Medicare Master Guide

Missing your enrollment deadline can result in permanent penalties. Here are the key windows:

Part A and Part B enrollment: You must sign up through the Social Security Administration (SSA), not Medicare.gov. SSA handles the official enrollment for Parts A and B. Medicare.gov can guide you through the process and provide information, but SSA processes the actual enrollment.

Three ways to enroll with SSA:

• Online: Visit Medicare.gov for information and to initiate enrollment (you'll be directed to Social Security's system)
• Phone: Call 1-800-MEDICARE (1-800-633-4227) — TTY users call 1-877-486-2048 (SSA handles the enrollment)
• In person: Visit your local Social Security office

What you'll need:

• Social Security number
• Proof of citizenship (birth certificate, passport)
• Proof of residence (utility bill, lease)
• Information about current insurance (if you have it)

CMS-L564 (Request for Employment Information): Use this to prove you have group health plan coverage based on current employment so you don't get enrolled in Part B automatically.

CMS-40B (Application for Enrollment in Medicare Part B): Used if you need to enroll in Part B outside your IEP without penalty.

Missing your enrollment deadlines triggers permanent penalties that you pay for life.

Part B Penalty:

• 10% of the monthly premium for each 12-month period you were eligible but not enrolled
• Penalty is permanent — you never lose it
• Example: If you delay 2 years, penalty = 20% extra on your Part B premium forever

Part D Penalty:

• 1% of the national base premium (around $0.30-$1) for each month you were eligible but not enrolled
• Penalty is permanent
• Example: If you delay 2 years, penalty ≈ 24% extra per month forever

If you're still working at 65 with group health plan coverage based on your current employment, the decision is important and depends on the size of your employer.

The core rule: If you have group health plan coverage based on current employment at an employer with 20 or more employees, you can usually delay Part B without penalty. But if your employer has fewer than 20 employees or you delay without qualifying coverage, penalties follow you forever.

For Part B purposes, what matters is whether you have group health plan coverage based on your current employment. The key threshold is employer size:

Employer size matters:

• 20+ employees: You may delay Part B without penalty (group health plan is primary)
• Fewer than 20: Medicare is primary — you should enroll in Part B at 65

Important: COBRA and retiree coverage do NOT count as current-employment coverage for Part B purposes. Only active employment coverage qualifies.

How to verify: Request form CMS-L564 from your benefits administrator. They'll tell you if your plan qualifies as current-employment coverage.

If you delay Part B thinking you're protected by current-employment coverage, but your coverage doesn't actually qualify (small employer, COBRA, retiree coverage), Medicare can retroactively assess penalties.

The risk: You may owe back premiums plus penalties for months you were uninsured.

Protection: Always get written confirmation that your coverage qualifies as current-employment group health plan coverage from your employer. Keep the CMS-L564 form on file.

At age 65, ask yourself:

1. Am I still working? If yes, go to question 2. If no, enroll in Part B now.
2. Does my employer have 20+ employees? If yes, you may delay. If no, enroll now.
3. Do I have written confirmation that my coverage is creditable? If yes, delay. If no, enroll now to be safe.
4. What's my plan for when employment ends? You have an 8-month Special Enrollment Period to enroll in Part B after your group health plan coverage based on current employment ends, without penalty. This SEP begins when your current-employment coverage ends.

If you use VA healthcare: You still must enroll in Part B to keep TRICARE or CHAMPVA coverage at 65.

TRICARE For Life (TFL): Available at 65 if you're on Medicare Parts A and B and maintain TRICARE eligibility. TFL coordinates with Medicare.

CHAMPVA: Similar to TRICARE — you must have Part A and Part B to maintain coverage.

At 65, you choose between two fundamentally different approaches:

Path 1: Original Medicare + Medigap (Supplement)

• Stay with government Medicare (Parts A & B)
• Add a private Medigap supplement for copays/coinsurance
• Add separate Part D for drugs
• No network — any provider

Path 2: Medicare Advantage

• Switch to a private plan that replaces Parts A & B
• Plan usually includes Part D
• Network-based (must use plan providers)
• May offer extras (dental, vision, gym)

Original Medicare + Medigap:

• Part B premium: $202.90/month
• Medigap premium: $100-$300/month (varies by age and plan)
• Part D premium: $20-$70/month
• Total: Typically $320-$570/month
• Copays: Minimal (once deductibles met)
• Out-of-pocket cap: No cap

Medicare Advantage:

• Plan premium: Often $0-$200/month
• Copays: $20-$50 per visit
• Out-of-pocket cap: Usually $6,800-$8,000/year
• Prescription coverage: Usually included

Key benefits:

• See any Medicare-accepting provider (no networks)
• No referrals needed for specialists
• Same coverage nationwide
• Lower copays once deductibles met
• Higher predictability (no plan changes each year)

Medigap Open Enrollment (Critical!):

At age 65, you have a special 6-month window to enroll in Medigap guaranteed-issue — no medical underwriting, no waiting periods.

Key benefits:

• Lower or zero premiums
• Out-of-pocket maximum protects you (cap on total costs)
• Extra benefits often included: dental, vision, fitness, hearing
• Prescription drugs usually built in
• May offer additional services (telehealth, maternity)

Tradeoffs:

• Network restrictions (must use plan doctors/hospitals)
• May need referrals for specialists
• Coverage changes year to year
• May have higher copays for specific services
• Out-of-network care usually costs much more

Original Medicare → Medicare Advantage: You can switch anytime during Open Enrollment (Oct 15-Dec 7) or if you qualify for Special Enrollment.

Medicare Advantage → Original Medicare: You can switch during Open Enrollment, but switching to Medigap after 65 requires medical underwriting — no guaranteed issue unless you qualify for SEP.

Medigap → Medigap: You can switch plans, but guaranteed-issue rights are limited after your initial 6-month open enrollment at 65.

In 2026, Part D coverage has been simplified to THREE phases. The coverage gap (donut hole) was eliminated beginning in 2025. Understanding each phase helps you plan and budget.

Phase 1: Deductible

• You pay 100% of drug costs until you hit the deductible (usually $100-$600)
• Plan then helps pay

Phase 2: Initial Coverage

• Plan pays a percentage (usually 75-80%)
• You pay the rest as copays/coinsurance
• Continues until your out-of-pocket spending reaches $2,100 (the 2026 annual out-of-pocket threshold)

Phase 3: Catastrophic Coverage

• After you reach $2,100 in out-of-pocket costs, you move to catastrophic coverage
• Plan pays majority of costs (usually 95%)
• You pay small copays (~$3-$12 per script)
• Continues for rest of year

Every Part D plan has a formulary — the list of covered drugs. Drugs are organized into tiers with different copays.

Typical tier structure:

• Tier 1 (Preferred generics): Lowest copay (~$5-$10)
• Tier 2 (Generics): Higher copay (~$15-$25)
• Tier 3 (Preferred brands): Higher copay (~$35-$60)
• Tier 4 (Non-preferred brands): Highest copay (~$75-$150)
• Tier 5 (Specialty): Often 25-30% coinsurance (expensive for biologics)

Critical action: Before enrolling in Part D, check if your current medications are covered on the plan's formulary and at what tier.

A major 2026 change: All Medicare Part D plans must cap out-of-pocket costs for insulin at $35/month per prescription.

What this means:

• You'll never pay more than $35/month for a 30-day supply of insulin
• Applies regardless of which insulin or coverage phase
• Applies to all insulin types (rapid-acting, long-acting, combination)

If you have limited income, you may qualify for "Extra Help" — federal assistance that reduces Part D costs dramatically.

2026 income limits (approximate):

• Single: Up to ~$1,820/month
• Couple: Up to ~$2,450/month

What it covers:

• Deductible fully covered
• Lower copays ($1-4 per script)
• May cover brands if generic not available
• Full coverage even at catastrophic coverage phase

How to apply: Call 1-800-MEDICARE or visit Social Security office.

Plan formularies change every year. Your drug costs may increase or decrease depending on plan changes.

When: October 15 - December 7 each year (Medicare Open Enrollment Period).

What to do:

1. Review your current medications
2. Check if they're still on your plan's formulary
3. Compare costs with other plans
4. Switch if you find lower costs

Tool: Medicare.gov has a "Find Care Providers" tool for comparing Part D plans.

If you don't enroll in Part D when first eligible and later sign up, you'll pay a penalty for life.

How it's calculated:

• 1% of the national base premium per month you were eligible but not enrolled
• Base premium is ~$30-35/month, so penalty is roughly $0.30-$0.35 per month
• Example: 2-year delay = 24% extra per month (~$9/month) forever

IRMAA stands for Income-Related Monthly Adjustment Amount. It's an extra charge added to your Part B and Part D premiums if your income is above a certain threshold.

The basic rule: Higher income = higher Medicare premiums.

Income used: Modified Adjusted Gross Income (MAGI) from your tax return from 2 years prior (the "look-back" rule).

Part B Premiums (Standard: $202.90/month):

Part D Premiums (Surcharge On Top of Plan Premium):

Example: A single person with $150,000 income pays Tier 4 on both Part B and Part D.

• Part B: $202.90 + $288.40 = $491.30/month
• Part D: Plan premium (e.g., $35) + $49.40 = ~$84.40/month
• Total extra due to IRMAA: ~$338/month or ~$4,056/year

IRMAA is based on your Modified Adjusted Gross Income (MAGI) from 2 years prior — not your current year.

Example timeline:

• You turn 65 in 2026 and enroll in Medicare
• Your IRMAA for 2026 is based on your 2024 tax return
• Your IRMAA for 2027 is based on your 2025 tax return

Why this matters: If you have a large income event in a given year (like selling a house or taking a lump-sum distribution), it affects your IRMAA two years later.

If your income drops significantly due to a life event, you can request a recalculation of IRMAA using current income instead of the look-back year.

Qualifying life-changing events:

• Retirement from work
• Loss of income-producing property
• Loss of pension
• Death of spouse
• Divorce or annulment
• Work status change

How to apply: Complete form SSA-44-CH and submit to Social Security or call 1-800-772-1213.

Documentation: You'll need proof of the life event (divorce decree, death certificate, retirement notice from employer).

Roth conversions: Converting traditional IRA to Roth increases MAGI in the conversion year. Plan this carefully if you're within 2 years of Medicare age.

Home sales: Capital gains from home sales count toward MAGI. You may exclude up to $250,000 (single) / $500,000 (married) if you meet the 2-year ownership test, but gains beyond that count.

Strategic planning: Many people find strategies to manage IRMAA impacts, such as:

• Timing major income events to minimize overlap with IRMAA look-back years
• Using qualified charitable distributions instead of traditional distributions
• Spreading large capital gains over multiple years if possible

If your income is low, state Medicare Savings Programs can help pay your Part A/B premiums and cost-sharing.

QMB (Qualified Medicare Beneficiary):

• Income limit: Single ≤$1,350/month, Couple ≤$1,824/month
• Covers: Part A & B premiums, deductibles, coinsurance

SLMB (Specified Low-Income Medicare Beneficiary):

• Income limit: Single ≤$1,616/month, Couple ≤$2,184/month
• Covers: Part B premium only

QI (Qualifying Individual):

• Income limit: Single ≤$1,816/month, Couple ≤$2,455/month
• Covers: Part B premium only (limited funding)

How to apply: Contact your state Medicaid agency or call 1-800-MEDICARE.

Veterans at 65 have access to two separate federal healthcare systems: VA and Medicare. They work differently and have different eligibility rules.

VA Healthcare:

• Based on military service and discharge status
• Provided at VA facilities (hospitals, clinics)
• Enrollment must be maintained
• Copays vary by service-connected disability level

Medicare:

• Based on age 65 or disability
• Available through any Medicare provider
• Must enroll to maintain coverage
• Standard premiums and copays apply

Key point: You can use both systems. Medicare does NOT replace VA benefits.

When you turn 65, VA and Medicare can work together, but coordination varies based on your situation.

If you use VA exclusively: You still should enroll in Medicare Part A (hospital) at 65. It's free for most people and provides backup coverage.

If you have dual coverage (VA + Medicare):

• VA typically pays first for VA-approved care at VA facilities
• Medicare pays second (as secondary insurance)
• You may have lower out-of-pocket costs

If you use Medicare providers: Medicare pays first, and VA may provide supplemental coverage.

If you're a military retiree or eligible family member, TRICARE For Life provides comprehensive coverage at age 65 — but only if you enroll in Medicare Parts A and B.

Eligibility:

• Age 65 or older
• Eligible for TRICARE (military retiree, spouse, family member)
• Must be enrolled in Medicare Parts A and B

Coverage:

• TFL acts as secondary payer to Medicare
• Covers Medicare copays and coinsurance
• No TFL premium (you pay for Medicare)
• No deductible with TFL

CHAMPVA (Civilian Health and Medical Program of the VA) covers survivors and dependents of veterans who died from service-connected conditions or who were rated 100% disabled.

At age 65: Like TRICARE, you must enroll in Medicare Parts A and B to maintain CHAMPVA eligibility.

How it coordinates:

• CHAMPVA acts as secondary to Medicare
• Helps pay copays, deductibles, and coinsurance
• No CHAMPVA premium for seniors on Medicare

This is critical and often missed: If you're eligible for TRICARE For Life or CHAMPVA, you MUST enroll in Part B at 65 to keep your military benefits. Unlike civilian group health plan coverage, military benefits are not a qualifying reason to delay Part B.

The enrollment window: You must enroll in Part B within 8 months after losing the military benefit to avoid penalties. If you enroll later, you face Part B late enrollment penalties.

Smart approach: Just enroll in Part B at 65 along with Part A. It's free or low-cost for most people, and you protect both your Medicare and your military benefits.

VA Healthcare Enrollment: 1-877-222-VETS (8387) or VA.gov

TRICARE: 1-800-538-9552 or TRICARE.mil

CHAMPVA: 1-800-733-8387 or VA.gov/CHAMPVA

Medicare (for both VA and non-VA eligible): 1-800-MEDICARE (1-800-633-4227)

Veterans Service Organizations: Many offer free help with benefits navigation (American Legion, VFW, DAV).