Why You Might Receive a Medicare Bill Before Coverage Starts

If you enroll in Medicare but delay claiming Social Security, you may be surprised by an initial bill. This bill, which can range between $370 and $925, is due on the 25th of the month before Medicare starts. The reason is simple: without Social Security checks to deduct premiums from, Medicare sends the bill directly to you.

Medicare Part A: Coverage and Costs

Most people qualify for premium-free Medicare Part A if they have worked at least 40 quarters. Those with fewer work credits pay:

• $285 per month with 30–39 quarters of work history.
• $518 per month with fewer than 30 quarters.

Part A covers inpatient hospital stays, rehabilitation, and hospice care. However, it comes with out-of-pocket costs:

• Deductible: $1,760 per hospital stay.
• Days 61–90: $519 per day.
• Days 91–150: $838 per day.
• Skilled nursing facility care: $0 for first 20 days, then $209.50/day for days 21–100.

Medicare Part B: Premiums, Coverage, and IRMAA

Part B covers outpatient services, doctor visits, durable medical equipment, and home health care. The standard premium is $185/month, but higher-income beneficiaries may pay more due to IRMAA surcharges.

• Income above $106,000 (single) or $212,000 (couples) can raise premiums by 35%–85%.
• Appeals are possible if your income drops due to a life-changing event, such as retirement.

For those delaying Social Security, the first Part B bill typically covers two to five months of premiums, making it larger than a standard monthly bill. Afterward, premiums are usually billed quarterly unless you set up Medicare Easy Pay for automatic withdrawals.

Out-of-pocket costs for Part B include:

• Annual deductible: $257.
• 20% coinsurance after the deductible.
• Potential 15% excess charges if providers don’t accept Medicare’s full payment.

Supplemental Plans to Cover Medicare Gaps

Since Parts A and B don’t cover all expenses, many retirees choose Medigap (supplemental) plans.

• Plan F: Covers all gaps (only available if enrolled before January 1, 2020).
• Plan G: Covers everything except the Part B deductible.
• Plan N: Covers most gaps but includes modest copays and excludes excess charges.

Alternatively, Medicare Advantage plans may charge daily copays for hospital stays but can cap maximum out-of-pocket costs.

Enrollment Timing: Avoiding Penalties

When to enroll depends on your situation:

• If you are not working at 65, you must enroll in Part A and Part B.
• If you have employer coverage, you can delay Part B without penalty, but you must enroll once that coverage ends.
• COBRA coverage does not count as credible coverage if you rely on it past 65 without enrolling in Part B, you risk penalties.
• If you’re auto-enrolled due to Social Security, you may disenroll from Part B if you have a good employer plan.

Final Thoughts: Plan Ahead to Avoid Mistakes

Medicare is not one-size-fits-all. The right timing, understanding of costs, and supplemental coverage can mean the difference between manageable healthcare expenses and overwhelming bills. To prepare, review your Annual Notice of Change, explore supplemental options, and work with an advisor to align your Medicare plan with your retirement strategy.