What Age Should You Start Thinking About Medicare?

An essential aspect of retirement and healthcare planning is figuring out Medicare. Medicare is a federal health insurance program for individuals aged 65 and younger people with certain disabilities. Longevity Live Paid Content. 

Given its importance, understanding when to start thinking about Medicare is crucial in securing your healthcare future. This article will explore the factors influencing your decision to consider Medicare and why early planning can be advantageous.

Turning 65: The Traditional Starting Point

Medicare eligibility typically begins around age 65 for U.S. citizens and legal residents who have lived there for at least five years. Because of this, you should start thinking about Medicare before then, likely around age 60 to 62. Doing so ensures you don’t miss critical information or make mistakes like missing enrollment periods, not understanding costs, etc.

Otherwise, if you wait until you’re 64 or 65, you’ll likely feel overwhelmed trying to understand the different parts and plans that come with Medicare, including Advantage and Medigap plans, like Plan N which you can learn more at Boomer Benefits – Plan N.

Late Enrollment Penalties

One of the reasons for starting to think about Medicare well in advance is to avoid late enrollment penalties. Late enrollment in Medicare Part B or Part D can increase premiums for the rest of your life. These penalties can be financially burdensome, underscoring the importance of planning ahead, so you must know your appropriate Medicare timeline.

Additionally, some people can delay Medicare past 65 if they have other qualifying coverage. If you plan to work past 65, you’ll want to look into and understand this.

Medicare Costs

Thinking of Medicare early on also helps people prepare their finances. It’s a common misconception that Medicare will be free, but that is not true. Medicare Part A and Part B come with costs, including premiums and deductibles.

You can also sign up for supplemental plans to help cover costs left over after Medicare pays, including Medigap and Advantage plans. These plans come with premiums and out-of-pocket costs as well.

IRMAA

Your income level can affect your costs as well. If you make a certain amount, your Medicare premiums will be higher. This is called an Income Related Monthly Adjustment Amount (IRMAA) charge. Social Security will look at your tax return from two years to determine if you qualify for an IRMAA charge, so it’s essential to consider your different assets leading up to Medicare eligibility.

Social Security

Although Social Security and Medicare are separate programs, they are related in some ways. If you plan to receive Social Security benefits before becoming eligible for Medicare, you will automatically be enrolled in the Medicare program. This may be okay for some people, but if you plan to delay Medicare due to having other creditable coverage, you’ll want to prepare for automatic enrollment.

HSA

Many people contribute to a Health Savings Account (HSA) while working. However, you don’t want to contribute to an HSA account if enrolled in any part of Medicare. If you do, you may be subject to an IRS penalty.

You’ll want to stop contributions at the right time to avoid this penalty. Some people will need to stop contributions by the day before the first of their 65th birthday month, while others will need to stop contributions at least six months before signing up for Medicare.

Retiring Before 65

Some people choose to retire before turning 65. In such cases, they need to consider healthcare coverage options until they become eligible for Medicare. Understanding the transition from employer-sponsored plans to Medicare is crucial in this scenario.

Conclusion

As a rule, it’s best to start thinking about Medicare between 60 and 62. Waiting until you are 64 or 65 could be overwhelming for most people.

Early planning is critical to avoid late enrollment penalties, maintain continuous coverage, and access comprehensive healthcare services. Regardless of your specific situation, understanding Medicare’s various parts, enrollment periods, and eligibility criteria is essential for making informed decisions about your healthcare coverage.

Taking proactive steps to educate yourself about Medicare can help you navigate the complexities of healthcare planning and ensure a secure healthcare future.