Like other types of insurance, you’ll pay monthly premiums for Medicare in retirement. But two things could cause you to pay even more each month—enrolling too late and earning too much.

Here’s why it’s important to plan ahead. (Need to brush up on the basics of Medicare, including its parts and what they cover? Read Five things you should know about Medicare.)

If you’re late signing up, you could be charged a lifetime monthly penalty

Most people must enroll for Medicare near their 65th birthday. There are exceptions for people who have insurance through a qualified employer or who have certain disabilities or conditions. But in general, your initial enrollment period starts three months before you turn 65 and ends three months after.

If you don’t enroll in Medicare Part B (medical coverage) when you’re first eligible, you’ll likely have to pay a late enrollment fee every month after you do sign up. The fee is permanent and depends on how long you go without coverage. The same goes for Part D (optional prescription drug coverage) if you sign up late and don’t have drug coverage from another source, such as an employer.


As you make plans for celebrating your 65th birthday, don’t forget to make plans for enrolling in Medicare. A delay could cost you.


Some people will also have to pay a surcharge if they enroll late in Part A (hospital coverage). Part A is premium-free for most people because it’s paid for by taxes deducted from their paychecks throughout their careers. However, if you don’t qualify for the free coverage, you’ll need to purchase it—and if you don’t do that when you are first eligible, a penalty will be added to your monthly premiums. You’ll be charged this penalty for twice the number of years you could have enrolled in Part A, but didn’t.

So, as you make plans for celebrating your 65th birthday, don’t forget to make plans for enrolling in Medicare. A delay could cost you.

If you make a lot of money, you'll probably pay more for Parts B and D.

Everyone pays a monthly premium for Part B—typically a standard amount somewhere between $150 and $200. Part D premiums differ by insurer. But if you make a lot of money, you could pay an additional fee each month for each of these parts—called the Income Related Medicare Adjustment Amount (IRMAA).

Medicare looks at your IRS tax return from two years before you enroll to determine whether you will pay more and, if so, how much.

So, it pays to plan ahead. If your income has decreased since your last tax return, you might look into Form SSA-44 (PDF), a Medicare form for noting any “life-changing events” that have affected your income since your last tax return—entering retirement, for example. Ask your financial professional if that might apply to you.

When it comes to Medicare, delays and mistakes can cost money, so don’t hesitate to ask for help if you need it. Your financial professional may be able to assist you, or you can contact your State Health Insurance Assistance Program (SHIP) for free, one-on-one Medicare guidance.

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