Medicare Eligibility and When to Sign Up

When are you eligible for Medicare and when can you sign up? These are questions that many boomers are starting to think about as the date approaches. Although entitlement programs such as Medicare are likely to change because of funding problems, those changes are more likely to affect younger generations.

Medicare Eligibility

Before we can discuss eligibility for Medicare, we should first briefly look at the four different parts: A, B, C, and D.

Medicare Part A pays for in-patient care in a hospital (semi-private room) including nursing care, meals, and hospital medical services such as lab tests and drugs.  Part A also covers temporary care (up to 100 days) in a nursing home after at least a 3 day stay in a hospital for a related condition.

Everyone who has 40 work credits is automatically eligible for Medicare Part A immediately upon reaching age 65. To earn 40 work credits, you must work at least 10 years, earning up to 4 credits per year. In 2009, each work credit requires $1090 in income. There are no premiums for Medicare Part A although there is a deductible.

Even if you do not have enough work credits, you may still be eligible for Medicare Part A at age 65 but you may have to pay a premium.

Medicare Part B covers physician and other outpatient medical care. This is optional, meaning that you do not have to sign up for it. If you do sign up for Part B, you have to pay a monthly premium. Any U.S. citizen or legal resident who is 65 or older and who has continuously lived in the U.S. for at least 5 years is eligible.

Medicare Part C is for managed care type plans offered by private companies (Medicare Advantage) that cover everything that Parts A and B cover, and in some cases cover additional items that traditional Medicare plans do not cover, such as outpatient prescription drugs. Again, you are eligible for Part C if you are also eligible for Parts A and B.

Medicare Part D is for outpatient prescription drugs. Part D plans are also provided by private companies for a separate premium, or can be part of a Part C plan.  You are eligible at age 65.

When to Sign Up for Medicare

For Part A and B, if you are already receiving Social Security when you turn 65, you will be automatically enrolled in Medicare Part A and Part B and will be sent a Medicare card. You can cancel the Part B coverage if you don’t want it.

If you delay signing up for Social Security until after age 65, you will need to enroll in Medicare separately. For Part A, you can sign up any time. For Part B, the initial enrollment window lasts for 7 months, starting 3 months before you turn 65 and ending in the third month after the month in which you turn 65. If you don’t enroll in Medicare Part B during this initial enrollment period, you may have to pay a late penalty.

The late penalty is equal to 10% of your premium for every year that you were eligible for Part B but did not sign up. The big problem with the late enrollment penalty is that you continue to pay it for every year that you are enrolled in Part B. Ouch.

The late penalty exceptions apply if you are still working and have a group coverage from your employer that is primary. If  you are retired and have retiree health coverage, you should still consider signing up for Part B to avoid paying a penalty. There is no penalty if you enroll within 8 months after retirement or after your group coverage expires, whichever occurs first. This is called the special enrollment period.

If you miss the initial enrollment window or special enrollment period, you can sign up for Medicare Part B during January 1-March 31 of each succeeding year, with coverage then beginning on July 1. This is called the general enrollment period.

Keep an eye on changes made to Medicare eligibility and sign up rules. The government will probably make changes to cover expected funding shortfalls.


  1. Phyllis Hewson says

    I will be turning 65 in February. I am presently collecting unemployment benefits and am on Network Health. Is it mandatory for me to sign up for Medicare now that my 65th birthday is almost here? If I should be fortunate enough to get a job that offers insurance benefits will I need to decline that coverage and go onto medicare?

    Thank you.

    Phyllis Hewson

  2. Kathy Hoffmann says

    Great info — I have a question if you could answer it I turn 65 in October
    Will continue working full time — I have insurance, I pay partial, through my company — we are a small firm– less than 35 people — Do I apply for Part A and then use my insurance as my secondary insurance?

Leave a Reply

Your email address will not be published. Required fields are marked *