While you don’t have to enroll in Medicare if you don’t want to, the default option for health insurance once you turn 65 is to sign up. In fact, if you’re already claiming Social Security benefits, then you’ll automatically be enrolled in Parts A and B. However, you may not want to enroll if you can get better insurance through your job or your spouse’s job or if you want to keep contributing to a health savings account. Nevertheless, depending on your circumstances you may not have the option to delay enrollment, or it may not be in your best interest because of the penalties you’ll incur or the gaps in coverage you’ll face. Here is an overview of the rules for when you can and can’t delay enrolling in Medicare Parts A, B and D.

Receiving Social Security Benefits

Once you start receiving Social Security benefits you must be enrolled in Part A. But if you can afford to postpone Social Security, you can also postpone Medicare Part A. Unlike Part A, you are allowed to opt out of Part B even if you’re claiming Social Security benefits. You can’t sign up for Part D unless you’re enrolled in Part A or B. (For more, see 4 Reasons You May Not Want to Delay Social Security Payments.)

Still Working

Part A: If you’re still employed when you turn 65 and you work for a company with 20 or more employees (or if this description applies to your spouse), you can keep relying on the employer’s group health plan and postpone Part A, because Medicare will consider the employer’s insurance to be your primary insurance. For companies with fewer than 20 employees, however, you’ll probably need to enroll in Medicare, because the company’s insurance plan will usually expect Medicare to be your primary insurance. This isn’t always the case, though, so ask your employer (or your spouse’s employer).

Part B: If you are still working at 65 and have health insurance through your employer – or if your spouse is still working and you have health insurance through his or her employer – you can delay enrolling in Part B. And you might want to because, while Part A is free for most people, Part B costs money, and you may be duplicating your coverage while seeing little to no additional benefit. You can’t go without Part B coverage or the employer-provided equivalent, however, or you’ll incur permanent penalties.

Part D: You can postpone enrollment in Part D if you’re still working (or your spouse is still working) and you have creditable prescription drug coverage through your employer (or your spouse’s employer). A creditable plan is one that’s equal to or better than what Part D pays for; your insurance company can tell you if your plan meets this definition. If you don’t have either Part D or creditable coverage, when you later enroll in Part D you’ll face a permanent penalty, as with Part B. If you’ve delayed enrolling in Part A and Part B, you’ll also have to delay enrolling in Part D. You can also delay or avoid enrolling in Part D if you get prescription drug coverage through a Medicare Advantage plan.  (For more, see The Employee’s Guide to Medicare.)

Retired

Part A: If you’re retired and you’re not covered under a working spouse’s plan, you’ll need to enroll in Part A to have coverage for hospital stays and skilled nursing care and to avoid penalties from the individual health insurance mandate. As an alternative, you could enroll in Medicare Part C, also known as a Medicare Advantage plan. It will give you Part A and Part B coverage and allow you to avoid Obamacare penalties. (For more, see Five Distinct Features of Medicare Advantage.)

Part B: If you have COBRA, retiree health insurance, VA health insurance or individual marketplace health insurance, you need to sign up for Medicare Part B within eight months of leaving your job, so you don’t have to pay permanent Part B penalties when you enroll later and so you don’t experience any gaps in your health insurance coverage. Without it, you’ll have to pay out of pocket for medically necessary services, ambulance rides and durable medical equipment such as canes, blood-glucose testing devices and sleep-apnea devices. You’ll also lack coverage for preventive and screening services such as cardiovascular disease screenings and mammograms.

Part D: If you retire and lose your creditable prescription drug coverage, make sure to sign up for Part D during the special enrollment period to avoid penalties. Also, get proof of your creditable coverage from your insurer so you can use it later to show that you aren’t subject to penalties. Don’t go without either Part D or creditable coverage for more than 63 days or you’ll face the penalty.

The Bottom Line

The government has strict rules about the health insurance and prescription drug coverage you’re required to have. There are allowances for keeping employer-provided insurance and delaying Medicare, but you must follow these rules carefully so you don’t end up with gaps in your coverage – and you don’t find yourself paying temporary Medicare Part A penalties or permanent Medicare Part B and D penalties.