Here are some things you need to know about Medicare (and IRMAA)

For some, turning 65 is celebrated with retirement and some much-anticipated travel. For others, it’s just another year in the rear-view mirror. Regardless of which boat you may be in, you’ll want to be intentional about what to do, or not do, about Medicare.

Let’s first briefly review the different parts of Medicare:

Medicare Part A (Hospital Insurance): Part A helps cover inpatient hospital stays, skilled nursing facility care, hospice care, and limited home healthcare services. Most people are eligible for Part A without paying a premium.
Medicare Part B (Medical Insurance): Part B covers medically necessary services, including doctor visits, preventive care, outpatient care, and durable medical equipment. Part B requires the payment of a monthly premium.
Medicare Part C (Medicare Advantage): Part C combines the benefits of Part A and Part B and is offered by private insurance companies approved by Medicare. Medicare Advantage plans may also include prescription drug coverage (Part D) and additional benefits like dental and vision care.
Medicare Part D (Prescription Drug Coverage): Part D provides coverage for prescription drugs. It is offered through private insurance companies and helps pay for the cost of prescription medications.

Enrolling in Medicare can occur automatically or manually, depending on your circumstances:

Automatic Enrollment: If you’re already receiving Social Security benefits that started at least four months before your 65th birthday you will be automatically enrolled in Medicare Parts A and B. You will receive your Medicare card in the mail about three months before your 65th birthday. You’ll still need to make important decisions about your coverage, such as whether you prefer Original Medicare or a Medicare Advantage plan. Go to Medicare.gov to learn more. You will also want to determine if a Part D (drug coverage) plan makes sense for you. Most Medicare Advantage plans include Part D.
Manual Enrollment: If you’re not receiving Social Security benefits, you’ll need to manually enroll in Medicare unless you are still working and don’t need to enroll. More on that coming up. You can sign up for Medicare online, by phone, or by visiting your local Social Security office. Click here to locate the office nearest you.

If you are retiring at age 65, you will want to enroll in Parts A and B during the initial enrollment period (IEP). The IEP for Medicare begins three months before your 65th birthday and extends for seven months. If your birthday falls on the first day of a month, the whole initial enrollment period shifts one month earlier. Not enrolling timely can result in penalties. Part A is free provided you or your spouse has worked and paid Medicare taxes for 40 quarters, or 10 years. Part B has a monthly premium of $185 for most people in 2025. High income earners pay more (surprise!). Like people who are automatically enrolled, you will need to make decisions about Original Medicare vs. Medicare Advantage and Part D coverage. Go to Medicare.gov to learn more.

If you are receiving Social Security benefits, your premium will be deducted from your monthly benefit. If you are not receiving Social Security benefits, you will need to pay your Medicare premium either online through your Medicare account or by mail (you will receive a premium notice from Medicare every quarter).

If you are still working, you have some additional determinations to make:

If you work for a “large” company ( 20 or more employees):

Many people enroll in Part A at 65, even with employer group coverage because it’s free provided you or your spouse have paid at least 40 quarters of Medicare taxes. However, you may decide to wait if you want to continue contributing pretax dollars to a health savings account (HSA). You can’t make new HSA contributions after you enroll in Medicare.

Those who work for large companies and have employer group health insurance often delay signing up for Part B while they’re still working. The employer insurance is always primary when a large company provides it… meaning it pays your medical bills first. Medicare will only pay for covered services not paid by your employer’s plan. Unless you have medical bills your employer insurance won’t cover but Medicare will, paying for Medicare Part B makes no sense while you still have group coverage makes no sense.

If you work for a “small” company ( fewer than 20 employees):

Federal regulations prohibit larger companies from requiring Medicare-eligible employees to drop their employer plan and sign up for Medicare. These regulations do not apply to companies with fewer than 20 employees. So, if you work for small company, you should ask your employer if you’re required to sign up for Medicare when you turn 65. If the employer requires you to enroll in Medicare, which is most common, Medicare automatically becomes your primary coverage at 65 and the employer plan provides secondary coverage. In other words, Medicare settles your medical bills first, and the group plan pays only for services it covers but Medicare doesn’t.

If you are not required to sign up for Medicare due to your employment (large or small company), once you do stop working (or lose your health insurance, if that happens first) you have an 8-month Special Enrollment Period (SEP) when you can sign up for Medicare (or add Part B to existing Part A coverage). The SEP starts when you stop working (or lose insurance), even if you choose COBRA or other coverage that’s not Medicare.

If you don’t have health insurance at all:

Sign up for both Part A and Part B during the IEP. If you sign up later, you may have to pay a penalty.

If you have COBRA coverage:

You still need to sign up for Medicare during your initial enrollment period if you continue your former employer’s health coverage through COBRA or if you have retiree health insurance.

Medicare becomes your primary coverage when you turn 65; COBRA coverage is secondary. You also could face coverage gaps if you don’t sign up for Medicare. Retiree health insurance benefits are generally secondary to Medicare, too.

If you or your spouse want to delay Medicare enrollment and qualify for a special enrollment period later, you or your spouse must actively work for the employer that provides your health insurance.

Now, just because Medicare isn’t complicated enough on its own, who is IRMAA? Or, more accurately, what is IRMAA?

IRMAA stands for Income Related Monthly Adjustment Amount which is a fee you pay on top of your Medicare Part B and Part D premiums if you have modified adjusted gross income (MAGI) over a certain threshold. IRMAA charges apply to eligible Medicare beneficiaries, whether you have Original Medicare or Medicare Advantage.

If your MAGI is above the threshold, your IRMAA surcharge amount is determined by your MAGI from your tax return two years ago. Both capital gains and taxable Social Security income are included in your MAGI so they make a difference here. Below are the brackets that determine Medicare premiums in 2025.

When you enroll in Medicare, you'll initially pay the standard Part B premium and your Part D premium (if applicable) until Social Security receives your income data (from two years prior) from the IRS. If your income is high enough for IRMAA to apply, Social Security will mail a predetermination notice.

After sending out the predetermination notice, Social Security will mail you an initial determination notice informing you that you owe IRMAA on your Part B and Part D (if applicable) premiums. This notice also includes how the determination was made and instructions on what to do if you think it isn't correct. If you receive an initial determination notice, hang onto it and keep it in a safe place.

If you are retiring; or if you have experienced a life event that affected your income, such as the death of a spouse, reduction of work, or reduction or loss of certain types of pension income, you absolutely should fill out the Medicare Income-Related Monthly Adjustment Amount - Life-Changing Event form (SSA-44). You can fax or mail the form to your local Social Security office.

Some key points to keep in mind:

You can only file Form SSA-44 if you’ve received an IRMAA determination letter indicating a premium increase.
You must provide supporting documentation to justify the income decrease.
The SSA will review your appeal and may request additional information or clarification.
If your appeal is approved, the premium reduction will apply going forward, and any previously paid IRMAA amounts may be credited back to you.

If it is determined you need to pay IRMAA and you're receiving retirement benefits from Social Security and already have your Medicare Part B and Part D (if applicable) premiums deducted from your Social Security benefit payment, your IRMAA will automatically be deducted from your Social Security benefit as well.

If you aren’t yet collecting Social Security benefits, or if you don't have any Medicare premiums deducted from your Social Security benefit payment, you'll receive a bill for your Part B and Part D IRMAAs.

In summary, you are well advised to pay attention to Medicare when approaching 65 years of age, whether you plan to retire or keep working. Make a date with yourself and put it on your calendar or create a reminder in your phone. Making decisions timely will yield a better outcome than fixing a mess after the fact.

Regarding IRMAA, be proactive in filing Form SSA-44 . Take steps to reduce your MAGI which may reduce or eliminate IRMAA surcharges altogether. A couple examples are gifting appreciated assets to charity and utilizing tax-free and tax-deferred investment products. There are many more. Reach out to Elevate to arrange a conversation.

Ken Armstrong, CFP®, RICP®, ChFC®, CLU®, CASL®, CLTC
CEO & Senior Wealth Management Advisor
Elevate Capital Advisors