaves like a tax deadline. The windows are fixed, the penalties for missing them are permanent, and the rules for people who keep working past 65 are counterintuitive enough that well-organized retirees get them wrong every year. Your plan needs a Medicare calendar, and it needs to be set before 64.

The parts

Part A covers hospital care and is premium-free for anyone with 40 quarters of work history. Part B covers physician and outpatient care and costs $202.90 a month in 2026 for most people, more for higher incomes under IRMAA. Part D covers prescriptions through private plans. Medicare Advantage (Part C) replaces A, B, and usually D with a private managed-care plan. Medigap supplements original Medicare by covering the deductibles and coinsurance it leaves behind.

The initial enrollment period

Seven months: the three months before the month you turn 65, your birthday month, and the three months after. Enroll in the three months before the birthday month and coverage starts on the first of the birthday month. Enroll later and the start gets pushed.

Anyone already receiving Social Security is enrolled in A and B automatically. Anyone who has delayed Social Security, which is most of our clients, has to enroll on their own. And nothing prompts them to.

The Part B penalty

Missing the initial enrollment period without creditable coverage costs 10% of the standard Part B premium for every full 12-month period of delay, for as long as you have Medicare. A two-year delay is a 20% surcharge for life. After that, enrollment is limited to the general enrollment period (January through March), with coverage beginning the following month, which can mean months with no coverage at all.

The Part D penalty is separate: 1% of the national base premium for each month without creditable drug coverage after the initial period, also permanent. People who feel healthy and skip Part D at 65 pay for it every month later.

Working past 65

If you or your spouse are actively employed and covered by that employer's group health plan, and the employer has 20 or more employees, you can delay Part B without penalty. When the employment or the coverage ends, a special enrollment period of eight months opens for Part B, and two months for Part D.

The exceptions are where the mistakes happen.

• Employers with fewer than 20 employees. Medicare is primary and the group plan pays second. Delay Part B and you're left with a plan that expects Medicare to have paid first. Enroll at 65.
• COBRA and retiree coverage. Neither counts as active employment coverage. A retiree at 66 on COBRA who figures the 18 months of COBRA are a safe bridge has blown through the eight-month window by the time COBRA ends, and owes the penalty. Enroll in Part B within eight months of the employment ending, not the COBRA ending.
• The spouse's plan. Coverage through a spouse's active employment counts. Coverage through a spouse's retiree plan doesn't.
• Marketplace plans. ACA coverage isn't creditable for Part B. Anyone on an exchange plan at 65 has to move to Medicare; subsidies end at Medicare eligibility.

Part A is generally taken at 65 regardless, since it's free, unless the HSA rule below applies.

The HSA trap

You can't contribute to a health savings account while enrolled in any part of Medicare. Part A enrollment is retroactive up to six months (but not before the month you turned 65) when you enroll after 65. So a person who delays Medicare while working, keeps funding the HSA, and then enrolls at 67 has made six months of excess contributions subject to tax and penalty. The fix: stop HSA contributions six months before the month Medicare enrollment will take effect, and prorate the final year's limit. Once on Medicare, the HSA can still be spent on Medicare premiums and medical expenses tax-free.

Taking Social Security also triggers automatic Part A enrollment, which ends HSA eligibility. Someone working past 65 who wants to keep the HSA going has to delay Social Security too.

The Medigap window

Medigap policies are guaranteed-issue, at the best available rate, only during the six months beginning the month Part B takes effect (and in a few other special situations). After that, insurers in most states, including Florida, can underwrite: decline you, or charge more for health conditions. This is the one decision you can't revisit. A retiree who picks Medicare Advantage at 65 and wants to switch to original Medicare with a supplement at 72, after a diagnosis, may not be able to buy one.

Medicare Advantage plans have low or zero premiums, provider networks, prior authorization, and annual out-of-pocket maximums. Original Medicare with a Plan G supplement costs more each month, has no network, and leaves almost no cost sharing. For clients who travel, who have or expect complex care, or who want the choice of any provider, we generally favor original Medicare with a supplement, bought in the open enrollment window. For those on tight budgets who are fine with a network, Advantage can be reasonable. Just make the choice at 65 knowing the path back isn't guaranteed.

The annual calendar

Every year from October 15 to December 7, Part D and Medicare Advantage plans can be changed for the following year. Formularies and plan costs change annually, and the plan that was cheapest last year often isn't this year. Checking the Part D plan against the current prescription list each fall takes about an hour. The difference can be thousands of dollars.

IRMAA is set each year from the tax return two years earlier. A large income event at 63 raises Medicare premiums at 65; a retiree whose income has dropped since can file Form SSA-44 to request a reduction based on a life-changing event.

Where we come in

The Medicare calendar is part of every retirement income plan for clients approaching 65: the enrollment date, whether employer coverage allows a safe delay, the HSA stop date, the Medigap window, and the IRMAA projection from the tax plan two years ahead. We don't sell Medicare plans. For the Medigap and Part D choice we point clients to an independent broker or the state SHINE counseling program, then check the result against the plan. The retire-before-65 post covers the years before Medicare, which have a cliff of their own.

Frequently asked questions

Joseph G. Valerio, CFP®, EAFounder and Lead Advisor at Valerio Wealth Management, a fee-only, fiduciary virtual family office in Miami, Florida. One advisor, credentialed in both financial planning and federal tax. About Joseph

This article is general education, not individualized advice, and it is not tax, legal, or accounting advice. Figures reflect federal law for the year stated and can change. Valerio Wealth Management does not prepare or file tax returns. Speak with a qualified professional about your own situation before acting.