Key Takeaways
- Medicare covers people age 65+ and certain disabled individuals or ESRD patients.
- Medicare is divided into Parts A, B, C (Advantage), and D (prescription drugs).
- Initial enrollment begins 3 months before and ends 3 months after age 65.
- General enrollment is Jan 1–Mar 31 with coverage starting July 1.
- Late enrollment penalties apply when coverage is delayed without credible coverage.
- Coordination with employer coverage depends on employer size and active status.
Medicare Overview
Medicare is the federal health insurance program for people 65 and older, certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or transplant). Administered by the Centers for Medicare & Medicaid Services (CMS), Medicare provides essential health coverage to over 65 million Americans.
Medicare Eligibility
Age-Based Eligibility (Age 65+)
| Requirement | Details |
|---|---|
| Age | 65 or older |
| Citizenship | U.S. citizen or permanent resident (5+ years) |
| Work credits | 40 quarters (10 years) of Medicare-covered employment |
| Automatic enrollment | If receiving Social Security benefits |
Disability-Based Eligibility (Under 65)
| Condition | Waiting Period |
|---|---|
| Social Security Disability Insurance (SSDI) | 24 months of SSDI benefits |
| Amyotrophic Lateral Sclerosis (ALS/Lou Gehrig's disease) | No waiting period |
| End-Stage Renal Disease (ESRD) | Generally 3 months after dialysis begins |
Key Point: Those with ALS receive Medicare immediately upon receiving their first SSDI payment—no 24-month waiting period required.
The Four Parts of Medicare
Original Medicare vs. Medicare Advantage
| Component | Description | Coverage |
|---|---|---|
| Part A | Hospital Insurance | Inpatient hospital, skilled nursing, hospice, home health |
| Part B | Medical Insurance | Doctor visits, outpatient care, preventive services |
| Part C | Medicare Advantage | Private plans combining Parts A & B (often includes D) |
| Part D | Prescription Drug Coverage | Outpatient prescription medications |
Original Medicare (Parts A & B)
| Feature | Details |
|---|---|
| Administration | Federal government (CMS) |
| Provider choice | Any provider accepting Medicare |
| Referrals | Not required to see specialists |
| Coverage gaps | Significant cost-sharing, no out-of-pocket maximum |
| Drug coverage | Must add separate Part D plan |
Medicare Advantage (Part C)
| Feature | Details |
|---|---|
| Administration | Private insurance companies |
| Provider networks | Usually HMO or PPO network restrictions |
| Additional benefits | Often includes vision, dental, hearing |
| Out-of-pocket maximum | Required annual cap on spending |
| Drug coverage | Usually included (MA-PD plans) |
Medicare Enrollment Periods
Initial Enrollment Period (IEP)
| Timeframe | 7-month window |
|---|---|
| Begins | 3 months before 65th birthday month |
| Includes | Month of 65th birthday |
| Ends | 3 months after 65th birthday month |
| Coverage start | Depends on when you enroll |
Coverage Start Date by Enrollment Timing
| When You Enroll | Coverage Begins |
|---|---|
| 3 months before birthday month | 1st day of birthday month |
| During birthday month | 1st of the following month |
| 1-3 months after birthday month | 1st of month after enrollment |
Annual Enrollment Period (AEP)
| Feature | Details |
|---|---|
| Dates | October 15 - December 7 each year |
| Purpose | Switch between Original Medicare and Medicare Advantage |
| Changes | Add, drop, or change Part D plans |
| Effective date | January 1 of following year |
General Enrollment Period (GEP)
| Feature | Details |
|---|---|
| Dates | January 1 - March 31 each year |
| Purpose | Enroll if missed IEP and no SEP |
| Coverage begins | July 1 (4-month delay) |
| Penalty | Late enrollment penalty applies |
Special Enrollment Period (SEP)
| Qualifying Event | SEP Length |
|---|---|
| Loss of employer coverage | 8 months |
| Moving out of plan area | 2 months |
| Losing Medicaid | 2 months |
| Other qualifying events | Varies |
Exam Tip: COBRA and retiree coverage do NOT qualify as creditable employer coverage. If relying on COBRA after leaving employer, you may face late enrollment penalties.
Late Enrollment Penalties
Part A Penalty (If Premium Required)
| Situation | Penalty |
|---|---|
| Less than 30 quarters worked | May owe Part A premium |
| Penalty amount | 10% higher premium |
| Duration | Twice the number of years delayed |
Part B Penalty
| Factor | Details |
|---|---|
| Amount | 10% for each full 12-month period without coverage |
| Duration | Lifetime—added to premium as long as enrolled |
| 2025 standard premium | $185.00/month |
| Example | 2 years late = 20% penalty ($37/month added) |
Part D Penalty
| Factor | Details |
|---|---|
| Trigger | 63+ consecutive days without creditable drug coverage |
| Calculation | 1% of national base premium per month without coverage |
| 2025 national base | $36.78/month |
| Duration | Lifetime—paid as long as enrolled in Part D |
Key Point: Late enrollment penalties are LIFETIME penalties—they never go away and are added to your premium for as long as you have Medicare coverage.
Key Takeaways
- Medicare covers people age 65+ and certain disabled individuals or ESRD patients.
- Medicare is divided into Parts A, B, C (Advantage), and D (prescription drugs).
- Initial enrollment begins 3 months before and ends 3 months after age 65.
- General enrollment is Jan 1–Mar 31 with coverage starting July 1.
- Late enrollment penalties apply when coverage is delayed without credible coverage.
- Coordination with employer coverage depends on employer size and active status.
Sarah is 65 and has worked for 35 years. She is currently enrolled in her employer's group health plan. When should she enroll in Medicare Part B to avoid penalties?
What is the Part B late enrollment penalty for someone who delays enrollment for 3 full years without creditable coverage?
Which of the following individuals does NOT have to wait 24 months for Medicare eligibility?