Transitioning from ACA Marketplace to Medicare at 65

If you retired before 65 and covered yourself through an ACA marketplace plan, your coverage situation changes the moment you become eligible for Medicare — even if you haven't enrolled yet. The switch is not optional. Getting the timing wrong creates two problems: premium tax credit repayment to the IRS and permanent Medicare late-enrollment penalties that follow you for life.

Why the switch is mandatory

ACA premium tax credits (PTCs) are only available to people who lack access to adequate, affordable coverage through other sources. Under federal law, Medicare Part A (hospital insurance) is "minimum essential coverage." If you qualify for premium-free Part A — which requires 40 quarters of Medicare-covered work history — you are legally ineligible for marketplace PTCs, whether or not you choose to enroll in Medicare.¹

This creates a hard cutoff: the month you turn 65 and become eligible for premium-free Part A, any PTCs you continue to receive for marketplace coverage can be clawed back by the IRS at tax time. The marketplace does not automatically know you've turned 65. If you don't actively terminate your marketplace plan and stop PTCs, the IRS reconciles at filing time and bills you for credits received after your Medicare eligibility date.

Medicare Part B (outpatient and physician coverage) is always purchased — there is no automatic free Part B. Delaying Part B enrollment can be appropriate in some situations (notably, when covered by a current employer's group health plan). But for most people leaving ACA marketplace coverage at 65, enrolling in Part B during the Initial Enrollment Period is essential. Delay creates a permanent 10% per year late enrollment penalty.²

Enrollment timeline and IEP

Medicare's Initial Enrollment Period (IEP) is a 7-month window: the 3 months before your birthday month, your birthday month, and the 3 months after. When you enroll within this window determines when your coverage begins:

For ACA marketplace enrollees, the practical takeaway: enroll in Medicare during the 3 months before your birthday month. This is the only enrollment window that produces coverage starting on your 65th birthday. Waiting until your birthday month or later delays Part B by at least 1 month, creating a gap your marketplace plan can't legally fill once PTCs end.

Terminating your marketplace plan

After enrolling in Medicare, you must actively terminate your ACA marketplace plan through Healthcare.gov (or your state's marketplace). Medicare enrollment does not auto-cancel your marketplace coverage. Coordinate the termination date carefully:

• Schedule the marketplace plan end for the last day of the month before your Medicare coverage begins
• Stop PTC advances as of your Medicare eligibility date — not your marketplace end date — to avoid IRS recapture
• Keep documentation of both your Medicare start date and marketplace termination date for your tax return

Coming off COBRA at 65

If you retired before 65 and chose COBRA continuation coverage instead of a marketplace plan, the transition works differently. COBRA's 18-month maximum term often expires around age 65, creating a natural switch point. But unlike marketplace coverage, COBRA termination triggers a specific Medicare enrollment rule.

The 8-month Special Enrollment Period

When your COBRA coverage ends — whether you exhaust the 18-month maximum or voluntarily drop it — you have an 8-month Special Enrollment Period (SEP) to enroll in Medicare Part B without a late enrollment penalty.³

This SEP does not wait for the Annual Enrollment Period (October 15–December 7) or the General Enrollment Period (January–March). Use it immediately after COBRA ends. Waiting for AEP or GEP while on COBRA would leave you unenrolled for months and expose you to the permanent LEP.

The first-year IRMAA trap

IRMAA surcharges are set based on your MAGI from two years prior. If you turn 65 in 2026 and Medicare begins in 2026, your Part B premium is determined by your 2024 income — likely your last full working year, when income was at its peak.

A person who earned $220,000 in 2024 and retired in early 2025 will pay IRMAA Tier 3 surcharges in 2026 ($4,620/year extra per person) — even though their 2026 retirement income is $85,000, well below the IRMAA threshold. The penalty is real but temporary: once the lower 2025 and 2026 income years flow through the two-year look-back in 2027 and 2028, premiums drop back to the base rate.

The look-back calendar for someone turning 65 in 2026:

You have two options when facing the first-year IRMAA trap: accept it as a transitional cost and wait it out, or file Form SSA-44 to reduce the surcharge using current-year income (see next section). If your 2024 income was only modestly above the IRMAA threshold, accepting the one-year surcharge may be simpler. If you were in the top two tiers, SSA-44 is almost always worth filing.

See the interactive calendar below to model your own situation, or see 2026 IRMAA brackets for the full tier table.

SSA-44 opportunity at transition

SSA Form 44 (Medicare Income-Related Monthly Adjustment Amount — Life-Changing Event) lets you ask Social Security to use a more recent year's income to set your Medicare premiums when a qualifying event substantially reduced your income. Retirement (work stoppage) is a qualifying event.⁴

If you retired in 2024 or 2025, you can file SSA-44 and ask SSA to use your expected 2025 or 2026 income to determine your premiums — instead of the 2024 peak-earnings figure currently driving your IRMAA determination.

What SSA-44 requires

• Documentation of the life-changing event: separation notice, final pay stub, employer letter, or signed retirement date confirmation
• A good-faith estimate of current-year income (SSA reconciles at tax time — overestimating slightly is safer than underestimating)
• Filed at any Social Security Administration office or by mail
• No filing fee; SSA typically processes within a few weeks

Full SSA-44 mechanics — including the seven qualifying events and appeal process — are covered in our IRMAA appeal guide.

Last-chance HSA contributions

If you had a high-deductible health plan (HDHP) through the ACA marketplace and contributed to a Health Savings Account (HSA), the Medicare transition ends your ability to make new HSA contributions. You cannot contribute to an HSA once enrolled in Medicare Part A or Part B.⁵

Part A retroactive enrollment trap

When you apply for Social Security benefits, Medicare Part A enrollment is automatic and retroactive up to 6 months. If you apply for SS at age 65 and Part A is backdated 6 months, you were technically "enrolled" in Part A 6 months ago — and any HSA contributions made during that period are excess contributions subject to a 6% annual IRS excise tax.

To continue HSA contributions past 65, you must delay both Medicare enrollment and Social Security enrollment. Delaying SS alone doesn't stop Part A retroactive enrollment if you later apply for SS at age 66 or 67.

See our full Medicare and HSA enrollment guide for the complete mechanics and prorated contribution calculation.

Maximize contributions before Medicare starts

In the calendar year you turn 65, you can make a prorated HSA contribution for the months you had HDHP coverage without Medicare. The 2026 limits are $4,400 (self-only HDHP) and $8,750 (family HDHP).⁵ If Medicare begins September 1, you can contribute 8/12 of the annual limit. Max this out before enrollment — the HSA balance you carry into retirement pays Medicare premiums, dental, vision, and most qualified medical expenses tax-free, with no expiration date.

Your Medigap guaranteed-issue window

Your Medigap Open Enrollment Period (OEP) is a 6-month window beginning on the first day of the month in which you are both age 65+ and enrolled in Part B. During this window, insurers must sell you any Medigap policy they offer without medical underwriting — no health questions, no denial, no surcharge for pre-existing conditions.⁶

After the OEP closes, most states allow full medical underwriting. If you have ongoing health conditions, history of serious illness, or any condition that would typically raise premiums or result in denial, buy Medigap during the OEP. You can always drop it if circumstances change; you cannot retroactively obtain it without underwriting once the window closes.

IRMAA look-back calendar

Enter your details below to see which income years will determine your Medicare premiums in each year of retirement.

What an advisor helps with at this transition

The marketplace-to-Medicare transition looks administrative on the surface — fill out forms, cancel one plan, enroll in another. The financial decisions compressed into this window are among the most consequential in retirement:

• SSA-44 analysis: Determining which income year produces the best result, whether your documentation is strong enough, and what income to estimate for the current year
• HSA optimization: Maximizing the final months of HDHP HSA contributions before Medicare enrollment, and coordinating the timing with Social Security delay
• Medigap vs. Medicare Advantage: Making the OEP decision with full information — network, travel plans, health history, and IRMAA projections over a 10–20 year horizon
• IRMAA forward planning: Modeling Roth conversion opportunities in the 1–2 years before Medicare starts, when income is lower and the two-year look-back creates a window to reduce lifetime IRMAA
• Income sequencing: Coordinating IRA withdrawals, Social Security timing, and capital gains realization to stay under IRMAA thresholds in the years that count

A fee-only advisor who specializes in Medicare focuses on the 5–10 year income picture across this transition — not just the enrollment forms. Most people navigate this transition once. Getting it right the first time saves real money.

Sources

1. IRS Publication 974 — Premium Tax Credit: Individuals eligible for minimum essential coverage through Medicare Part A are not eligible for the premium tax credit, even if they choose not to enroll in Medicare. Eligibility for premium-free Part A (40 quarters of covered employment) disqualifies a taxpayer from PTCs under IRC §36B. Verified June 2026.
2. Medicare.gov — When Does Medicare Coverage Start: Part B late enrollment penalty is 10% of the Part B premium for each 12-month period during which you could have had Part B but didn't, excluding periods of employer group health plan coverage. Penalty is permanent and paid for as long as you have Part B.
3. Medicare.gov — Special Enrollment Periods: 8-month Special Enrollment Period to enroll in Part B begins when group health plan coverage (including COBRA) ends. Note: COBRA termination starts the 8-month SEP; do not defer enrollment to GEP or AEP as this results in a coverage gap and triggers the late enrollment penalty.
4. SSA Form SSA-44 — Medicare Income-Related Monthly Adjustment Amount: Life-changing events that qualify for IRMAA adjustment include work stoppage (retirement), work reduction, marriage, divorce, death of spouse, loss of pension income, and loss of income-producing property. Retirement is explicitly listed. SSA will use the estimated current-year income if a qualifying event has occurred in a prior or current calendar year.
5. IRS Publication 969 — Health Savings Accounts and Other Tax-Favored Health Plans: An individual enrolled in Medicare Part A or Part B is not an eligible individual for HSA contribution purposes. 2026 contribution limits: $4,400 (self-only HDHP) / $8,750 (family HDHP), per IRS Rev. Proc. 2025-67. Prorated contributions allowed for partial years of HDHP eligibility. Part A retroactive enrollment up to 6 months applies when applying for Social Security retirement benefits.
6. Medicare.gov — Medigap Open Enrollment Period: The guaranteed-issue Medigap OEP is 6 months, beginning on the first day of the month you are age 65 or older and enrolled in Medicare Part B. Insurers may not deny coverage or charge higher premiums based on health status during this period. Outside the OEP, federal law permits medical underwriting in most states.

Values verified as of June 2026. IRMAA brackets per SSA POMS HI 01101.020. HSA contribution limits per IRS Rev. Proc. 2025-67. Consult a licensed advisor for guidance specific to your situation.