Key Takeaways
- A 62-year-old listener of the Your Money, Your Wealth podcast plans to retire at 64 and keep his employer’s health insurance until he turns 65.
- Medicare’s first sign-up window lasts seven months, from three months before the 65th birthday to three months after it, and after that the next chance runs from Jan. 1 to March 31.
- Retiree coverage and COBRA don’t count as coverage from a current job, so they don’t let anyone put off Part B without a penalty.
- The penalty adds 10% to the premium for each full year late, which at 2026’s $202.90 monthly premium works out to $243.48 a year, usually for life.
If you plan to retire before 65 and stay on your employer’s health plan until Medicare starts, congratulations: that’s a valuable perk. But it comes with a deadline that’s easy to miss. If you miss it, Medicare can charge you extra for as long as you have Part B.
One listener’s plan shows how that works. A 62-year-old wrote in to Your Money, Your Wealth, and his question was read on the Nov. 10 episode. He’s single, has about $2.6 million in his 401(k) on top of a Roth and a brokerage account, and plans to retire at 64. He’s also covered the gap before Medicare: “I will get health insurance until 65,” he wrote.
He’ll have seven months to sign up
Medicare’s first sign-up window lasts seven months. It opens three months before you turn 65 and closes three months after the month you turn 65. Miss it, and your next chance is the general window, which runs from Jan. 1 to March 31 each year.
People who are still working at 65 and have health coverage through that job can usually put off Part B and sign up later without a penalty. But retiree coverage and COBRA don’t count as coverage from a current job. So once he retires at 64, he loses that option, even though his old employer’s plan still covers him. For him, the seven months around his 65th birthday are the window that counts.
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A year late costs $243.48 a year
Signing up late for Medicare Part B adds 10% to the premium for each full year you could have had it and didn’t. At this year’s $202.90 monthly premium, one full year late means paying $20.29 more a month, or $243.48 more a year. Two full years late makes it 20%, or $486.96 a year.
And since the penalty usually lasts as long as you have Part B, it adds up. Over 20 years on Part B, a one-year penalty comes to about $4,870 in extra premiums at today’s rate. It would be more if the premium goes up, because the penalty is a percentage of the premium.
Then there’s the wait itself. If his employer’s coverage ends at 65 and he misses the seven months, he’d have no Part B until he can sign up in a January-to-March window. Ouch.
Getting this one right is easy
Now, if his coverage really does end the day he turns 65, I’d bet he signs up right on time. Few people let their insurance lapse on purpose. People usually get caught in one of two ways. Either they assume any employer plan lets them wait, as it does for people still working, or they stay on coverage that runs past 65, such as COBRA or a retiree plan that keeps going. He’s single, too, so there’s no spouse’s work plan he could use to put off Part B.
Fortunately, the window opens three months before he turns 65, so he can sign up while his employer’s coverage is still in place. He can also ask his employer now for the exact date that coverage ends.
The way I see it, his plan is solid, and the seven-month window is the one date in it he can’t afford to miss. He has two or three years to put it on the calendar. CMS should publish 2027’s Part B premium soon (it released this year’s on Nov. 14 last year). By the time he turns 65, the penalty will be 10% of whatever the premium is then.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
