The 7-Month Window

Medicare

A woman I'll call Linda retired at 64 after 30 years in healthcare administration. Ironic, given what happened next. (She's hypothetical, invented for this letter, but her mistake is one of the most common in all of retirement.)

She figured Medicare worked like everything else in her career: you sign up when you need it. She felt healthy. Money was tight in year one of retirement. So she skipped Part B to save the premium and planned to enroll "when something comes up."

Something came up at 67.

When she finally enrolled, two things hit her. First, she couldn't just sign up whenever she wanted. She had to wait for the general enrollment window, months away, with no coverage in between. Second, her premium came back 20% higher than everyone else's.

Not for one year. Forever.

That's the Medicare late enrollment penalty, and it's one of the only mistakes in retirement that literally never stops charging you.

How the window actually works

When you turn 65, you get a 7-month Initial Enrollment Period. It opens 3 months before your birthday month, includes your birthday month, and closes 3 months after.

That's it. It doesn't extend. It doesn't come around again.

Enroll during the first 3 months and your coverage starts the month you turn 65, clean. Enroll late in the window and your start date can slip. Miss the window entirely without qualifying coverage and you're waiting for the January-March general enrollment period, with coverage starting the following July. That can mean the better part of a year uninsured.

The penalty math

The Part B penalty is 10% of the premium for every full 12-month period you delayed. And it's permanent.

The 2026 standard Part B premium is $202.90/month. Delay two years like Linda and you pay 20% more, about $487 extra per year, every year, for the rest of your life. Live 25 more years and that "money-saving" decision costs over $12,000. On top of the coverage gap risk.

There's a separate, also-permanent penalty for Part D drug coverage. It accrues monthly, not yearly, so even a short delay adds up. This is why people who take zero medications still enroll in a cheap Part D plan at 65. It's not about today's prescriptions. It's about locking in penalty-free access forever.

The exception that confuses everyone

Here's where half the mistakes happen: if you're still working at 65 with health coverage from an employer with 20 or more employees, you CAN delay Part B without penalty. Your employer plan stays primary, and when you eventually retire, you get a special enrollment window.

But the rules are specific, and two groups get burned:

Small employer coverage. If your company has FEWER than 20 employees, Medicare becomes primary at 65 whether you enrolled or not. Your employer plan may quietly stop paying claims it expects Medicare to cover. People discover this from a denied claim.

COBRA and retiree coverage. Neither counts as active employer coverage. Riding COBRA past 65 and skipping Part B is one of the most common and most expensive Medicare mistakes there is. The penalty clock runs the whole time.

The HSA trap hiding inside this

One more for the still-working crowd. If you have a Health Savings Account with a high-deductible plan, you must stop HSA contributions at least 6 months before enrolling in Medicare.

Why: Part A coverage can be backdated up to 6 months when you apply, and the IRS prohibits HSA contributions once any part of Medicare is in effect. Keep contributing into that backdated window and you've made excess contributions with tax penalties attached.

If you're 64 and a half and maxing an HSA right now, this paragraph is worth the whole newsletter.

The sequence

1. Mark the window. Your IEP opens the 1st of the month, 3 months before your birthday month. Put it on the calendar today, even if 65 is a few years off.
2. Decide your path before the window opens. Still working with large-employer coverage? Document it (you'll need proof later to avoid the penalty). Retiring or on small-employer coverage? Plan to enroll in the first 3 months of the window.
3. Stop HSA contributions 6 months out if Medicare is coming.
4. Enroll through Social Security, not Medicare.gov. This surprises people. You sign up at ssa.gov. If you're already collecting Social Security, enrollment in A and B happens automatically.
5. Then make the real coverage decision: Medicare Advantage vs Medigap. That choice is bigger than most people realize and nearly irreversible in practice.

The mistakes that cost the most

Assuming it works like open enrollment at work. There is no annual do-over for the initial window. Miss it, pay forever.

Riding COBRA past 65. Not creditable coverage for Part B. The penalty clock runs.

Skipping Part D because you're healthy. The cheapest plan in your zip code is penalty insurance. Buy it.

Contributing to an HSA into the 6-month lookback. Quiet, technical, expensive.

Waiting for someone to notify you. Unless you're already on Social Security, nobody sends a reminder. The government assumes you know.

Linda's penalty wasn't a paperwork problem. It was an information problem. Nobody had ever explained the window.

Now you've had it explained.