Medicare: Enrollment Timing & IRMAA Surcharges

Medicare enrollment might seem straightforward — you turn 65, you sign up. But the reality is more nuanced and the consequences of getting it wrong are surprisingly severe. Late enrollment penalties can increase your premiums permanently, and higher-income retirees face additional surcharges known as IRMAA that can add hundreds of dollars per month to their Medicare costs.

Understanding the enrollment timeline, knowing when exceptions apply, and planning ahead for income-based surcharges can save you significant money over the course of your retirement.

The Initial Enrollment Period

Your Medicare Initial Enrollment Period (IEP) is a 7-month window centered around your 65th birthday. It begins three months before the month you turn 65 and ends three months after your birthday month. When you enroll within this window determines when your coverage starts:

• 3 months before birthday month: Coverage starts the first day of your birthday month (or the month before if your birthday is on the 1st).
• During your birthday month: Coverage starts the first day of the following month.
• 1 month after birthday month: Coverage starts two months later.
• 2 months after birthday month: Coverage starts three months later.
• 3 months after birthday month: Coverage starts three months later.

The takeaway is clear: enrolling in the first three months of your IEP ensures your coverage begins on time with no gap. Waiting until the later months creates delays that could leave you without coverage.

If you are already receiving Social Security benefits before age 65, you will be automatically enrolled in Parts A and B. Your Medicare card will arrive in the mail approximately three months before your 65th birthday. If you are not yet receiving Social Security, you need to actively sign up through the Social Security Administration.

Enrollment Timeline Visualized

The 7-month Initial Enrollment Period is structured as follows around your 65th birthday:

Enrolling in the first three months (the blue zone) gives you the earliest possible coverage start date. Enrolling during or after your birthday month (the amber zone) will delay your coverage, potentially leaving you without insurance for a period of time.

Late Enrollment Penalties

If you miss your Initial Enrollment Period and do not qualify for a Special Enrollment Period, you will face late enrollment penalties — and these are not one-time fees. They are permanent surcharges added to your premiums for as long as you have Medicare.

To put this in perspective, someone who delays Part B enrollment by just two years without qualifying employer coverage will pay 20% more for their Part B premium every single month for the rest of their life. At the 2025 standard premium of $185, that is an extra $37 per month, or $444 per year. Over 20 years of Medicare coverage, that one mistake costs nearly $9,000 in additional premiums — and the penalty grows along with the base premium each year.

The Part D penalty, while smaller on a monthly basis, also compounds over time. The national base beneficiary premium is recalculated annually, so the dollar amount of the penalty increases even though the percentage stays the same.

Special Enrollment Period

There is an important exception to the enrollment deadline: if you or your spouse are still actively working and covered by an employer group health plan, you can delay Medicare enrollment without penalty. This is called the Special Enrollment Period (SEP).

When your employment or employer coverage ends (whichever happens first), you have an 8-month Special Enrollment Period to sign up for Part B without penalty. During this window, you can enroll at any time, and coverage will begin the month after you sign up.

However, there is a critical distinction that catches many people off guard:

Similarly, coverage through the Health Insurance Marketplace (ACA exchanges), retiree health plans, and VA benefits are generally not considered creditable employer coverage for the purpose of delaying Part B enrollment. Always verify your specific situation before making enrollment decisions.

IRMAA Income Brackets for 2025

The Income-Related Monthly Adjustment Amount (IRMAA) is an additional charge added to your Part B and Part D premiums if your income exceeds certain thresholds. IRMAA is based on your Modified Adjusted Gross Income (MAGI) from two years prior — so your 2025 IRMAA is determined by your 2023 tax return.

MAGI for IRMAA purposes includes your adjusted gross income plus any tax-exempt interest income (such as municipal bond interest). The following table shows the 2025 IRMAA brackets.

The difference between the standard premium and the highest tier is dramatic. A couple filing jointly with MAGI above $750,000 pays $714.70 per person per month for Part B and Part D alone — compared to $185 at the standard level. That is an additional $1,059.40 per month for a married couple, or nearly $12,713 per year in extra premiums.

Even moving from the standard tier to the first IRMAA bracket adds about $88 per month, or $1,051 per year. For couples, that doubles. These amounts make IRMAA planning a meaningful consideration for higher-income retirees and those approaching retirement with significant taxable income events ahead.

Strategies for Managing IRMAA

Because IRMAA is based on income from two years prior, the planning window is real but requires forethought. Here are several strategies that may help reduce or avoid IRMAA surcharges:

Roth Conversions Before Age 63. Since IRMAA in the year you turn 65 is based on your income at age 63, completing Roth conversions in your late 50s and early 60s — while your income may be lower in the gap between retirement and Medicare — can help you avoid pushing into a higher bracket. Roth IRA withdrawals are not included in MAGI, so money converted to a Roth before the two-year lookback window begins will not trigger IRMAA when you start Medicare.

Income Timing. If you have flexibility in when you recognize income — such as capital gains, business income, or retirement account withdrawals — coordinating the timing around the IRMAA lookback period can be valuable. For example, if you plan to sell a highly appreciated asset, doing so before or after the two-year window that affects your first years of Medicare can avoid unnecessary surcharges.

Tax-Exempt vs. Taxable Bonds. Remember that tax-exempt interest from municipal bonds is included in MAGI for IRMAA purposes, even though it is not taxed. If you are near an IRMAA threshold, the choice between municipal and taxable bonds deserves analysis that accounts for the full IRMAA impact.

Qualified Charitable Distributions (QCDs). If you are 70½ or older, making charitable donations directly from your IRA through a QCD satisfies your Required Minimum Distribution without adding to your MAGI. This can help keep your income below IRMAA thresholds while still meeting your charitable goals.

IRMAA planning is not just for the ultra-wealthy. Many retirees with modest portfolios can find themselves in an IRMAA bracket due to a one-time event like selling a home, taking a large IRA distribution, or recognizing deferred compensation. The key is awareness of the two-year lookback and proactive planning with your financial advisor and tax professional to smooth income across the critical years.

This article is for informational purposes only and does not constitute investment advice. All information should be discussed with a qualified financial advisor before implementation.