For the vast majority of Americans who look forward to receiving Medicare health benefits, eligibility is as uncomplicated as celebrating your 65th birthday. But your eligibility to receive Medicare coverage without having to pay a premium – and your eligibility for other Medicare plans – depends on such factors as your work history and your health status.Here’s what you need to know:
Medicare Part A eligibility
Generally, you’re eligible for Medicare Part A if you’re 65 years old and have been a legal resident of the U.S. for at least five years. In fact, the government will automatically enroll you in Medicare Part A at no cost when you reach 65 as long as you’re collecting Social Security disability or retirement benefits.
If you’re already receiving Social Security or Railroad Retirement benefits, all you need to do is check your mail for your Medicare card, which should automatically arrive in the mail three months prior to your 65th birthday (or the 25th month of a disability). The card will arrive with the option to opt-out of Part B (see below). Generally this is a bad idea. (See our article about Part B enrollment issues.)
If you’re not already receiving Social Security or Railroad Retirement benefits, you’ll need to enroll in Medicare during a seven-month open enrollment window that includes the three months before the month you turn 65, the month you turn 65, and the three following months. It’s always best to enroll during the three months before you turn 65, or you could end up with a period where you don’t have primary health coverage.
Sound good? It’s even better if you don’t have to pay a premium for Part A coverage, which is the case for most people. You’re eligible to receive Part A coverage premium-free if:
- You are 65 and you or your current or former spouse has paid Social Security taxes for at least 10 years.
- You’re not yet 65, but you’re disabled and you’ve been receiving Social Security benefits or Railroad Retirement Board disability benefits for two years.
- You have end-stage renal disease (ESRD) and are receiving dialysis and file for Medicare.
- You have amylotrophic lateral sclerosis (ALS) and are approved for Social Security Disability Insurance. (Unlike other SSDI recipients, your eligibility for Medicare begins without a waiting period.)
If you (or your spouse) have not been paying Social Security taxes for at least 10 years, you’ll still be eligible to buy Part A coverage, but you’ll need to pay a large premium; its size can vary based on your work history. Your premium will be $411 a month if you’ve paid into Medicare less than 7.5 years; your premium will be a bit less (but still expensive) if you’ve paid between 7.5 but less than 10 year of FICA taxes.
Medicare Part B eligibility
When you receive notification that you’re eligible for Medicare Part A, you’ll also be notified that you’re eligible for Part B coverage, which is optional and has a premium for all enrollees. Part B costs $104.90 for a majority of enrollees in 2016, and $121.80 for those enrollees who are new to the program, have high incomes, or aren’t drawing Social Security benefits.
In addition, Part B costs more in any situation if your income is more than $85,000 or $170,000 for a married couple – these income thresholds for paying higher premiums go up again each year beginning in 2020, meaning that more people will pay higher income-related premiums after that year.
It’s important to enroll in both Part A and Part B. If you enroll in Part B during your initial enrollment period (the seven months surrounding the month you qualify, beginning three months prior to the month you turn 65 in most cases), Part B will kick in on the first day of the month you turn 65. While you can enroll in the three months following your 65th birthday, it’s best to enroll in Part B early, or you could have gaps in health coverage. If you wait too long, you could end up locked out of Part B altogether and wait over a year to get it in the future.
If you don’t enroll during that period, you won’t lose eligibility for Part B, but you will be penalized with an increased premium when you eventually enroll, which climbs 10 percent for each year that you’re eligible but don’t enroll in Part B. The General Enrollment Period (GEP) for Medicare A and B runs from January 1 to March 31 each year, for coverage effective July 1 (with an increased premium if the late enrollment penalty applies).
Medicare Advantage eligibility
If you’re eligible for Medicare benefits, you have to choose how to receive them – either through the government-run Original Medicare program, or through Medicare Advantage.
You need to have both Medicare Part A and Part B in order to enroll in Medicare Advantage, and you can select a plan during your Medicare initial enrollment period (seven months surrounding the month you qualify for Medicare).
Most Medicare Advantage plans also include Part D prescription drug coverage; if you have an MA plan, you typically receive your Part D coverage together with the health and hospital benefits, in one single package.
Medicare Part D eligibility
To be eligible for Medicare Part D prescription drug coverage, you must have either Medicare Part A or Part B (or you can have both).
As mentioned above, most people who select Medicare Advantage must receive their Part D prescription benefits as part of that same Medicare Advantage plan. There are only a few, limited exceptions, including if you happen to be enrolled in what’s called a Private Fee-for-Service (PFFS) Medicare plan. (Most people aren’t.)
Penalties for not enrolling
As with Part B, you are still eligible for Part D prescription drug coverage if you don’t enroll when you’re first eligible, but you may pay higher premiums if you enroll later on.
If you’re enrolled in both Medicare Part A and Part B, and don’t have Medicare Advantage or Medicaid benefits, then you’re eligible to apply for a Medigap policy. You have a federal right to buy a Medigap during the six months beginning after you’re both 65 years old and have enrolled in Part B.
After this time runs out (known as your Medigap “open enrollment”), you will have only limited chances to purchase one down the road. Some states allow people of any age or health status to purchase Medigaps at any time, but most don’t. In many states, Medigaps aren’t an option for people who have Medicare before age 65.
The primary factor that will affect your ability to purchase the policy – regardless of your health – will be whether you enroll during your Medigap Open Enrollment Period.
If you don’t enroll during the six months that starts with the month you turn 65, carriers are allowed to use your medical history to determine eligibility for coverage and to set your premium if you apply for coverage later on.