No, Medicare isn't mandatory, but most people should enroll in premium-free Part A (Hospital Insurance) because it covers costs and doesn't have a premium if you've paid Medicare taxes for about 10 years; Part B (Medical Insurance) has a monthly premium, and delaying enrollment without other creditable coverage can lead to lifetime penalties, so check with Social Security about your specific situation.
Some people may be exempt from paying Medicare tax before retirement. Reasons for exemption include renouncing your rights to Social Security Association (SSA) benefits, never having received or not being eligible for SSA benefits, and living abroad and working for a foreign employer.
If you reach age 65 and already have comprehensive health insurance, you don't have to enroll in Medicare right away, but in some cases, enrollment at age 65 is essential to avoid gaps in coverage.
If you don't sign up for Medicare at 65 when you're first eligible (and don't have creditable employer coverage), you risk significant, permanent late enrollment penalties for Part B (10% extra premium for each year you waited) and Part D (1% of national average premium for each uncovered month), can face gaps in coverage, and may have to wait to sign up later, potentially delaying your benefits. However, if you have high-quality employer coverage, you can delay Part B without penalty until you stop working, but should still enroll in Part A if you pay a premium, and get proof of your "creditable coverage" from your employer to avoid future penalties.
No, Medicare Part A isn't strictly mandatory at 65, but you'll likely be enrolled automatically if you get Social Security/RRB benefits, and delaying without creditable employer coverage can trigger lifetime late enrollment penalties for Part A (if you pay a premium) and Part B. If you're still working and have good employer insurance (with 20+ employees), you can delay Part A (usually premium-free) and B without penalty, but if you have fewer than 20 employees, you need Part A and B to avoid issues.
Here are some of the biggest Medicare mistakes to avoid:
Part A is free if you worked and paid Medicare taxes for at least 10 years. You may also be eligible because of your current or former spouse's work.
Yes, you can have both Social Security and Medicare at the same time, and they often work together, with your Social Security record qualifying you for Medicare, especially if you're 65+ or have received Social Security disability for 24 months. Most people sign up for both through the Social Security Administration (SSA).
Your CalPERS health coverage will automatically be canceled the first day of the month after you turn 65.
Many licensed health professionals are not permitted to opt out, including those who often work in outpatient settings or offer ancillary services. These providers must bill Medicare for covered services or restrict their private-pay services to only those not reimbursable under Medicare rules.
You can avoid paying Medicare Part B premiums by delaying enrollment if you have creditable employer coverage (your own or spouse's job with 20+ employees) until that coverage ends (within 8 months to avoid penalties), or by qualifying for a Medicare Savings Program (MSP) to have state/federal funds pay for it due to low income. Other ways to save include using HSA funds, appealing high Income-Related Monthly Adjustment Amounts (IRMAA) for life changes, or enrolling on time during your Initial Enrollment Period.
If you don't sign up for Medicare at 65 when you're first eligible (and don't have creditable employer coverage), you risk significant, permanent late enrollment penalties for Part B (10% extra premium for each year you waited) and Part D (1% of national average premium for each uncovered month), can face gaps in coverage, and may have to wait to sign up later, potentially delaying your benefits. However, if you have high-quality employer coverage, you can delay Part B without penalty until you stop working, but should still enroll in Part A if you pay a premium, and get proof of your "creditable coverage" from your employer to avoid future penalties.
Medicare Part B premiums are automatically deducted from Social Security checks, with the standard amount for 2026 being $202.90/month, but this can increase based on your income (IRMAA). Most people pay $0 for Medicare Part A, while Part C (Advantage) and Part D (Drug) plans also have premiums that can be deducted, depending on the plan and your choices.
Exemptions from Medicare tax apply mainly to specific employment situations, like certain religious objectors (Amish/Mennonite) and some foreign workers (students, temporary scholars). U.S. citizens working for foreign governments or specific state/local employees hired before 1986 (with public pension plans) can also be exempt, as can students working for their universities under certain conditions. Generally, if you have earned income and aren't in one of these categories, you'll pay the Medicare tax.
Supplemental insurance is advisable for those with Medicare to help cover out-of-pocket costs and gaps in coverage, offering financial protection for deductibles, coinsurance, and other medical expenses not fully covered by Medicare.
Disadvantage 1: High Maximum Out-of-Pocket Limits
This is true. For 2023 Medicare Advantage enrollees, the average out-of-pocket limit is $5,070 for in-network services. For PPOs, the average is nearly $9,000 for both in-network and out-of-network services. These figures are expected to continue to increase.
Starting in 2025, there is an annual limit on what you pay out-of-pocket for prescription medications through Medicare and Medicare Advantage prescription drug plans. All prescription medications, including specialty medications, covered by Part D plans are included under this cap.
The Medicare "3-Day Rule" requires a beneficiary to have a qualifying 3-day inpatient hospital stay (admission day counts, discharge day doesn't) before Medicare will cover services in a Skilled Nursing Facility (SNF) for rehabilitation or skilled care, though this rule can be waived in certain Medicare Advantage plans or through specific Accountable Care Organization (ACO) initiatives. Time spent in observation or the Emergency Department doesn't count towards these 3 days, but new demonstration projects and waivers are emerging to offer more flexibility for patients needing SNF care.
Californians with an annual income of less than $21,597 for an individual or $29,187 for a couple are eligible for a Medicare Savings Program. These programs provide help from the State of California to pay for your Medicare premiums, and sometimes your deductibles and copayments.