If you’re approaching 65, it’s important to have a strategy for signing up for Medicare, even if you plan on keep working. 

Like most healthcare plans, Medicare has specific enrollment windows. If you don’t enroll on time, you may face a coverage gap. 

But unlike private insurance plans, there are additional enrollment rules to follow and you may face a penalty if you don’t enroll during your initial enrollment period (IEP).  

For all parts of Medicare, the initial enrollment period begins three months before the month of your 65th birthday and ends three months after your birthday month. 

Late enrollment penalties may be incurred for Medicare Parts A, B, and D, but not Medicare Part C (Medicare Advantage). Here’s how you can avoid the penalties for each: 

Medicare Part A

Medicare Part A covers hospital costs and is premium-free as long as you or your spouse have a minimum of 10 years of work experience.  

If you’re eligible, consider enrolling as soon as you can, even if you’ll still be working and covered under your employer’s health plan. 

If you aren’t eligible for premium-free Part A and you don’t buy it during your IEP, your monthly premium may go up by 10%. 

You’ll have to pay the higher premium for twice the number of years you could have had Part A, but didn’t sign up.

Medicare Part B

Medicare Part B covers medical care and equipment. For 2021, Medicare Part B premiums start at $148.50 per month and go up to $504.90 per month for the highest earners. 

This is the most important part of Medicare to enroll in on time as it has the most significant late enrollment penalty. 

For each year that you’re eligible for Part B but are not enrolled, your Part B premium will go up by 10%.  

That increase is permanent, not temporary, which means the penalty lasts for the rest of your life. 

You can delay enrolling in Part B if you keep working and your company’s health coverage is qualifying.  

To be considered qualifying, your employer must have more than 20 employees and offer group health plan coverage as defined by the IRS.  

If your employer healthcare is qualifying, you won’t pay the penalty if you sign up for Part B within eight months of leaving your job during the Special Enrollment Period.