Medicare Enrollment: What to Know Before October

Medicare Enrollment: What to Know Before October

Every fall, millions of retirees face the same question: Do I need to make changes to my Medicare coverage during open enrollment? While the process can feel overwhelming, understanding the basics can help you make smart decisions — and avoid costly mistakes.

Here’s what you need to know as October approaches.

Key Enrollment Periods

Medicare has several enrollment windows, each with different rules:

  1. Initial Enrollment Period (IEP)
    • When: Starts 3 months before the month you turn 65, includes your birthday month, and ends 3 months after.
    • Why it matters: This is your first chance to enroll in Medicare Part A (hospital insurance) and Part B (medical insurance). Missing this window without qualifying employer coverage can result in lifelong penalties.
  2. General Enrollment Period (GEP)
    • When: January 1 – March 31 each year.
    • Why it matters: If you missed your IEP and don’t qualify for a Special Enrollment Period, this is your chance to sign up. Coverage starts July 1, and you may face penalties.
  3. Open Enrollment Period (OEP)
    • When: October 15 – December 7 every year.
    • Why it matters: You can switch Medicare Advantage (Part C) plans, move from Original Medicare to Advantage (or vice versa), and change or add Part D prescription drug coverage. Any changes take effect January 1 of the following year.
  4. Medicare Advantage Open Enrollment Period
    • When: January 1 – March 31.
    • Why it matters: If you’re already in a Medicare Advantage plan, you can switch to a different Advantage plan or go back to Original Medicare (with or without Part D).

Late Enrollment Penalties to Avoid

Medicare penalties can be long-lasting and expensive:

  • Part B Penalty: If you miss your initial window and don’t have qualifying employer coverage, your monthly premium increases by 10% for each full 12-month period you could have had Part B but didn’t. This penalty is permanent.
  • Part D Penalty: If you go 63 days or more without “creditable” prescription drug coverage, you’ll pay an extra 1% of the national base premium (about $34.70 in 2025) for each month you delayed. This also lasts for life.

What to Review Each October

Even if you’re happy with your current plan, it pays to review:

  • Prescription Drug Coverage (Part D): Formularies (drug lists) change annually. A medication covered affordably this year may cost much more next year.
  • Provider Networks: If you have a Medicare Advantage plan, check whether your doctors and hospitals remain in-network.
  • Out-of-Pocket Costs: Premiums, deductibles, and copays reset each year. Small changes can add up.
  • Extra Benefits: Some Advantage plans offer dental, vision, or hearing coverage — but these can change yearly.

The Role of Income: IRMAA Surcharges

Medicare premiums aren’t one-size-fits-all. Higher-income retirees may pay more under Income-Related Monthly Adjustment Amounts (IRMAA).

  • Thresholds for 2025:
    • Individuals: $103,000
    • Married couples filing jointly: $206,000
  • If your Modified Adjusted Gross Income (MAGI) exceeds these amounts, you’ll pay extra on Part B and Part D premiums.
  • Important: IRMAA is based on your tax return from two years prior (your 2023 income determines your 2025 premiums).

Common Mistakes to Avoid

  1. Assuming Medicare is Free: Part A is usually premium-free if you’ve worked at least 10 years, but Part B and Part D have monthly costs.
  2. Overlooking Employer Coverage Rules: If you’re still working past 65 and covered by an employer plan, you may be able to delay Part B without penalty — but the rules depend on your employer size.
  3. Forgetting to Revisit Coverage Each Year: Plans change. What worked last year may not be the best fit for the coming year.
  4. Not Factoring in Travel: Original Medicare generally works nationwide, but some Advantage plans have limited regional networks.

Scenario Spotlight

A 66-year-old retiree in Wellesley is enrolled in a Medicare Advantage plan with prescription coverage. During open enrollment, she reviews her plan and notices her cholesterol medication will no longer be on the preferred drug list next year, increasing her out-of-pocket costs by nearly $800 annually. By switching to another Advantage plan, she keeps her doctors in-network and avoids the extra expense.

Key Takeaways

  • Mark your calendar: October 15 – December 7 is your annual chance to review and adjust Medicare coverage.
  • Avoid costly penalties by enrolling in Part B and Part D on time.
  • Higher-income retirees should pay attention to IRMAA thresholds.
  • Review drug coverage, provider networks, and costs each year.
  • Don’t assume “what worked last year” will still be your best option.

Staying on top of Medicare enrollment doesn’t have to be stressful. With preparation and an annual review, you can avoid penalties, manage costs, and ensure your healthcare coverage fits your needs in retirement.

This material is provided for informational purposes only and is not intended as financial advice. Evergreen Wealth Management does not guarantee investment outcomes. Please consult a qualified professional before making decisions about your personal financial situation.

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