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Medicare vs. Employer Insurance: Which One Pays First

When you’re eligible for Medicare and also have employer-sponsored health insurance, things can get a little confusing. One question that comes up often: is Medicare or employer coverage primary?

The answer depends on employment status, the size of the employer, and the type of Medicare you have. Here’s what you need to know about how Medicare coordinates with employer coverage and who pays first.

Primary Payer

When you have more than one type of health coverage, the primary payer is the insurance that pays first for your healthcare services. The secondary payer may cover remaining costs, such as copayments, coinsurance, or deductibles.

Knowing which plan is primary ensures:

• Your claims are processed correctly
• You avoid unexpected bills
• You stay compliant with Medicare rules

General Rule: Employment Size Determines Priority

If You’re 65 or Older and Still Working

If your employer has 20 or more employees:

• Employer insurance is primary
• Medicare is secondary

If your employer has fewer than 20 employees:

• Medicare is primary
• Employer insurance is secondary

Note: The same rule applies if you’re covered under your spouse’s employer plan.

Watch a video on how Medicare works with employer coverage

Under 65 and Have Medicare Due to Disability:

If your (or your spouse’s) employer has 100 or more employees

• Employer insurance is primary
• Medicare is secondary

If the employer has fewer than 100 employees

• Medicare is primary

Retiree Coverage or COBRA

• Medicare is always primary
• Retiree plans and COBRA are considered secondary

In fact, if you delay enrolling in Medicare while on COBRA, you could lose COBRA coverage. Always sign up for Medicare Part B when first eligible to avoid penalties and gaps in coverage.

What About Veterans Benefits or TRICARE

If you have VA coverage, TRICARE, or other federal health benefits, the rules may differ:

• VA only covers care at VA facilities. If you go to a non-VA provider, Medicare pays first.
• TRICARE for Life acts as secondary coverage to Medicare for eligible military retirees.

Beneficiaries

• Don’t assume employer insurance will always pay first; check the size of the employer.
• Always inform Medicare and your employer plan that you have dual coverage so they can coordinate benefits properly.
• If Medicare is supposed to be primary and you haven’t enrolled in Part B, your employer plan may refuse to pay claims.

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Medicare OEP Open Enrollment Period

The Medicare Open Enrollment Period (OEP) runs annually from January 1 to March 31. It is specifically for individuals already enrolled in a Medicare Advantage (Part C) plan as of January 1.

This period does not apply to those with Original Medicare (Part A and B) only; it’s strictly for Medicare Advantage plan members who may want to make a one-time change.

What Changes Can You Make During OEP

Those enrolled in a Medicare Advantage plan, can make one change during the OEP. The options include:

• Switching to a different Medicare Advantage plan, with or without drug coverage
• Dropping your Medicare Advantage plan and returning to Original Medicare, with the option to add a Part D prescription drug plan

Changes You Cannot Make:

• Switch from Original Medicare to a Medicare Advantage plan
• Enroll in Part D drug coverage if you’re on Original Medicare and missed your IEP or AEP
• Make multiple changes; OEP only allows one switch

Watch a video on Medicare enrollment periods

Why Use the OEP

Here are a few common reasons beneficiaries take advantage of the Medicare OEP:

• Their current Medicare Advantage plan doesn’t cover a needed medication or provider
• They discovered higher costs or restrictions after using the plan in January
• They had a change in health and want a different plan with better specialist coverage
• They were unaware of better plan options during the Annual Enrollment Period (AEP), which runs from October 15 to December 7

How Is OEP Different from AEP

Important Considerations

• If you switch to Original Medicare during OEP, you may not be guaranteed Medigap (Medicare Supplement) coverage; unless you’re in a trial right or qualify for a Special Enrollment Period.
• Any changes made during the OEP become effective the first day of the month after the change is made (e.g., a change in February takes effect March 1).
• It’s important to review coverage early in the year to determine if your current plan still meets your needs.

Work with a Licensed Agent

The Medicare OEP is a valuable but limited opportunity to make corrections or improvements to your coverage. If you’re unsure whether your plan fits your health needs or budget, speak with a licensed Medicare agent. They can help you compare options, check provider networks and drug formularies, and make confident decisions about your healthcare.

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Medicare Commissions 2026 for Medicare Advantage & PDP Plans

As the Medicare industry evolves, so do the rules and compensation guidelines set by CMS. For 2026, CMS has released updated Medicare commissions 2026 for Medicare Advantage (MA) and Prescription Drug Plans (PDPs). Every Medicare agent needs to be aware of the new amounts and the policy changes behind them.

Below is a breakdown of what’s changing and how it impacts your commissions heading into the 2026 Annual Enrollment Period (AEP).

2026 Maximum Commission Rates

Each year CMS sets a fair market value (FMV) for agent compensation. These rates represent the maximum allowable compensation carriers can pay agents for enrollments and renewals of Medicare Advantage and Part D plans.

Medicare Advantage (MA) Initial Compensation:

• National base: $694 (up from $626 in 2025) this is the rate for any state not listed below.
• Renewal compensation: $347 per renewal (up from $313)

Connecticut, Pennsylvania, District of Columbia:

• Initial compensation: $781
• Renewal: $391

California and New Jersey:

• Initial compensation: $864
• Renewal: $432

Puerto Rico and U.S. Virgin Islands:

• Initial compensation: $474
• Renewal: $237

Prescription Drug Plan (PDP) Compensation:

• Initial enrollment: $114 (up from $100 in 2025)
• Renewal: $57

These are maximums. Carriers are not required to pay this amount but may do so depending on their policies and agent contracts.

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Why CMS Raised MA Commissions

The substantial increase in MA commissions; particularly the national base, is part of CMS’s broader effort to:

• Align compensation with the increased workload and compliance obligations placed on agents
• Encourage transparency and fair practices in marketing and enrollments
• Reflect rising healthcare costs and inflationary trends

Watch a video on Medicare commission payment details

Compliance Remains Critical

With higher compensation comes increased scrutiny. CMS continues to crack down on misleading marketing, aggressive sales tactics, and non-compliant enrollments.

Key compliance reminders for 2026:

• Scope of Appointment (SOA) forms must be completed 48 hours before most marketing appointments
• Call recordings of all Medicare-related sales calls are still required
• Third-party marketing organizations (TPMOs) must clearly disclose affiliations and limitations of plan representation

As commissions rise, expect CMS and carriers to take a firmer stance on agent conduct, training, and documentation.

Stay updated on agent events and information

Agent Tips to Maximize Success

1. Stay current on training: Complete your AHIP and carrier certifications early.
2. Educate your clients thoroughly: Higher commissions can mean more scrutiny, make sure clients understand their options.
3. Build long-term relationships: Renewal commissions continue to rise, rewarding agents who support their clients beyond initial enrollment.
4. Diversify your offerings: Include PDPs and Medigap plans or ancillary benefits where appropriate; some clients may benefit more from a supplement and drug plan.
5. Leverage compliant marketing: Use CMS-approved marketing materials and ensure your lead generation efforts are transparent and ethical.

The 2026 updated commission amounts are great news for agents who work hard to serve the Medicare community. Higher commissions and a continued emphasis on compliance and ethics mean; it is a good time to refine your strategy, refresh your knowledge, and recommit to providing excellent service.

Understanding the Different Types of Medicare Advantage Plans

Medicare Advantage (Part C) plans offer an all-in-one alternative to Original Medicare, often including additional benefits like dental, vision, hearing, and even prescription drug coverage. These plans are offered by private insurance companies approved by Medicare. Whether you’re a Medicare beneficiary or an agent helping clients make informed decisions, understanding the different types of Medicare Advantage plans is essential.

There are many types of Medicare advantage plans to consider when choosing coverage that best fits your needs. Here’s a breakdown of the main types of MA plans available:

HMO (Health Maintenance Organization) Plans

Key Features:

• Requires members to use a network of doctors and hospitals.
• Members must choose a Primary Care Physician (PCP).
• Referrals are usually needed to see a specialist.
• Most HMO plans include prescription drug coverage (Part D).

Best for: People who are comfortable with a coordinated care approach and staying within a specific provider network to keep costs low.

PPO (Preferred Provider Organization) Plans

Key Features:

• Offers more flexibility in choosing healthcare providers.
• You can see out-of-network providers, usually at a higher cost.
• No need to choose a PCP or get referrals for specialists.
• Often includes Part D prescription drug coverage.

Best for: Those who want the freedom to see any doctor or specialist without a referral and are willing to possibly pay a bit more for that flexibility.

SNPs (Special Needs Plans)

Key Features:

• Tailored for individuals with specific diseases, health conditions, or financial needs.
• Types include:
  • C-SNPs: For people with chronic conditions (e.g., diabetes, heart disease).
  • D-SNPs: For dual-eligible individuals (Medicare and Medicaid).
  • I-SNPs: For people in institutional care (like nursing homes).
• Always includes prescription drug coverage.
• Offers care coordination and case management.

Best for: Individuals with specific medical, financial, or living circumstances who need a personalized care approach.

PFFS (Private Fee-for-Service) Plans

Key Features:

• Allows you to see any Medicare-approved provider who agrees to the plan’s payment terms.
• No need to choose a PCP or get referrals.
• Some PFFS plans include drug coverage; others don’t.

Best for: People who want flexibility and are comfortable checking whether their provider will accept the plan’s terms.

POS (Point of Service) Plans

Key Features:

• A hybrid of HMO and PPO.
• You can go out-of-network for certain services, often with higher copays or coinsurance.
• Requires a PCP and referrals for specialists (when in-network).
• May include drug coverage.

Best for: Beneficiaries who like the care coordination of an HMO but want some out-of-network flexibility.

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MSA (Medical Savings Account) Plans

Key Features:

• Combines a high-deductible health plan with a savings account that Medicare deposits money into.
• Funds can be used to pay for qualified medical expenses.
• Does not include Part D coverage; must be purchased separately.

Best for: Those who prefer managing their own health savings and expenses and are comfortable with high deductibles.

Watch a quick YouTube video on why agents should include ancillary products with MA sales

Choosing the Right Medicare Advantage Plan

When evaluating which type of plan is best for you or your client, consider:

• Provider access: Do you want to stay in-network or have more flexibility?
• Prescription needs: Is Part D coverage important?
• Cost preferences: Would you rather pay higher premiums for lower out-of-pocket costs or vice versa?
• Health conditions: Are there chronic conditions or Medicaid eligibility that might qualify for an SNP?

Each Medicare Advantage plan type offers different benefits, restrictions, and costs. Understanding these differences is the key to selecting the most suitable coverage.

Agents, stay up-to-date on the our latest webinars an agent events.

CMS 2026 Part D Redesign & the Executive Order on Drug Prices

Starting January 1, 2026, CMS will implement Medicare Part D redesign 2026 updates that were put in place by the Inflation Reduction Act. They will also enact the new Most-Favored-Nation (MFN) Executive Order issued May 12, 2025. The goal of these actions is to better align U.S. drug prices with those paid by other high-income nations.

CMS 2026 Part D Redesign: Key Cost Updates

• $615 deductible before coverage kicks in.
• Initial Coverage Phase: beneficiary pays 25% coinsurance; 65% is plan-covered, and manufacturers cover 10% (plus CMS provides a 10% subsidy on select negotiated drugs)
• Out-of-Pocket Cap: annual TrOOP limit rises to $2,100 in 2026
• Catastrophic Phase: beneficiaries pay $0; plans cover 60%, manufacturers 20%, CMS 20–40%

Watch a video on the CMS Medicare Final Rule Proposal

Selected Drug Subsidy Program & Negotiated Prices

The Direct price negotiations initiated under the IRA (Inflation Reduction Act) for the first 10 high-cost Part D drugs begins in 2026. These selected drugs also qualify for a 10% subidy, provided by CMS during the initial coverage phase.

Additionally; the expected savings for medicare is estimated at about $6 billion with an estimate of $1.5 billion in savings on beneficiary out-of-pocket costs.

Executive Order: Most-Favored-Nation Pricing (May 12, 2025)

• Directs agencies (HHS, CMS, Commerce, USTR) to benchmark U.S. drug prices against the lowest prices in OECD nations
• Encourages direct-to-consumer drug purchasing programs at these international prices
• Includes authority to impose tariffs or regulatory action if manufacturers don’t comply within 30 days
• Targets anti-competitive practices, middlemen reforms, accelerated generic and biosimilar availability, and simplified importation
• Reform measures also extend to Medicaid and facilitate value-based pricing and site-neutrality
• Implementation faces legal uncertainties, with pharmaceutical leaders raising concerns over future innovation and practicality

Medicare Prescription Payment Plan (MPPP) Updates

• Auto re-enrollment with a 3-day opt-out window for returning participants
• No extra fees and pharmacy reimbursement within 14 days (e-claims) or 30 days (paper)
• All plans must include smoothed monthly billing as an alternative to per-fill copays

What Agents Can Do

Emphasize cost cap increases: deductible ($615) and TrOOP ($2,100), and detail catastrophic phase structure.

Promote savings with negotiated drug program: mention the overall savings after the TrOOP is reached.

Educate clients about MPPP; how monthly smoothing can reduce sticker shock and how to opt out.

Highlight executive order impacts; both MFN implications and ongoing drug price negotiations that can give them additional price drops or new purchasing options.

Address drug import possibility from Canada, pending MFN implementation.

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What This Means for Agents & Clients

• Lower costs for select medications due to CMS negotiations and MFN pricing policies
• Enhanced predictability and affordability via MPPP
• Opportunities in marketing: position these changes as saving tools during Open Enrollment
• Stay alert to implementation updates and legal progress on MFN rules

Get updated agent information and event details

Understanding Medicaid Spend Downs: What It Is and How It Works

For many individuals, especially older adults and those with disabilities, affording healthcare and long-term care can be a significant financial challenge. Medicaid offers crucial support, but not everyone qualifies based on income or asset limits. That’s where understanding Medicaid Spend Downs is important. It is a pathway to eligibility for those who exceed Medicaid’s financial thresholds but still have high medical costs.

What Is Medicaid Spend Down

Medicaid Spend Down is a process that allows individuals with income or assets above Medicaid eligibility limits to “spend down” their excess resources on medical expenses to qualify for Medicaid coverage. It’s similar to an insurance deductible; once you’ve paid out a specific amount in medical bills, you become eligible for Medicaid assistance for the rest of the period.

There are two common types of spend down:

• Income Spend Down: For people whose monthly income is too high but who have recurring medical expenses.
• Asset Spend Down: For those whose savings or property exceed Medicaid’s asset limits.

Who Needs a Spend Down

Spend down is often needed by:

• Seniors over age 65
• Individuals with disabilities
• People in need of long-term care
• Those receiving home and community-based services

For example, someone with a small pension or Social Security income that slightly exceeds their state’s Medicaid income limit might still qualify if they have regular out-of-pocket medical costs like prescription drugs, doctor visits, or even insurance premiums.

How Does It Work

Each state administers Medicaid differently, so spend down rules and procedures vary. However, the basic process looks like this:

1. Determine Excess Income/Assets: Compare income or resources to the state’s Medicaid limits.
2. Calculate the Spend Down Amount: This is the amount you must use for medical expenses to qualify.
3. Submit Proof: Provide receipts or bills to your state Medicaid office as evidence of your medical expenses.
4. Become Eligible: Once you meet your spend down requirement, Medicaid covers your additional medical costs for a certain period; often between one and six months.

Agents, watch a quick video on the quarterly SEP for dual and drug help elimination 2025

What Counts Toward a Spend Down

Expenses that may count include:

• Unpaid medical bills
• Prescription drugs
• Health insurance premiums
• Doctor and hospital visits
• In-home care services
• Medical equipment

Important Considerations

• Timing Matters: Medicaid coverage through spend down is usually limited to specific timeframes (e.g., a one- or six-month period). Beneficiaries will need to re-qualify at the end of each spend down period. The length of each spend down varies by state.
• Asset Rules Are Strict: Some assets are exempt (like your home or one vehicle), but others may need to be spent down or placed in a trust.
• Documentation Is Key: Keep all receipts and records of medical expenses as proof.

Medicaid Spend Down can be a lifeline for those who need healthcare but don’t meet traditional financial eligibility criteria. It requires careful planning and documentation, but it opens the door to critical services like long-term care and in-home support.

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Stay up-to-date on agent events and information

If you or a client may benefit from Medicaid but don’t meet the income or asset limits, a CMP (Certified Medicaid Planner) or elder law attorney can provide spend down options and help beneficiaries make informed decisions.

Medicare Part D Extra Help: What Agents and Beneficiaries Need to Know

When it comes to Medicare, prescription drug coverage can be a very confusing and expensive component for beneficiaries. Fortunately, there’s a federal program called Extra Help, also known as the Low-Income Subsidy (LIS), that can significantly reduce those costs. As a Medicare agent, you need to be able to answer the question; what’s Medicare part D Extra Help. Understanding and explaining this benefit can be a game-changer for your clients.

What Is Medicare Part D Extra Help

Extra Help is a program administered by the Social Security Administration (SSA) and Centers for Medicare & Medicaid Services (CMS) to assist individuals with limited income and resources in paying for their Medicare Part D prescription drug plan costs. This includes premiums, deductibles, and copayments.

The value of this benefit can be substantial—worth an average of about $5,300 per year (2024 estimate).

Who Qualifies for Extra Help?

To qualify for Extra Help, beneficiaries must meet certain income and resource limits. As of 2025 (these numbers are adjusted annually):

• Income Limits:
  • Individuals: Up to $23,715 annually
  • Married couples: Up to $31,965 annually
• Resource Limits (includes bank accounts, stocks, and bonds; excludes home, car, personal items):
  • Individuals: Up to $17,600
  • Married couples: Up to $35,130

Click here for a LIS Extra Help chart for 2025

Note: People who automatically qualify for Extra Help include those who:

• Have full Medicaid coverage
• Receive Supplemental Security Income (SSI)
• Qualify for an MSP (Medicare Savings Program)

What Extra Help Covers

Depending on the level of help a beneficiary qualifies for, Extra Help can:

• Reduce or eliminate monthly Part D premiums
• Lower or remove the annual Part D deductible
• Cap out-of-pocket drug costs

In most cases, those receiving Extra Help will pay:

• Low or no monthly premiums for a benchmark Part D plan
• A small deductible as low as $0
• Low copays (as little as $4.80 for generics and $12.15 for brand-name drugs in 2025) Full-Duals pay $1.60 for generic and $4.80 for brand name drug copays

Watch a quick YouTube video on the Quarterly SEP for Dual and Drug Help Elimination in 2025

How to Apply for Extra Help

• Online at www.ssa.gov/extrahelp
• By calling 1-800-772-1213 (SSA)
• Or by visiting the local Social Security office

As an agent, you can guide clients through the application process, help gather the right documentation, and verify eligibility.

Why Agents Should Care

Helping clients apply for Extra Help not only strengthens your relationship with them but also ensures they can afford necessary medications. When a client qualifies, they may be more willing and able to enroll in or stick with a Part D plan; making this an ideal opportunity to offer value and grow your book of business.

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SEP for Extra Help Recipients

Don’t forget, beneficiaries who qualify for Extra Help are eligible for a Special Enrollment Period (SEP). This means they have an SEP to change their Medicare Part D plan once they are approved for extra help.

learn about the SEP Changes for Dual, Partial Dual and LIS members in 2025

Extra Help can be life-changing for Medicare beneficiaries who struggle with prescription drug costs. As an agent, your role in identifying eligibility and guiding your clients through the application process is crucial. It’s a win-win: clients get meaningful financial relief, and you build long-term trust and loyalty.

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Understanding Medicare Part B LEPs: How to Avoid Them and Dispute Errors

Enrolling in Medicare is a crucial step to secure affordable healthcare for those who qualify. However, missing the enrollment window can be a costly mistake. If this happens, a beneficiary will face Medicare Part B LEPs (Late Enrollment Penalties). In this post, we explain what the penalty is, how to avoid it, and how to dispute it if it is applied in error.

Watch a video on OEP, SEPs & late Part B enrollment

What Is a Medicare Part B LEP

Medicare Part B covers outpatient services like doctor visits, preventive care, durable medical equipment, and more. If the beneficiary doesn’t sign up for Part B when they’re first eligible, and they don’t qualify for a Special Enrollment Period (SEP), they may receive a monthly penalty that lasts a lifetime.

Here’s how it works:

• The penalty is 10% of the standard Part B premium for every 12-month period the beneficiary was eligible but didn’t enroll.
• CMS adds it to the monthly premium as long as you have Part B; most likely for the rest of your life.

Example:

If the beneficiary delays Part B for 2 full years without a valid reason, the penalty will be 20% of the standard monthly premium.

When Can You Delay Enrollment Without Penalty

You can delay Part B without a penalty if you have creditable coverage. This generally means you receive coverage under an employer-sponsored plan through your (or your spouse’s) active employment.

You qualify for a Special Enrollment Period (SEP) if:

• You or your spouse are still working past age 65.
• You’re covered under a group health plan from that employment.
• You enroll in Part B within 8 months of losing that coverage or stopping work; whichever comes first.

How to Avoid the Part B LEP

1. Know Your Initial Enrollment Period (IEP). The IEP is a 7-month window. It begins 3 months before th emonth you turn 65, includes your birth month , and ends 3 months later.
   
2. Enroll During a Special Enrollment Period (if eligible). Those working past 65 and have employer coverage shoul dkeep proof of coverage. This may qualify them for an SEP.
   
3. Get Written Confirmation of Creditable Coverage. Keep documents from your employer or insurance provider to prove your coverage was creditable.
   
4. Don’t Assume COBRA or Retiree Coverage Counts. These type of coverage do not qualify as creditable to delay Part B enrollment without a penalty.

What If You’re Penalized by Mistake

If you receive a notice of a Part B LEP and believe it’s in error, you have the right to appeal.

Steps to Dispute a Medicare Part B LEP:

1. Request a Reconsideration
   Contact the Social Security Administration (SSA) and request Form CMS-L564 (Request for Employment Information) and Form CMS-40B (Application for Enrollment in Medicare – Part B).
2. Gather Proof
   Obtain proof of your creditable coverage, such as:
   • Employer letters
   • Pay stubs showing active health coverage
   • Group health insurance policy documents
3. Submit Documentation Promptly
   Include a letter explaining your situation and attach your documentation. Send it to your local Social Security office or follow instructions provided with the reconsideration request.
4. Follow Up
   Appeals can take several weeks. Keep a record of all communication and follow up regularly.

Medicare Part B LEPs are more than just a financial nuisance; they’re a lifelong burden if not handled correctly. Fortunately, with proper planning and awareness of enrollment timelines, they are entirely avoidable. If a mistake does occur, don’t panic. There is a clear process in place for disputes, and with strong documentation, many errors can be successfully overturned.

If you’re approaching Medicare eligibility or navigating coverage options, consider consulting with a licensed Medicare agent to help guide you through the process.

Medicare agents

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Medicare Enrollment: When It’s Automatic and When You Need to Sign Up

Medicare enrollment can be confusing, especially when it’s not clear whether you’ll be enrolled automatically or if you need to take the first step yourself. As either a Medicare agent or beneficiary, knowing when is Medicare enrollment automatic is critical to avoid late enrollment penalties and coverage gaps.

Here’s a breakdown of when Medicare enrollment happens automatically and when beneficiaries need to sign up on their own.

When Medicare Enrollment Is Automatic

Individuals are automatically enrolled in Medicare Part A and Part B at age 65 if:

They already receive Social Security or Railroad Retirement benefits

Individuals who collect either Social Security or Railroad Retirement Board (RRB) benefits for at least four months before their 65th birthday are automatically enrolled in:

• Medicare Part A (hospital insurance)
• Medicare Part B (medical insurance)

In most cases, These individuals receive their Medicare card about three months before their 65th birthday.

Those under 65 and have a qualifying disability

Individuals who receive Social Security Disability Insurance (SSDI) for 24 consecutive months, are automatically enrolled in Medicare once they reach the 25th month of disability benefits.

Please Note: Individuals with ALS (Lou Gehrig’s disease) receive Medicare automatically the month their disability benefits begin.

When You Need to Sign Yourself Up

Individuals must enroll themselves in Medicare if:

They’re not receiving either Social Security or RRB benefits

In many cases, people decide to delay the receipt of Social Security until after age 65 to maximize their benefit amount. Those individuals are not automatically enrolled in Medicare; they must sign themselves up during their IEP (Initial Enrollment Period).

The IEP is a 7-month window that starts 3 months before, includes the month of, and ends 3 months after the beneficiary’s 65th birthday.

Individuals who have employer coverage and delay Part B enrollment

Those still working and receive health coverage from a large employer (20+ employees) group health plan may choose to delay Part B and avoid paying the monthly premium. In that case, they must sign up later during a SEP (Special Enrollment Period). This is an 8 month window when individuals can sign up for Part B once their employer coverage ends or they stop working (whichever comes first).

Watch a YouTube video on OEP, SEPs and Late Part B enrollment

Important: COBRA and retiree coverage do not count as active employer coverage. Individuals may face penalties if they delay Medicare enrollment and rely on these plans.

What If You Miss Enrollment

If you miss your IEP and don’t qualify for an SEP, you’ll have to wait for the General Enrollment Period (GEP):

• January 1 – March 31 each year
• Coverage begins the month after you enroll
• You may owe a late enrollment penalty for Part B (and Part D if applicable)

Tips for Clients & Agents

• Mark your calendar: Your IEP starts 3 months before your 65th birthday.
• Enroll on time: Even if you’re healthy, missing the window can cost more later.
• Coordinate carefully: If still working, check with HR or your agent before delaying Medicare enrollment.
• Check coverage: Compare Original Medicare vs. Medicare Advantage (Part C) and add Part D or Medigap as needed.

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Need Help Enrolling

Whether you’re approaching 65 or advising clients, navigating enrollment can be tricky. Medicare.gov provides tools to check eligibility and apply online; agents can help guide clients through the process to avoid delays and penalties.

Knowing when Medicare enrollment is automatic and when you need to enroll yourself helps avoid costly mistakes. As an agent, walking clients through this process adds tremendous value. If you’re a beneficiary, planning ahead ensures a smooth transition into Medicare with the coverage you need.

Have questions about a specific situation? Reach out to a licensed Medicare agent who can provide personalized guidance based on your health needs and budget.

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As a Medicare agent, you’re not just helping clients find the right plan, they depend on your advice to help them navigate through all the complexities of Medicare. One important thing agents do is explaining Medicare penalties, this ensures clients avoid costly surprises.

Educating clients early using understandable terms on how to avoid these charges helps build trust and reinforces your value as a trusted advisor. Here’s a breakdown of the most important penalties clients need to understand and how to help them stay ahead of the game.

Start with the Enrollment Timeline

Some clients are unaware of the IEP (Initial Enrollment Period) and how crucial timing is. As you know, the IEP is a seven-month window:

• Three months before the month of their 65th birthday,
• The birthday month,
• And three months after their birthday month.

If they don’t enroll in Medicare Part B or Part D during this period, and they don’t qualify for an SEP (Special Enrollment Period), they could face lifelong penalties.

Encourage clients to begin planning their Medicare enrollment early; at least 3 to 6 months before turning 65. Use this time to review their current coverage and explain how Medicare will coordinate (or replace) it.

Clarify Each Type of Penalty

Clients rarely understand the specific consequences of delaying enrollment. Be sure to cover these key penalties in your consultations:

Medicare Part B Late Enrollment Penalty

• What It Is: A 10% increase in the monthly premium for every full 12-month period the client delayed enrollment without other creditable coverage.
• How Long It Lasts: For life, and CMS will add it to their Part B premium.
• Common Misunderstanding: Clients often believe they can just delay Part B if they’re healthy or not using care without knowing there is a penalty and it keeps growing.

Watch a YouTube video on OEP, SEPs an Late Part B Enrollment

Part D Late Enrollment Penalty

• What It Is: 1% of the national base premium (currently $36.78 in 2025) multiplied by the number of full uncovered months they went without creditable prescription drug coverage.
• How Long It Lasts: For life, and it’s added to their monthly Part D premium.
• Common Misunderstanding: Clients are often unaware of this penalty and if they don’t need drug coverage now, they do not have to enroll in a plan. Although, not having creditable coverage triggers the penalty anyway.

Medicare Part A Penalty

Penalty: 10% increase in the premium for twice the number of years they delayed enrollment.

Applies only to clients who do not qualify for premium-free Part A (usually those with less than 10 years of Medicare-covered work history).

Explain Employer Coverage and SEPs

This is where your expertise can be very useful.

Many clients working past 65 assume they can delay Medicare without issue. However, eligibility for an SEP (Special Enrollment Period) depends on their employment and the type of coverage they have.

Key Points:

• Employer coverage must be from active employment (not COBRA or retiree plans).
• The employer must have 20 or more employees for the coverage to delay Medicare enrollment without penalty.
• They must enroll in Medicare within 8 months of losing employer coverage to avoid penalties.

Review your client’s group health plan documents or provide them with specific questions to ask their HR department. It’s critical they confirm whether their plan is considered creditable coverage for both Part B and Part D.

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Conduct Annual Reviews

Clients’ needs, income levels, and coverage can change year to year. Use the AEP (Annual Enrollment Period) that runs Oct 15–Dec 7 to:

• Verify their current coverage.
• Check for plan changes that could increase costs.
• Remind them of potential penalties if they drop coverage without a replacement.

Document Everything and Communicate Clearly

Because it is easy for some clients to misunderstand Medicare rules, it’s essential to:

• Take notes that summarize the appointment after each consultation, some clients may want a copy for their own records.
• Track enrollment deadlines and follow up as key dates approach.
• Encourage clients to keep copies of any employer or plan letters that state their coverage is creditable.

Medicare penalties are preventable; only if your clients have the right information at the right time. As an agent, your ability to explain these rules in simple terms and guide clients through timely enrollment is a key part of your value.

By proactively addressing fees and penalties in your process, you not only protect clients financially you also strengthen your reputation as a knowledgeable and trustworthy advisor in a competitive marketplace.

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