The complete Medicare guide: when to enroll, late penalties, premiums and IRMAA, Medigap and your HSA

Medicare is federal health insurance, mainly for people 65 and older, people who have received Social Security disability (SSDI) for 24 months, and people with end-stage renal disease (ESRD) or ALS. Part A covers hospital care, Part B covers doctors and outpatient care, Part D covers prescription drugs, and Part C (Medicare Advantage) is a bundled plan from a private insurer that follows Medicare rules and takes the place of A and B.

Description: Original Medicare is A plus B, and you can add Part D and Medigap. Medicare Advantage (Part C) replaces A and B and usually includes Part D.

Part	What it covers	Who runs it	2026 cost
Part A (hospital insurance)	Inpatient hospital care, skilled nursing after a hospital stay (up to 100 days per benefit period, after a 3-day inpatient stay), hospice, some home health	Federal government	Premium-free with 40 quarters of work; otherwise $311 a month (30–39 quarters) or $565 (under 30 quarters). $1,736 deductible per benefit period
Part B (medical insurance)	Doctor visits, outpatient care, lab work, imaging, ER, ambulance, medical equipment, preventive care	Federal government	$202.90 a month standard, plus IRMAA for higher incomes; $283 annual deductible, then generally 20% with no cap
Part C (Medicare Advantage)	Replaces A and B; most include Part D and often some dental and vision	Medicare-approved private insurers	You still pay Part B, plus any plan premium (some are $0); in-network out-of-pocket maximum up to $9,250 in 2026
Part D (prescription drugs)	Outpatient prescription drugs	Private insurers	Plan premiums vary; deductible up to $615; out-of-pocket drug costs capped at $2,100; IRMAA for higher incomes

The two main paths to Medicare

• Turning 65: U.S. citizens, and lawful permanent residents (green card holders) who have lived in the U.S. continuously for 5 years, can enroll at 65.
• Under 65: after 24 months of SSDI, Medicare starts automatically in month 25. People with ALS get Medicare the first month SSDI starts, with no 24-month wait. People with ESRD (regular dialysis or a kidney transplant) can generally get Medicare starting with the fourth month of dialysis.

Premium-free Part A, or do you have to buy it?

• Premium-free: you (or a spouse) worked and paid Medicare tax for 40 quarters (about 10 years). Without your own record, you can use a spouse's: married at least a year and the spouse qualifies (generally age 62 or older). A divorced spouse can qualify after a 10-year marriage, and there are separate rules for widows and widowers.
• Buying Part A: with fewer than 40 quarters, Part A costs $311 a month (30–39 quarters) or $565 (under 30) in 2026. If you buy Part A, you must also enroll in Part B. Green card holders and immigrant parents are covered in their own section below.

Medicare isn't free. Part B costs at least $202.90 per person per month, you pay deductibles and 20% coinsurance when you use care, and hospital costs are counted per "benefit period," so long stays cost more. Here are the main 2026 numbers for Original Medicare, Part D, Medicare Advantage and Medigap.

• The floor for one person: the standard Part B premium alone is $202.90 × 12 = $2,434.80 a year, or $4,869.60 for a couple. Add Part D and Medigap and most people pay at least double that in premiums, depending on state, age and plan.
• Original Medicare has no cap: the 20% Part B coinsurance and repeated hospital deductibles have no annual limit. That's the main reason people add Medigap or choose Medicare Advantage.

Original Medicare covers medically necessary hospital, outpatient and doctor services plus preventive care. It generally doesn't cover long-term custodial care (help with bathing, eating and dressing in a nursing home), most dental work, eye exams for glasses, hearing aids, cosmetic surgery, or care outside the United States.

• Long-term care is the biggest gap: Medicare doesn't pay for long nursing home stays. That money comes from your savings, long-term care insurance or, if you qualify, Medicaid.
• Part B's 20% has no limit: Original Medicare has no annual out-of-pocket cap, which is why many people add Medigap or choose Medicare Advantage.

Which preventive services are free?

Most preventive services cost you $0, with no Part B deductible, if the provider accepts assignment (the Medicare-approved amount). If the visit finds a problem and the doctor treats it or orders more tests, you may owe 20% for that part.

The full list is on Medicare.gov's "Preventive services" page and is updated each year.

Your first chance is the Initial Enrollment Period (IEP): the 3 months before your 65th-birthday month, that month and the 3 months after, 7 months in all. Miss it and you can only sign up during the General Enrollment Period from January 1 to March 31, with coverage starting the next month and possibly a penalty. Coverage through current work gives you a Special Enrollment Period. Once you're in, plan changes happen during Open Enrollment, October 15 to December 7.

Description: The first three rows are about joining Parts A and B for the first time; the last two are about changing Medicare Advantage or Part D plans once you're in.

Window	When	What you can do	When coverage starts
Initial Enrollment Period (IEP)	3 months before your 65th-birthday month, that month, and 3 months after (7 months)	Join A, B, D or a Medicare Advantage plan for the first time	Sign up before your birthday month: the 1st of your birthday month. Sign up that month or in the next 3: the 1st of the month after you sign up
General Enrollment Period (GEP)	January 1 to March 31 each year	Sign up for Part B (and premium Part A) if you missed your IEP and have no SEP	The 1st of the month after you sign up (since 2023)
Special Enrollment Period: current-employment coverage	8 months after the employment or the group coverage ends, whichever comes first	Sign up for Part B with no penalty	Usually the 1st of the month after you sign up
Medicare Open Enrollment	October 15 to December 7 each year	Change Medicare Advantage or Part D plans, or switch between Original Medicare and Advantage	January 1 of the next year
Medicare Advantage Open Enrollment	January 1 to March 31 each year	If you're in an Advantage plan, make one change: another Advantage plan, or Original Medicare plus Part D	The 1st of the month after the change

• Already on Social Security: you're enrolled in A and B automatically at 65, and your Medicare card arrives about 3 months before your birthday. If you don't want Part B yet (for example, you're still covered at a large employer), follow the instructions that come with the card.
• Not on Social Security yet: nothing happens automatically, so you have to apply (see the online steps below). Signing up before your birthday month is the safest choice.
• "Exceptional circumstances" SEPs since 2023: losing Medicaid, getting wrong information from an employer or plan, a disaster or emergency that kept you from enrolling, release from incarceration, and other exceptional situations reviewed case by case.
• Medicare and Social Security are separate decisions: you can start Medicare at 65 and Social Security at 70. See "How do Medicare and Social Security fit together?" below.

Start six months before 65: check your work and coverage situation, decide when to stop HSA contributions, and see whether your income from two years back will trigger IRMAA. Your IEP opens three months before your birthday month, and signing up before that month is best. The six months after Part B starts are your guaranteed-issue window for Medigap.

Description: Read it month by month. If you're still covered through current work at an employer with 20+ employees, Part B and the Medigap window can wait, but the HSA 6-month rule still applies.

When	Example month	What to do
6 months before 65	March 2026	Check whether you (or your spouse) have 40 quarters; ask HR about employer size, whether the plan is current-employment coverage and whether the drug coverage is creditable; if you have an HSA, set the date to stop contributing; check whether 2024 MAGI triggers IRMAA
4–5 months before 65	April–May 2026	List your doctors, hospitals and regular prescriptions; compare Original Medicare plus Medigap and Part D with Medicare Advantage in Plan Finder; get Medigap quotes and ask how each company prices
3 months before 65 (IEP opens)	June 2026	Apply for A and B at ssa.gov; sign up for Part D or a Medicare Advantage plan
The month before your birthday month	August 2026	Sign up by now so A and B start September 1; apply for Medigap (many companies accept applications before Part B starts)
Birthday month	September 2026	A, B and D start; cancel ACA Marketplace coverage and stop the premium tax credit
3 months after your birthday month	October–December 2026	Your IEP ends at the end of December, so sign up now if you haven't; Open Enrollment (October 15–December 7) sets your 2027 Part D or Advantage plan
6 months after 65	End of February 2027	Your 6-month Medigap open enrollment period ends (counted from September, when Part B started); after that, Medigap may involve health questions

A six-month checklist before 65

• Work record: check your quarters in your my Social Security account; if you're short of 40, look at your spouse's record.
• Current coverage: employer plan, spouse's plan, COBRA, retiree coverage, ACA Marketplace, VA or TRICARE. Which type is it, and who pays first?
• HSA: pick the date you'll apply for Medicare or Social Security, count back six months to stop contributions, and tell HR to stop payroll and employer contributions.
• Income: pull the tax return from two years ago and check MAGI. Roth conversions, asset sales and bonuses at 63 and 64 set your premiums at 65 and 66.
• Doctors and drugs: do your doctors take Medicare, and which Advantage networks are they in? Write down each drug's name and dose.
• Budget: compare premiums (Part B, Part D, Medigap or Advantage) plus expected out-of-pocket costs as one yearly total.

Medicare is tied to age 65; full retirement age for Social Security is 67 for anyone born in 1960 or later. They're separate decisions. If you started Social Security at 62–64, you're enrolled in A and B automatically at 65. If not, you apply for Medicare yourself. Apply for Social Security after 65 and you'll get Part A automatically, reaching back up to 6 months, which matters if you have an HSA.

• The hold-harmless rule: if your Part B premium was deducted from your Social Security last year and this year, the increase generally can't exceed your Social Security cost-of-living raise, so your net check doesn't shrink. It doesn't protect new enrollees, people who pay IRMAA, or people whose premiums aren't deducted from benefits.
• IRMAA comes out of Social Security too: the Part D IRMAA is paid to Medicare, not your plan. It's deducted from your benefit, or billed separately if you're not collecting yet. Unpaid bills can end your Part D coverage.
• Taxes on benefits: up to 85% of Social Security is taxable. Premiums deducted from your benefit don't change the taxable amount (Form SSA-1099 still shows the full benefit), but they can count as medical expenses or, if you qualify, toward the self-employed health insurance deduction.

Part B costs 10% more for each full 12 months you were late, for as long as you have it. Part D adds 1% of the national base beneficiary premium for each month without creditable drug coverage, also permanently. If you have to buy Part A, a late start adds 10% for twice the number of years you were late. The way to avoid penalties is to have current-employment coverage or creditable drug coverage for every month you're not in Medicare, and keep the proof.

• Current-employment coverage lets you delay Part B: if you or your spouse are still working and covered by that job's group plan, you can skip Part B and sign up within 8 months after the job or coverage ends, with no penalty. Your employer fills out Form CMS-L564 to show the months you had coverage.
• COBRA and retiree coverage don't count: neither is coverage based on current employment. The 8 months start the month your job ends, not when COBRA ends. Many people find out after 18 months on COBRA that their Part B Special Enrollment Period ran out long ago.
• Neither does ACA Marketplace coverage: going without Part B after 65 because you have a Marketplace plan leads to a penalty later, and once you're eligible for premium-free Part A, you generally can't keep getting the premium tax credit (see the guide at yclcpa.com/aca).
• Part D needs creditable coverage: employer, union, VA and TRICARE drug coverage send a notice every year saying whether the coverage is creditable. Keep those letters.
• Lower incomes: people who get Extra Help pay no Part D late penalty, and people in a state Medicare Savings Program generally don't pay the Part B penalty.

It depends on the employer's size and whether the coverage comes from current work. At an employer with 20 or more employees, if you or your spouse are still working, the group plan pays first and Medicare second, so you can delay Part B. Under 20 employees, Medicare pays first, so sign up for A and B at 65 or the group plan may pay very little. With COBRA or retiree coverage, Medicare pays first.

COBRA and Medicare: the order matters

• Medicare first, then COBRA: you can still elect COBRA. Medicare pays first and COBRA fills in. COBRA can still be useful, for example to keep a spouse or children on the group plan.
• COBRA first, then Medicare: the plan can end your own COBRA early once you become entitled to Medicare. Your spouse's and children's COBRA generally isn't affected, and in some cases it can be extended. Check the plan documents and your COBRA notice.
• The most common mistake: retiring after 65 and relying on COBRA instead of Part B. COBRA pays second, so it may deny or claw back the share Medicare should have paid. Once the 8-month window has passed, you're stuck with the General Enrollment Period and a penalty.
• A spouse's plan: if you're covered through your spouse's current job, the spouse's employer size decides who pays first. When your spouse retires, your Special Enrollment Period starts when that current-employment coverage ends.

Still working past 65: what else to watch

• Medicare tax keeps coming out of your paycheck: 1.45%, plus 0.9% Additional Medicare Tax on higher wages, whether or not you're enrolled.
• Large employers can't push you onto Medicare: under the Medicare Secondary Payer rules, an employer with 20+ employees must offer workers 65 and older the same group coverage and can't pay or reward them for dropping it in favor of Medicare.
• How employees are counted: whether the employer had 20 or more employees on each working day in 20 or more weeks in the current or prior year. Multi-employer plans have special rules. If you're unsure, ask HR to confirm in writing whether Medicare pays first or second.
• Is the group plan cheaper than Medicare? Run the numbers: your share of the group premium plus out-of-pocket costs, compared with Part B plus Medigap plus Part D. If you drop the group plan for Medicare, the 8-month Part B and 63-day Part D clocks start when the group coverage ends.

Small-business owners and the self-employed

• Fewer than 20 employees: Medicare pays first and the company plan pays second. Owners and employees 65 and older usually need A and B, or the group plan may pay only what's left after the amount Medicare would have paid.
• One-person or husband-and-wife companies: there's often no true group plan, or the insurer has its own small-group rules. Ask the insurer how coverage coordinates once you turn 65.
• S corporation shareholders (over 2%) and the self-employed: Medicare premiums the company pays for you, or Part B, Part D, Medigap and Medicare Advantage premiums you pay yourself, can generally qualify for the self-employed health insurance deduction (Form 7206), limited to your net earnings from that business. You can't take it for any month you were eligible for subsidized employer coverage, including through a spouse's employer. S corporation-paid premiums go on the shareholder's W-2 first.
• Reimbursing employees' Medicare premiums through an HRA: under IRS rules, a small employer's QSEHRA or ICHRA can reimburse premiums for employees enrolled in Medicare, but the plan document has to allow it and it has to fit the Medicare Secondary Payer rules. Confirm before you set one up.
• Income in the two years before you retire: selling the business, or a large final distribution or bonus, raises IRMAA two years later. If you're selling, see whether an installment sale fits; retirement itself can support an SSA-44 "work stoppage" request.

Veterans: how VA care and TRICARE work with Medicare

• VA health care: the VA and Medicare don't pay for each other's care. Use the VA at VA facilities and Medicare elsewhere. VA drug coverage is creditable, so you can skip Part D, but VA care isn't current-employment coverage, so delaying Part B leads to a penalty if you sign up later. Many veterans keep Part B for care outside the VA.
• TRICARE For Life: military retirees and family members need Part A and Part B at 65 to keep TRICARE For Life. Medicare pays first and TRICARE For Life fills in. Different rules apply if you're covered through an active-duty spouse, so check with TRICARE.

Medicare pays only for up to 100 days of skilled nursing after a hospital stay, not for long-term custodial care in a nursing home. Long-term care is generally paid from your own savings, long-term care insurance, or Medicaid once you meet its income and asset tests. Medicaid long-term care rules vary by state and include a 5-year look-back on transfers; those are legal and planning questions for an elder law attorney.

• Medicaid isn't Medicare: Medicaid is a joint state-federal program based on income and assets; Medicare doesn't look at income for eligibility. People with both are "dual eligible" and have special Medicare Advantage plans (D-SNPs).
• The 5-year look-back: when you apply for Medicaid long-term care, the state looks at gifts and below-value transfers in the prior 60 months, and transfers can delay eligibility. Don't move the house or savings to your children to "qualify" before talking to an attorney.
• Spousal protections: when one spouse is in a nursing home and the other stays home, federal and state rules protect some of the at-home spouse's income and assets. The amounts change each year and vary by state.
• Long-term care insurance and taxes: premiums for qualified long-term care insurance count as medical expenses up to an age-based limit and can be paid from an HSA, and benefits are generally tax-free up to a limit. We can look at the tax side; whether to buy a policy, and from whom, is your decision.

Original Medicare plus Medigap and Part D lets you see any provider in the country that takes Medicare, rarely requires prior authorization, and costs more each month but little when you use care. Medicare Advantage uses networks, often requires prior authorization, has lower premiums (some are $0) and an annual out-of-pocket cap, and often adds dental and vision. The choice turns on whether your doctors are in the network, how often you're out of state or abroad, your health and your budget.

• Trial rights: if you joined Medicare Advantage when you first became eligible at 65, you can switch to Original Medicare within 12 months and buy Medigap with guaranteed issue. If you dropped Medigap to try Advantage for the first time, you can return within 12 months and generally get your old Medigap policy back if the company still sells it.
• After those 12 months: in most states, Medigap insurers can ask health questions, charge more or turn you down. That makes the decision at 65 far more important than any single Open Enrollment.
• How to decide: list your doctors, hospitals and long-term prescriptions, check each plan's network and formulary in Medicare Plan Finder, and compare yearly premiums plus expected out-of-pocket costs rather than the monthly premium alone. North Carolina residents can get free, unbiased counseling from SHIIP at the state Department of Insurance (every state has a SHIP), which doesn't sell insurance.

Medigap (Medicare Supplement) is sold by private insurers, works only with Original Medicare, and pays Part A and B deductibles and coinsurance. Outside Massachusetts, Minnesota and Wisconsin, plans are standardized as A, B, C, D, F, G, K, L, M and N, and a given letter covers the same benefits at every company; only price and service differ. Timing is what matters most: the 6 months after your Part B starts and you're 65 are your guaranteed-issue Medigap open enrollment period.

• Plans C and F: they cover the Part B deductible and can only be bought by people who became eligible for Medicare before January 1, 2020. If you turned 65 after that, the usual choices are G, N and high-deductible G.
• The 6-month open enrollment period: it starts the first month you have Part B and are 65. During those 6 months, insurers can't refuse you or charge more because of your health. If you delay Part B because you're covered at a large employer, the window waits until Part B starts, so don't sign up for Part B early just to "start the clock."
• Medigap doesn't cover prescriptions: buy Part D separately. Medigap also can't be used with Medicare Advantage.
• Three pricing methods: community-rated (same price regardless of age), issue-age-rated (priced on your age when you buy, without age increases later) and attained-age-rated (rises each year with age). All three can still go up with inflation and claims. Ask which method a company uses and how much its premiums have risen in recent years.
• State rules differ: New York and Connecticut allow Medigap applications year-round without medical underwriting. California, Oregon and a few other states have "birthday rules" that let you switch each year, around your birthday, to a plan with the same or fewer benefits without health questions. The length of the window varies, so check your state insurance department. North Carolina doesn't currently have a birthday rule.

Description: None of the three covers the Part B deductible ($283). They differ in small copays, Part B excess charges and whether you pay a large deductible first. Premiums are set by each company and state, so the table doesn't compare prices.

Benefit	Plan G	Plan N	High-deductible Plan G
Part A hospital deductible ($1,736)	Covered	Covered	Covered after you pay $2,950 for the year ($3,050 in 2027)
Part B deductible ($283)	You pay	You pay	You pay (counts toward the $2,950)
Part B 20% coinsurance	Covered	Covered, except up to $20 per office visit and up to $50 per ER visit (waived if admitted)	Covered after $2,950
Part B excess charges (up to 15%)	Covered	Not covered	Covered after $2,950
Foreign travel emergency	80% after $250, up to $50,000 lifetime	Same	Same (after the deductible)
Who it tends to suit	People who want almost nothing to pay at the doctor and can handle a higher premium	People with fewer office visits who accept small copays and live where excess charges are rare	Healthy people with low expected use and cash on hand to cover $2,950 in a bad year

• Plans K and L: the plan pays part of the cost (50% for K, 75% for L), with 2026 out-of-pocket limits of $8,000 and $4,000.
• How to compare: plans with the same letter have identical benefits, so compare premium and pricing method, past rate increases, household discounts and service. We don't recommend specific insurers or plans.

Original Medicare works in every state, so moving doesn't affect it. You can generally keep your Medigap policy, though the premium may be repriced for your new area, and switching to a new policy usually means health questions. Medicare Advantage and Part D plans have service areas; moving out of one means changing plans, with a Special Enrollment Period to do it.

• Snowbirds: if you split the year between North Carolina and Florida or California, Original Medicare plus Medigap works in both places. A Medicare Advantage plan usually has a network in only one area and covers just emergencies and urgent care in the other (some PPO plans have national networks or travel benefits, so check each plan).
• Your tax home: the address Medicare uses isn't the same thing as the state where you file taxes, but addresses, driver's licenses and voter registration are all evidence of state residency for tax purposes, so think about them together when you move.

Each person pays separately, so a couple pays two premiums. The 2026 standard Part B premium is $202.90 a month. If 2024 MAGI is above $109,000 (single) or $218,000 (married filing jointly), you pay an income-related monthly adjustment amount (IRMAA) on Part B and on Part D. For IRMAA, MAGI is adjusted gross income (Form 1040, line 11) plus tax-exempt interest (line 2a).

Description: Going $1 over a threshold puts you in the whole next tier. Part D IRMAA is added on top of your Part D plan premium and is paid to Medicare, not the insurer.

Single MAGI	Married filing jointly MAGI	Part B per month	Part D add-on
$109,000 or less	$218,000 or less	$202.90	$0
$109,001–$137,000	$218,001–$274,000	$284.10	$14.50
$137,001–$171,000	$274,001–$342,000	$405.80	$37.50
$171,001–$205,000	$342,001–$410,000	$527.50	$60.40
$205,001–$499,999	$410,001–$749,999	$649.20	$83.30
$500,000 or more	$750,000 or more	$689.90	$91.00
Married filing separately, lived with spouse: over $109,000 and under $391,000	—	$649.20	$83.30
Married filing separately, lived with spouse: $391,000 or more	—	$689.90	$91.00

• The two-year look-back: 2026 premiums use your 2024 return; 2027 premiums use 2025. SSA gets the data from the IRS and uses the return from three years back if the latest isn't available. In practice, your income at 63 sets your premium at 65.
• Tax-exempt interest counts: municipal bond interest isn't federally taxed but is added back for IRMAA. Under Section 1839(i) of the Social Security Act, foreign earned income excluded under the FEIE is added back too. Qualified Roth IRA distributions and HSA distributions for medical expenses aren't income and stay out of MAGI.
• The new $6,000 senior deduction doesn't lower MAGI: the OBBBA deduction for people 65 and older (2025–2028) is taken after AGI, so it cuts income tax but not IRMAA.
• Part A and Part D: premium-free Part A isn't affected by IRMAA. Part D IRMAA is based on the national base beneficiary premium ($38.99 for 2026, $41.33 for 2027), not on the plan you pick.

Are Medicare premiums tax-deductible?

• Itemized deductions: Part B, Part D, Medicare Advantage and Medigap premiums (including IRMAA) are medical expenses. Together with your other medical costs, the amount above 7.5% of AGI is deductible on Schedule A.
• Self-employed: if you have net self-employment income and weren't eligible for a subsidized employer plan that month, Medicare premiums generally qualify for the self-employed health insurance deduction on Form 7206, which lowers AGI and therefore MAGI.
• Paying with your HSA: after 65, you can use money already in your HSA tax-free for Part B, Part D and Medicare Advantage premiums (and Part A if you pay for it), but not Medigap premiums.

Are the 2027 numbers out yet?

There are two routes. After a life-changing event, Form SSA-44 asks SSA to use a more recent year's income (or an estimate for this year). Or plan ahead and keep MAGI under a threshold in each year from 63 on, for example by timing Roth conversions and asset sales and using qualified charitable distributions (QCDs) from an IRA after 70½. A one-time spike in income, such as selling a home or a Roth conversion, isn't a qualifying event on its own.

The 8 life-changing events SSA-44 accepts

• Work stoppage (retirement) and work reduction (going part-time or cutting hours)
• Marriage, divorce or annulment, and death of a spouse
• Loss of income-producing property, but only for reasons beyond your control, such as a natural disaster, arson or criminal theft. Selling or giving it away, or ordinary investment losses, don't count.
• Loss of pension income from an employer (for example, because the employer went bankrupt or the plan was terminated or cut)
• An employer settlement payment (for example, because of an employer's bankruptcy or reorganization)

Include proof of the event (such as a letter from your employer, a marriage certificate or a death certificate) and your more recent income: a filed tax return if you have one, or an estimate for the current year, followed later by the actual return. If you underestimate, SSA adjusts when the return comes in. If SSA used wrong data, or you amended the return for that year, you can also ask SSA for a new determination.

Planning MAGI ahead (the tax side)

• Timing Roth conversions: the full conversion is in AGI that year. If you want to convert early in retirement, do it before 63 or spread it over several years, keeping each year under a threshold (see the guide at yclcpa.com/ira).
• QCDs: after 70½, a direct transfer from an IRA to a qualified charity, up to $111,000 per person in 2026, stays out of AGI and counts toward your required minimum distribution. Ordinary charitable gifts are itemized deductions and don't lower AGI.
• Installment sales: a qualifying installment sale spreads the gain over the years you're paid instead of pushing one year into the top tier.
• Timing stock sales and losses: capital gains go into AGI. Losses in the same year offset gains (and up to $3,000 of other income), so the timing of sales can be planned with IRMAA thresholds in mind. This is about the timing of taxes, not investment advice.
• Municipal bond interest doesn't help: it's federally tax-free but still counts for IRMAA.
• Mind the cliffs: each tier is a cliff. One dollar over the threshold and you pay the full tier for the year. 2028 premiums will use 2026 income, and the thresholds will be adjusted for inflation by then, so leave some room.

Example (hypothetical numbers, to show the method): a couple's IRMAA and an SSA-44 request

Mr. and Mrs. Zhang both turn 65 in 2026 and enroll in Parts B and D. Mrs. Zhang retired years ago; Mr. Zhang retired in June 2025. Their 2024 joint return showed $230,000 of wages and $20,000 of interest and dividends, for AGI of $250,000, plus $30,000 of municipal bond interest.

• 2024 MAGI: $250,000 + $30,000 = $280,000, in the $274,001–$342,000 joint tier.
• 2026 per person, per month: Part B $405.80 ($202.90 above standard) plus a $37.50 Part D add-on.
• Extra cost for the year: ($202.90 + $37.50) × 12 = $2,884.80 each, $5,769.60 for the couple.

Option 1: an SSA-44 request for work stoppage. Mr. Zhang retired in 2025, and for 2026 they expect only pension and investment income, with estimated MAGI of $140,000, under $218,000. With his employer's letter and the 2026 estimate, if SSA approves, they pay the standard premium for 2026 and save $5,769.60. 2027 uses 2025 income (half a year of wages plus other income); if that's still over the threshold, they can use the same event again.

Option 2: no qualifying event. Suppose $40,000 of the $280,000 came from a Roth conversion Mr. Zhang did at 63. A Roth conversion isn't an SSA-44 event, so they pay the 2026 surcharge. Had he converted $33,000 instead, MAGI would have been $273,000, in the $218,001–$274,000 tier: $284.10 for Part B plus $14.50 for Part D each, or ($81.20 + $14.50) × 12 × 2 = $2,296.80 a year for the couple, which is $3,472.80 less than $5,769.60. $7,000 less MAGI makes that much difference: that's the cliff. The rest of the conversion could be done in later, lower-income years.

From the first month you're enrolled in any part of Medicare (including premium-free Part A), your HSA contribution limit is zero, for your own and your employer's contributions alike. If you apply for Medicare or Social Security after 65, Part A starts up to 6 months back (but not before the month you turned 65), so stop contributing 6 months before you apply. Withdraw any excess and its earnings by the due date of that year's return, including extensions, to avoid the 6% excise tax.

• Social Security brings Part A with it: applying for Social Security after 65 enrolls you in Part A automatically, and you can't drop Part A while keeping Social Security. If you're still covered at a large employer and want to keep funding the HSA, delay both Social Security and Medicare.
• The Medicare year is prorated by month: only months when you're eligible on the 1st (HDHP coverage, no Medicare) count toward the year's limit. The 2026 limits are $4,400 self-only and $8,750 family, plus $1,000 at 55 and older, all prorated. The "last-month rule" (eligible on December 1 means a full year) doesn't help, because once you're on Medicare you aren't eligible on December 1.
• What happens to an excess: the excess isn't deductible (employer or payroll contributions become taxable income), and you owe a 6% excise tax on Form 5329 every year until it's withdrawn or absorbed by unused room in a later year. On Medicare your limit stays at zero, so there's no later room; withdrawal is the only fix.
• How to fix it: ask your HSA custodian for a "return of excess contribution"; most have a form for it. By the due date of the return for the contribution year, including extensions, withdraw the excess plus the earnings on it. The excess is then treated as never contributed, with no 6% tax, and the earnings are other income in the year you withdraw them. Report the prorated limit on Form 8889.
• Can the 6% be waived? The Section 4973 excise tax on excess contributions has no reasonable-cause exception in the statute; the fix is a timely withdrawal. If the deadline has passed, withdrawing now stops the 6% for later years, but the years already past still owe it.
• You can still spend what's in the account: once you're on Medicare you can't add money, but you can keep using the balance tax-free for medical costs, including Part B, Part D and Medicare Advantage premiums, though not Medigap premiums.
• A spouse not yet on Medicare: if your spouse is eligible with family HDHP coverage, they can keep contributing to their own HSA, with the amount figured under the married-couple rules in Publication 969.

Example (hypothetical numbers, to show the method): age 66, applies for Medicare in July after a full year of HSA contributions

Mr. Li was born in March 1960. When he turned 65 in 2025 he was still working at a 200-person company with a self-only HDHP, so he didn't sign up for Medicare or Social Security. In January 2026 he put the full 2026 amount into his HSA: $4,400 + $1,000 = $5,400. He retired at the end of June and applied for Medicare A and B at ssa.gov in July.

• When Part A starts: applying in July, Part A reaches back 6 months to January 1, 2026 (he's past 65, so the age limit doesn't cut it off).
• His 2026 limit: he has Part A from January 1, so he isn't eligible in any month of 2026. His limit is $0, and the whole $5,400 is an excess contribution.
• Fixing it on time: by April 15, 2027 (or October 15, 2027 with an extension), he withdraws the $5,400 and the earnings on it, say $120. He doesn't deduct the $5,400 on his 2026 Form 8889, and the $120 is other income in the year he takes it out. No 6% tax.
• If he doesn't fix it: $5,400 × 6% = $324 of excise tax each year until it's withdrawn, and if he already deducted the $5,400, he needs to amend.
• What he could have done: planning to apply in July, he should have stopped contributing in January 2026. His 2025 contributions were fine, because the look-back stopped at January 1, 2026.
• A different date: had he applied in May, Part A would have started November 1, 2025. He'd have had only 10 eligible months in 2025, with a limit of ($4,300 + $1,000) × 10 / 12 = $4,416.67. If he had contributed the full $5,300 for 2025, the extra $883.33 needs fixing too, and the 2025 return deadline may already have passed.

Starting in 2025, the Part D "donut hole" is gone and yearly out-of-pocket drug costs are capped: $2,100 in 2026 and $2,400 in 2027. Once you hit the cap, covered Part D drugs cost you $0 for the rest of the year. The Medicare Prescription Payment Plan lets you spread drug costs over monthly bills instead of paying all at once at the pharmacy.

• What counts toward the cap: deductibles, copays and coinsurance you pay for drugs your Part D plan covers. Premiums don't count.
• Paying monthly: every Part D plan and every Advantage plan with drug coverage must offer it, free and interest-free, and you can join any time during the year. It helps most if you have large drug costs early in the year. It doesn't lower total costs, only when you pay them.
• Insulin and vaccines: insulin covered by Part D costs no more than $35 a month, and adult vaccines recommended by ACIP cost $0.
• Extra Help (the low-income subsidy): with income generally under 150% of the federal poverty level and assets under the limit, Part D premiums (up to a benchmark) and deductibles are $0, each drug has a small copay, and there's no Part D late penalty. Apply online at ssa.gov; people with Medicaid, a Medicare Savings Program or SSI qualify automatically. The asset limits change each year; use SSA's current figures.

Medicare Savings Programs: the state pays your Part B premium

Run by your state Medicaid agency, these programs pay the Part B premium for people who meet income and asset limits, and some also pay deductibles and the 20% coinsurance. Anyone in an MSP automatically gets Extra Help. In North Carolina, apply at your county Department of Social Services (DSS).

• States can be more generous: these are the federal standards (higher in Alaska and Hawaii). Some states use higher income limits or don't count assets, and the income test includes a $20 general disregard and other rules. If you're close, apply anyway.
• What counts as assets: generally bank accounts, stocks and bonds. Your home, one car and a set amount for burial usually don't count.
• QMB protection: providers who take Medicare can't bill QMB enrollees for Medicare deductibles and coinsurance on covered services.

The big 2026 changes are about drugs: negotiated Medicare prices for the first 10 drugs took effect January 1, the Part D cap rose to $2,100, and the monthly payment plan now renews automatically. In 2027, negotiated prices for 15 more drugs (including Ozempic and Wegovy) take effect and the Part D cap rises to $2,400. Separately, the OBBBA narrowed Medicare eligibility for noncitizens.

• What negotiated prices mean for you: you pay your plan's deductible, copay or coinsurance; negotiation lowers the underlying drug price, so people who pay a percentage for these drugs pay less. It can also change how quickly you reach the $2,100 cap, depending on your plan.
• Review your plan every year: premiums, formularies and pharmacy networks change annually. Your plan's Annual Notice of Change arrives by the end of September; compare again in Plan Finder between October 15 and December 7.

Green card holders who have lived in the U.S. continuously for 5 years can enroll at 65. With 40 quarters of U.S. work (yours or a spouse's), Part A is premium-free; otherwise you buy A and B, at up to $565 + $202.90 = $767.90 per person per month in 2026. Years worked in China don't count, because the U.S. and China have no Social Security (totalization) agreement.

• "Five years of continuous residence": you must have lived in the U.S. as a permanent resident for the 5 years in a row before applying. Long stays in China can affect continuous residence, and the green card itself; that's an immigration-law question for an immigration attorney.
• Buying Part B without Part A: with fewer than 40 quarters, you can buy just Part B ($202.90 a month and up), but then you have no hospital coverage. Many families compare the cost of buying A and B with ACA Marketplace coverage. Lawfully present people who aren't eligible for premium-free Part A can generally buy Marketplace coverage and apply for premium tax credits under the rules for their status; those rules changed after 2025 (see the guide at yclcpa.com/aca).
• Earning quarters: wages or self-employment income with Social Security and Medicare tax earn up to 4 quarters a year ($1,890 per quarter in 2026). Someone who arrives in their 50s and works 10 years in the U.S. can have premium-free Part A after 65.
• Using a spouse's record: if your spouse has 40 quarters, you've been married at least a year and your spouse is 62 or older, you can get premium-free Part A on their record.
• The OBBBA restriction: Section 71201 of the OBBBA (signed July 4, 2025) limits Medicare for noncitizens to green card holders, Cuban and Haitian entrants and COFA migrants. Current enrollees with other lawful statuses but no green card (such as refugees, asylees and TPS holders) lose coverage 18 months after enactment, around January 2027. If this affects you, watch for SSA notices and look early at your options, including adjusting status (an immigration attorney) and other coverage.
• Taxes when children pay: if adult children pay a parent's Medicare premiums, the children can include them in their own medical expenses only if the parent meets the dependency test for medical expenses (for example, the children provide more than half the parent's support; the parent's income doesn't matter for this). Otherwise it's simply money given to the parent. A parent who files a U.S. return and pays the premiums can deduct them as medical expenses on their own return.

Medicare generally doesn't cover care outside the United States, with a few exceptions (such as an emergency in the U.S. where the closest hospital is in Canada or Mexico). For a U.S. citizen or green card holder living in China, the Part B premium keeps coming due. Drop Part B and when you come back you can only re-enroll in the General Enrollment Period, with a permanent penalty for the years you were out. Whether to keep it is a trade-off between premiums, the penalty and how likely you are to need care back in the U.S.

• Part A: if it's premium-free, keeping it costs nothing and covers hospital stays when you're back.
• Keep or drop Part B: keeping it costs at least $2,434.80 a year (the 2026 standard premium × 12), more with IRMAA. Dropping it means no Special Enrollment Period when you return (living abroad isn't current-employment coverage): you'd sign up in the January–March General Enrollment Period, start the next month, and pay 10% more for each full 12 months, for life. Spend 8 years in China and your Part B premium is 80% higher for good, possibly with a gap of a few months.
• Part D: you can't enroll in Part D while living outside the U.S. You get a 2-month Special Enrollment Period when you move back, and under CMS rules the months you lived abroad and weren't eligible generally don't count toward the Part D penalty. Confirm with Medicare for your situation.
• Medigap for emergencies abroad: Plans C, D, F, G, M and N include foreign travel emergency coverage: 80% after a $250 deductible, up to $50,000 lifetime, for the first 60 days of each trip. It isn't a substitute for health insurance where you live.
• Medicare Advantage: plans generally require you to live in the service area, and a long stay abroad can lead to disenrollment.
• Paying premiums: if you're on Social Security, premiums still come out of your benefit while you're abroad. If not, pay through your Medicare.gov account or by automatic debit from a U.S. bank account.
• Taxes and IRMAA: foreign earned income you exclude with the FEIE is added back for IRMAA. For the tax side of retiring in China as a U.S. citizen or green card holder, see the guide at yclcpa.com/retirechina; if you're thinking about giving up a green card or citizenship, read yclcpa.com/exittax first.

If you're not on Social Security yet, apply for A and B online at ssa.gov; it usually takes 10 to 15 minutes. If you're signing up for Part B during a Special Enrollment Period after employer coverage ends, you can also submit Form CMS-40B and your employer's CMS-L564 online at ssa.gov. Once you have a Medicare number, create a Medicare.gov account and use Plan Finder to compare Medicare Advantage, Part D and Medigap.

Description: The first four steps are on ssa.gov and the last four on Medicare.gov. Sites change, so follow what's on the screen.

Step	Where	What to do	What you need
1. Create a my Social Security account	ssa.gov	Verify your identity through Login.gov or ID.me	SSN, a U.S. phone number or email, ID
2. Apply for A and B (not taking Social Security yet)	ssa.gov Medicare application	Choose "apply for Medicare only" and answer the work and coverage questions	Date of birth, citizenship or green card details, spouse's information, dates of employer coverage
3. Sign up for Part B with an SEP	ssa.gov online Part B Special Enrollment Period application	Complete CMS-40B online and upload your employer's CMS-L564	CMS-L564 signed by HR; if the employer can't complete it, other proof such as pay stubs or W-2s showing health premiums
4. Track it and get your card	my Social Security	Check the status and receive your red-white-and-blue Medicare card and Medicare number (MBI)	—
5. Create a Medicare.gov account	Medicare.gov	Register with your Medicare number and complete identity verification	Your Medicare card
6. Compare plans in Plan Finder	Medicare.gov Plan Finder	Enter your ZIP code, each drug and dose, and your pharmacies; compare yearly premiums plus estimated drug costs; check Advantage networks, out-of-pocket maximums and star ratings	Your drug list, doctors and hospitals
7. Look up procedure costs	Medicare.gov Procedure Price Lookup	Enter a procedure or test to compare national average costs at hospital outpatient departments and ambulatory surgical centers, and roughly what you'd pay	The procedure name from your doctor
8. Enroll or switch	Plan Finder or the insurer	Enroll during the IEP, Open Enrollment or another window; apply for Medigap directly with the insurer	Save the confirmation number and date

• Keep screenshots: the confirmation page, confirmation number and date help if a penalty or Special Enrollment Period is ever disputed.

You can appeal any denial. With Original Medicare, the first-level appeal is due within 120 days of receiving your Medicare Summary Notice (MSN). With Medicare Advantage and Part D, you appeal to the plan first, generally within 65 days. If you think the hospital is discharging you too early, you can file a fast appeal with the Quality Improvement Organization (BFCC-QIO) the same day.

• Get your doctor's support: a letter from your doctor explaining why the care is medically necessary greatly improves your chances.
• Keep every notice: MSNs, plan denial letters (EOBs) and prior-authorization denials list the appeal deadline and where to send it.
• Free help: your state's SHIP (SHIIP in North Carolina) can help with appeals at no cost.

Medicare and SSA don't call, text or come to your door asking for your Medicare number, SSN or bank account, and they never charge for a "new card" or a "refund." Hang up on those calls and check by calling 1-800-MEDICARE or logging in to Medicare.gov yourself.

• Your card shows an MBI, not your SSN: guard your Medicare number like a credit card number. Give it only to your doctors, pharmacies and insurers you contacted yourself.
• Open Enrollment sales calls: calls and TV ads that claim to be "from Medicare" are mostly private companies or brokers. Don't agree to change plans over the phone; check in Plan Finder first.
• Read every MSN and EOB: if you see tests you didn't have or equipment you didn't get (genetic tests, catheters and braces are common), report it to 1-800-MEDICARE. Your state's Senior Medicare Patrol can also help for free.
• IRS and SSA impostors: the same tricks are used for taxes. The IRS generally writes first and never asks you to pay with gift cards or crypto. If you're unsure, send us a photo of the letter or text.

Find your situation, then work through it in this order. The choice of plan is yours; the tax effects (IRMAA, your HSA, income planning) can be worked out ahead of time.

• Situation A: you turn 65 in 3 months and no longer work, or have individual coverage. Sign up for A and B during your IEP, ideally before your birthday month, and decide between Original Medicare with Medigap and Part D or Medicare Advantage. If you're on an ACA Marketplace plan, end it the month Medicare starts so you don't receive premium tax credits you'd have to pay back.
• Situation B: you're 65 and still covered through current work at an employer with 20+ employees. You can delay Part B; if you have an HSA, delay Part A and Social Security too. Confirm the drug coverage is creditable. When you plan to retire, stop HSA contributions 6 months ahead, sign up for Part B within 8 months of leaving, and ask your employer for CMS-L564.
• Situation C: your employer has fewer than 20 employees, or you're on COBRA or retiree coverage. Medicare pays first, so sign up for A and B at 65; the employer plan or COBRA is secondary.
• Situation D: you're retired and got an IRMAA notice. Check which tax year SSA used and whether the numbers are right. If you retired, divorced, were widowed or had another qualifying event, gather proof and your newer income and file SSA-44. Going forward, plan Roth conversions, asset sales and QCDs around the two-year look-back.
• Situation E: you live in China or plan a long stay abroad. Keep premium-free Part A. Work out whether to keep Part B by comparing premiums with the late penalty and your plans to come back. For the tax side in both countries, see yclcpa.com/retirechina.