What do I need to know about Medicare before retiring?
Medicare eligibility begins at 65, regardless of retirement age. You should enroll during your Initial Enrollment Period (3 months before to 3 months after turning 65) to avoid late penalties. Original Medicare (Parts A & B) covers hospital and medical services; Part D covers prescriptions. Many people add Medigap or Medicare Advantage for additional coverage.
Medicare is complicated, but the core decisions are manageable. Here's what matters.
The timeline:
- Age 65: You're eligible (regardless of when you retire)
- Initial Enrollment Period: 7 months centered on your 65th birthday
- If you're still working with employer coverage, you may delay—but there are rules
The parts of Medicare:
- Part A (Hospital): Usually premium-free if you paid payroll taxes for 10+ years
- Part B (Medical): Monthly premium (~$175/month in 2024), covers doctor visits, outpatient care
- Part D (Prescriptions): Separate plans with varying premiums and coverage
- Medigap (Supplement): Fills gaps in Original Medicare, sold by private insurers
- Medicare Advantage (Part C): Alternative to Original Medicare, often includes drug coverage
The decision tree: 1. Original Medicare + Medigap + Part D = Most flexibility, any doctor who accepts Medicare, predictable costs 2. Medicare Advantage = Often lower premiums, but network restrictions, variable out-of-pocket
The penalties:
If you don't enroll on time and don't have qualifying employer coverage:
- Part B: 10% penalty for each 12-month period you delayed (forever)
- Part D: 1% penalty per month you delayed (forever)
What people miss:
- IRMAA: High earners pay more for Parts B and D (based on tax returns from 2 years prior)
- Medigap timing: Best rates are during open enrollment at 65—if you wait, you may face medical underwriting
- Retiring before 65: You'll need bridge coverage (COBRA, marketplace, spouse's plan)
The bottom line: Healthcare costs are one of the biggest retirement expenses. Understanding Medicare isn't optional—it's essential to retiring confidently.