You Can’t Just Sign Up for Medicare and Hope It Works—Especially if You’re Retired

Key Takeaways

• Signing up for Medicare is not a one-step task; it requires careful coordination with your retirement timeline, other health benefits, and potential penalties if done late or incorrectly.

• For public sector retirees, especially those with FEHB or PSHB coverage, making the wrong assumptions about how Medicare fits in can lead to higher costs and lost coverage.

The Clock Starts Before You Turn 65

Medicare eligibility starts at age 65, but your window to enroll begins well before your birthday. The Initial Enrollment Period (IEP) is a seven-month window that includes:

• The three months before your 65th birthday

• Your birth month

• The three months after your birthday

If you don’t enroll during this period and aren’t covered by a qualifying employer health plan, you risk late enrollment penalties that last for life. In 2025, those penalties can be significant, especially for Part B and Part D.

For public sector employees, particularly those already retired or planning to retire soon, this timeline is crucial. If you wait until after retirement or after your IEP to explore Medicare, you may already be behind.

Medicare Isn’t One Program—It’s Several

Many retirees think they’re all set once they “sign up for Medicare,” but that phrase can be misleading. Medicare has several parts, and each plays a different role:

• Part A (Hospital Insurance): Most people get this premium-free if they paid Medicare taxes for at least 10 years.

• Part B (Medical Insurance): Covers outpatient services, doctor visits, and preventive care. You pay a monthly premium for this.

• Part D (Prescription Drug Coverage): Offered separately, this part comes with its own premium, deductible, and out-of-pocket costs.

In addition, retirees may encounter:

• Medigap policies (supplemental plans that help cover out-of-pocket costs from Original Medicare)

• Medicare Advantage (an alternative to Original Medicare, combining Parts A, B, and usually D, with different cost-sharing structures)

If you only enroll in Part A and skip Part B, thinking you don’t need it, your FEHB or PSHB plan might not pay what you expect. This is a common and costly misunderstanding.

Coordination Rules Change at Retirement

If you’re still working past 65 and covered by employer-sponsored health insurance, you might be able to delay Medicare Part B without penalty. But that depends on the size of your employer:

• If your employer has 20 or more employees, you can delay Part B with no penalty.

• If your employer has fewer than 20 employees, Medicare becomes your primary payer at age 65, and you should enroll in Part B to avoid coverage gaps.

For public sector retirees, FEHB or PSHB counts as employer coverage while you’re still working. Once you retire, Medicare becomes primary, and your FEHB/PSHB plan becomes secondary only if you are enrolled in Medicare.

Failing to enroll in Medicare Part B at retirement can result in your FEHB/PSHB plan denying claims it would otherwise have paid as a secondary payer.

You Can’t Rely Solely on FEHB or PSHB

Federal and postal retirees often assume their FEHB or PSHB plan is all they need. While these plans are among the most robust available in retirement, they are not designed to replace Medicare.

In 2025, FEHB and PSHB plans integrate closely with Medicare. If you don’t enroll in Part B when eligible:

• Your cost-sharing under FEHB/PSHB may increase.

• Some plans reduce or waive deductibles and coinsurance only if you have both Part A and B.

• PSHB plans may require Medicare Part B enrollment to remain eligible for prescription drug benefits via the integrated Part D Employer Group Waiver Plan (EGWP).

Special Enrollment Periods Aren’t Guaranteed

If you miss your IEP and don’t qualify for a Special Enrollment Period (SEP), your next chance to enroll in Medicare is during the General Enrollment Period (GEP) from January 1 to March 31, with coverage starting July 1.

Delaying Medicare without a valid SEP means:

• Late enrollment penalties: In 2025, Part B penalties add 10% for every 12 months you delay.

• Coverage gaps: You could go without critical outpatient or drug coverage for months.

For a retiree who no longer has employer coverage, missing Medicare deadlines can leave you uninsured or underinsured at a time when medical needs tend to rise.

Medicare Isn’t Free, and Premiums Can Be Higher Than You Expect

Even though Medicare Part A is usually premium-free, Part B and Part D come with monthly costs. In 2025:

• Part B standard premium is $185/month

• Part B deductible is $257/year

• Part D average premium is $46.50/month, with a maximum deductible of $590

If your income is above certain thresholds, Income-Related Monthly Adjustment Amounts (IRMAA) apply, increasing your premiums for both Part B and D. These are based on your tax return from two years ago. If you retired recently and had a high income in 2023, your Medicare premiums in 2025 could be significantly higher.

You can request a reassessment by submitting Form SSA-44 if you’ve experienced a life-changing event like retirement, but many don’t realize this is even an option.

Prescription Coverage Under Medicare Looks Very Different

Prescription drug costs can be a major source of confusion. FEHB and PSHB plans include drug coverage, but once you’re Medicare-eligible, coordination with Part D becomes critical.

In 2025, new rules eliminate the Part D “donut hole” and introduce a $2,000 out-of-pocket cap for prescription drugs. This cap applies once you hit that threshold for the year, after which Medicare pays 100% of covered drug costs.

However, this protection only applies if you are enrolled in Medicare Part D or a PSHB plan that integrates with it. If you opt out or miss enrollment, you forfeit access to this benefit, which can be financially devastating if you require high-cost medications.

Medicare Advantage Plans Vary, and Not All Work Well with FEHB/PSHB

While Medicare Advantage (Part C) plans combine Parts A, B, and usually D, they are offered by private insurers. Some retirees are drawn to these because of potential additional benefits like dental or vision.

But here’s the problem: you cannot use Medicare Advantage and FEHB or PSHB at the same time effectively.

• If you enroll in a Medicare Advantage plan, your FEHB/PSHB plan will often not pay as secondary.

• Some retirees drop FEHB for Advantage, only to regret it when they realize the plan’s network or coverage is narrower.

You can re-enroll in FEHB during Open Season if you leave it, but you must remain eligible and follow strict rules.

Timing Medicare With Your Retirement Date Is Essential

Your retirement date should dictate your Medicare timing, not the other way around. For instance:

• If you retire at 62 and do not have employer coverage, you must purchase private insurance until you reach 65 and can enroll in Medicare.

• If you retire at 66 but don’t enroll in Part B because you thought your FEHB plan would continue the same way, you could face denied claims or late penalties.

Every transition requires you to:

• Reevaluate what coverage you’ll have post-retirement

• Coordinate Medicare enrollment precisely

• Understand how your other benefits interact with Medicare

Don’t Forget About Spouses and Dependents

Medicare is individual coverage. Your spouse and dependents are not automatically covered just because you are. If your family is on your FEHB or PSHB plan:

• They can stay on it even if you enroll in Medicare

• They lose eligibility only if you drop FEHB/PSHB entirely

But if you switch to Medicare Advantage or make changes that affect your status, your dependents could lose their coverage.

What You Should Do Right Now

You don’t need to wait until you’re 65 to start preparing. In fact, by age 63, you should begin your Medicare planning, especially if you’re also retiring soon.

Here’s a practical Medicare preparation checklist:

• Confirm your Medicare eligibility date (usually the month you turn 65)

• Review whether you’ll be working at that time and if your coverage qualifies for delayed enrollment

• Decide whether to enroll in Medicare Part A at 65, even if you delay Part B

• Check if your FEHB/PSHB plan coordinates with Medicare and requires Part B for full benefits

• Consider your income from two years ago and whether IRMAA will apply

• Look into integrated drug coverage through your PSHB plan or enroll in standalone Part D

Retirement Planning Requires More Than Enrollment

Medicare is not just a box to check during retirement. It’s a critical part of your long-term financial and health planning. Mistakes can cost you in coverage gaps, higher premiums, or denied claims.

Take the time to review how Medicare aligns with your other retirement benefits. Discuss your options with someone who understands the entire system, including FEHB, PSHB, TSP, and Medicare.

For personalized guidance, reach out to a licensed professional listed on this website. A short conversation could save you thousands and give you the peace of mind you need.