Center for a Secure Retirement
When Are You Eligible for Medicare?

When Are You Eligible for Medicare?

Medicare is a federal government health insurance program that helps to pay the post-retirement health care bills of many Americans. You may have heard about Medicare, but you might also feel that you could use a crash course on how it works. You may be wondering:

  • When are you eligible for Medicare?
  • What does it take to enroll?
  • Does Medicare cover every health care expense?
  • What are the options for filling any coverage gaps?

Here we will provide answers to these questions and explain how preparing for Medicare enrollment is part of a comprehensive health care planning process that you should start thinking about as early as possible.

When Are You Eligible for Medicare?

You qualify for both Medicare Part A, which is hospital insurance, and Medicare Part B, which is medical insurance, if any of the following situations applies to you:

  • You are 65 or older.
  • You have a disability.
  • You have end-stage kidney disease.

Most Medicare recipients qualify to receive Part A at no cost as long as they are entitled to receive Medicare based on their own earnings or those of their spouse, parent or child. That entitlement is based on the accumulation of a minimum number of "quarters of coverage," which are earned at a rate of one credit for each quarter you work and pay payroll or self-employment taxes for Medicare.

The basis on which you apply for Medicare — whether it's age, a disability or kidney disease — will determine the specific minimum required. For example, if you are 65 or older and you or your spouse worked and paid Medicare taxes for at least 10 years (40 quarters), you are eligible for premium-free Medicare Part A.

Medicare Part B is a voluntary benefit program that requires the payment of a monthly premium. If you are eligible for premium-free Part A, you automatically qualify to purchase enrollment in Part B. For individuals who must pay a premium for Part A, Part B is available only if the applicant is a U.S. resident who is 65 or older and either a U.S. citizen or a legal permanent resident who has been in the country for five continuous years before applying for Medicare.

Medicare Part C, also known as Medicare Advantage, is an all-in-one alternative available from private insurers that provide Part A and Part B benefits through contracts with Medicare. Most Medicare Advantage plans also cover prescription drugs in addition to hospital and medical care. They also tend to offer benefits like vision, hearing and dental coverage that you don't get with baseline Medicare. To be eligible for a Medicare Advantage plan, you must live within the plan's service area and enroll in both Medicare Part A and Part B. You don't qualify for this type of plan if you have end-stage kidney disease.

How to Enroll in Medicare

Now that we've answered the question of when you are eligible for Medicare and addressed the rules around applying for various Medicare options, lets dive into the enrollment process.

If you are a U.S. resident (except in Puerto Rico) who has already started receiving Social Security or Railroad Retirement Board benefits at least four months before becoming eligible for Medicare, you are automatically enrolled in both premium-free Part A and Part B. If you live in Puerto Rico, only your premium-free A enrollment is automatic.

If you don't qualify for automatic enrollment because you are not yet receiving Social Security or Railroad Retirement Board benefits, you must apply for Medicare by contacting the U.S. Social Security Administration. If you are eligible for premium-free Part A, you can enroll in that part of the program at any time after you first become eligible. Applications for premium Part A, Part B or both are accepted only during these three specified enrollment periods:

  • Initial enrollment period: A seven-month period that starts three months before your 65th birthday and ends three months after.
  • General open enrollment period: Jan. 1 through March 31 of each year.
  • Special enrollment period for the working aged and people working with disabilities: An eight-month-long opportunity for people who did not enroll when they were first eligible because they were covered by an employment-based health insurance plan.

Once you've enrolled in Medicare, you won't need to repeat the process, but you will be able to do an annual review of your plan and make changes if you desire.

Does Medicare Cover Long-Term Care?

Now on to the question of whether Medicare covers every health care expense. Unfortunately, the answer is no — Medicare doesn't cover every type of care. Most notably, it does not pay for long-term care. If you're shocked to discover this fact, you're not alone. A study of middle-income baby boomers from the Center for a Secure Retirement (CSR) found that 56% mistakenly believe Medicare will cover their long-term care.

The 2019 report, based on a nationwide survey of 1,500 people, also cites an estimate from the U.S. Department of Health and Human Services stating that nearly 70% of today's baby boomer population will require some type of long-term care in their lifetimes. More than half of that group is expected to need long-term care for up to two years, while 27% will require it for more than five years, the study reveals. Everyone's situation is different, but based on the statistics, it's wise to consider supplemental coverage options.

Paying for Uncovered Health Care Needs

As you prepare for your Medicare enrollment, it makes sense to think about how you'll pay for retirement care expenses that the federal health insurance program won't cover, including long-term care.

Here are some potential resources to consider:

  • Your own finances, including personal savings, retirement income and earnings from a part-time job or business in retirement.
  • Medicare Supplement insurance, also known as Medigap, which is available through private insurers to help pay expenses such as copayments, coinsurance and deductibles.
  • Long-term care insurance, which is another form of private coverage that can pay for skilled care, personal care and other services provided in facilities and homes.

Get a Head Start on Your Health Care Planning

If you're asking about when you will be eligible for Medicare well ahead of when you can enroll, you're already off to a head start. In fact, respondents to the CSR survey who had completed a retirement care plan said that starting earlier helped them worry less about their health care and enjoy their retirement more fully.

One of the best incentives to create a plan sooner rather than later is that it can allow you to find ways to reduce the financial burden of health care in retirement, which continues to grow. The same CSR report cites an estimate from the U.S. Department of Health and Human Services stating that today's baby boomers will spend an average total cost of $138,000 on their future health care.

Getting a head start on your retirement health plan can give you more time to build up your savings and find more affordable options for financing your care. For instance, long-term care insurance is much less expensive if you purchase it before you reach your retirement age. You'll also have more time to discuss your care plan and preferences with loved ones and seek advice from insurance planners, financial advisors and other experts who can help you develop a plan that's right for you.

Understanding Medicare's eligibility rules, enrollment process and coverage limitations is an essential first step in retirement planning. Equipped with this knowledge, you'll be able to make the right decisions to cover all your health care needs and set yourself up to enjoy a fulfilling retirement.

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