Medicare decisions are made under time pressure, on deadlines that are unforgiving, and with consequences that can last the rest of a person’s life. Miss a Part B enrollment window without qualifying coverage and the penalty is permanent. Choose a Medicare Advantage plan at 65 and, in most states, you may be unable to return to a Medigap policy later without medical underwriting.
California is more forgiving than most states on that last point. The California “birthday rule” gives Medigap policyholders an annual window to change plans without underwriting — a protection most Americans do not have. California also runs a free, well-regarded counseling program, and it eliminated the asset test for the Medicare Savings Programs that help pay premiums.
This page explains how Medicare works for Californians and where it intersects with estate and long-term care planning. Because premiums, deductibles, and thresholds change every year, the figures are deliberately left out — confirm current amounts before acting. The Holmes Law advises California families on how Medicare fits with Medi-Cal, long-term care funding, and the rest of an elder law plan.
The Four Parts
- Part A — hospital insurance. Inpatient hospital stays, a limited skilled nursing facility benefit, hospice, and some home health care. Premium-free for most people based on work history.
- Part B — medical insurance. Physician services, outpatient care, preventive services, lab work, and durable medical equipment. Requires a monthly premium.
- Part C — Medicare Advantage. A private plan that replaces Original Medicare, must cover everything A and B cover, and usually bundles drug coverage and extras. Network-based.
- Part D — prescription drug coverage. A private stand-alone plan, or included in a Medicare Advantage plan.
The structural choice is between Original Medicare plus a Medigap policy plus a Part D plan, and Medicare Advantage. Original Medicare with Medigap means any provider in the country who accepts Medicare, predictable costs, and no referrals, at a higher monthly premium. Medicare Advantage means lower or no additional premium, a provider network, prior authorization requirements, and extras like dental and vision, with costs arriving when care is used.
Neither is universally correct. Someone who travels, splits time between states, or wants a specific specialist is usually better served by Original Medicare with Medigap. Someone who stays local, uses a network they like, and prefers a lower fixed cost may do better with Advantage.
Enrollment Windows and Penalties
The Initial Enrollment Period runs seven months — the three months before the month you turn 65, your birthday month, and the three months after. Someone already drawing Social Security is generally enrolled in A and B automatically. Everyone else must act.
A Special Enrollment Period lets you delay Part B without penalty if you have group health coverage based on current active employment, yours or your spouse’s, and enroll within eight months of that employment or coverage ending.
The word “active” carries the whole rule, and this is the most expensive Medicare mistake people make. COBRA, retiree coverage, and marketplace plans do not count. A 65-year-old who retires, elects COBRA, and delays Part B for eighteen months has not preserved a Special Enrollment Period. They will face a gap in coverage and a permanent penalty.
The Part B late enrollment penalty adds 10% to the monthly premium for each full 12-month period the person could have had Part B and did not — and it lasts as long as they have Part B. The Part D penalty accrues at 1% of the national base beneficiary premium for each month without creditable drug coverage and is likewise permanent. Someone who missed their window can enroll during the General Enrollment Period, January 1 through March 31, with coverage now beginning the month after enrollment.
Two Traps Worth Knowing
Health savings accounts. You cannot contribute to an HSA once enrolled in any part of Medicare, including premium-free Part A. Worse, when Part A enrollment is delayed and later applied for, coverage can be made retroactive up to six months. Contributions made during that retroactive period become excess contributions subject to penalty. Anyone still contributing to an HSA past 65 should stop several months before enrolling.
IRMAA. Higher-income beneficiaries pay an income-related monthly adjustment amount on top of the standard Part B and Part D premiums, based on modified adjusted gross income from the return filed two years earlier. That two-year lag matters for planning: a large Roth conversion, a business sale, or a big capital gain at 63 raises Medicare premiums at 65. Where income has dropped because of a qualifying life-changing event — retirement, work stoppage or reduction, marriage, divorce, death of a spouse, loss of income-producing property — the determination can be appealed to Social Security using Form SSA-44.
Medigap and the California Birthday Rule
Medigap — Medicare Supplement Insurance — covers the deductibles and coinsurance Original Medicare leaves behind. Plans are standardized by letter, so the coverage under a given letter is the same from any insurer and only the price and service differ.
The critical window is the Medigap Open Enrollment Period: six months beginning when you are 65 or older and enrolled in Part B. During it you have guaranteed issue — no medical underwriting, no refusal, no higher premium for health history. Once it closes, in most states an insurer may underwrite and decline you.
California adds a protection most states lack. Under the California birthday rule, a Medigap policyholder gets an annual window beginning on their birthday — currently 60 days — during which they may switch to a policy with equal or lesser benefits, with the same or a different insurer, without medical underwriting. This lets Californians shop for price every year rather than being locked into whatever they chose at 65, which over a retirement can be worth a great deal.
Note the limitation: equal or lesser benefits. The birthday rule does not let you upgrade to a richer plan without underwriting. California is also among the states that require insurers to make Medigap coverage available to at least some Medicare beneficiaries under 65 who qualify through disability — an option unavailable in much of the country, though premiums for that group can be substantially higher.
Medicare Advantage in California
California has one of the most competitive Medicare Advantage markets in the country, with plan availability varying sharply by county. A plan that is excellent in one county may not be offered in the next.
Two annual windows matter. Medicare Open Enrollment, October 15 through December 7, is when anyone can change between Original Medicare and Advantage, switch Advantage plans, or change Part D plans. The Medicare Advantage Open Enrollment Period, January 1 through March 31, allows someone already in an Advantage plan to switch to a different Advantage plan or return to Original Medicare — though returning to Original Medicare does not guarantee a Medigap policy will accept you, unless a guaranteed issue right or California’s birthday rule applies.
Special Needs Plans serve specific populations, and the most relevant in California are dual eligible plans for people who have both Medicare and Medi-Cal. California has been consolidating dual coverage into integrated Medicare and Medi-Cal plans, so a dual eligible beneficiary should review options carefully rather than assume last year’s arrangement continues.
Before choosing any Advantage plan, check three things: whether your doctors and hospital are in network for the coming year, whether your medications are on the formulary and at what tier, and what the plan’s maximum out-of-pocket is. Networks and formularies change annually, and the plan that fit last year may not fit now.
Part D and Recent Improvements
Part D underwent the most significant changes since its creation. Insulin cost-sharing is capped at a fixed monthly amount, recommended adult vaccines are covered without cost-sharing, and — most importantly for people with high drug costs — an annual out-of-pocket cap on Part D spending took effect in 2025, indexed each year thereafter. The old coverage gap, the “donut hole,” is gone as a separate phase.
A Medicare Prescription Payment Plan also allows beneficiaries to spread out-of-pocket drug costs across the calendar year in monthly installments rather than absorbing a large bill in January.
Extra Help, the low-income subsidy, substantially reduces Part D premiums, deductibles, and copayments for those who qualify, and it is widely underclaimed.
Help With Premiums: Medicare Savings Programs
The Medicare Savings Programs pay Medicare premiums and, in the case of the Qualified Medicare Beneficiary program, also cost-sharing. In California these are administered through Medi-Cal.
This is where California’s Medi-Cal reform reaches Medicare. Because the Medicare Savings Programs sit in the non-MAGI category, the elimination of the asset limit effective January 1, 2024 applies to them as well. A California Medicare beneficiary with modest income is no longer disqualified from premium assistance because of savings. Many Californians who were told years ago that they had too much in the bank are now eligible and do not know it. Enrollment in a Medicare Savings Program also brings automatic eligibility for Extra Help.
What Medicare Does Not Cover
The gap that matters most for elder law is long-term custodial care. Medicare’s skilled nursing benefit runs up to 100 days per benefit period, requires a qualifying three-day inpatient hospital stay — and observation status does not count — and ends when daily skilled care is no longer needed. Ongoing help with bathing, dressing, and supervision is not covered at all. That is Medi-Cal’s territory, or private pay, or long-term care insurance.
Original Medicare also does not cover most routine dental, vision, or hearing care, or care received outside the United States. Advantage plans often include limited dental and vision benefits, which is a genuine advantage of that route.
Appeals and Free Help
Medicare has a five-level appeal process, and appeals succeed often enough to be worth pursuing. Two are especially time-sensitive: when a skilled nursing facility or home health agency issues a notice that Medicare coverage is ending, an expedited appeal to the Quality Improvement Organization must be requested immediately — usually by the day before coverage ends. When a Medicare Advantage plan denies a service, an expedited reconsideration is available where waiting would jeopardize health.
California operates the Health Insurance Counseling and Advocacy Program (HICAP), the state’s federally funded counseling service, offering free, unbiased, one-on-one help with plan comparisons, enrollment, billing problems, and appeals. HICAP counselors do not sell insurance and receive no commissions, which distinguishes them from most people offering Medicare advice. It is the first call a California family should make.
Frequently Asked Questions
Can I delay Part B if I have COBRA?
No. COBRA and retiree coverage are not coverage based on current active employment, so they do not create a Special Enrollment Period. Delaying Part B on COBRA leads to a gap in coverage and a permanent penalty.
What is the California birthday rule?
An annual window beginning on a Medigap policyholder’s birthday — currently 60 days — during which they may switch to a policy with equal or lesser benefits, with any insurer, without medical underwriting.
Does Medicare pay for assisted living or a nursing home?
Not for custodial care. Medicare covers a limited skilled nursing benefit after a qualifying hospital stay. Assisted living is not covered. Long-term nursing facility care is generally paid privately, by long-term care insurance, or by Medi-Cal.
Do my savings affect Medicare?
Medicare itself is not means-tested — assets do not affect eligibility. Income affects premiums through IRMAA. And for the Medicare Savings Programs that help pay premiums, California eliminated the asset limit effective January 1, 2024.
The facility says Medicare is cutting off my mother’s coverage. Can we do anything?
Yes. Request an expedited appeal to the Quality Improvement Organization immediately — the deadline is generally the day before coverage is set to end. These appeals are sometimes successful, and HICAP can help.
Speak With a California Elder Law Attorney
Medicare is one piece of a larger picture that includes Medi-Cal, long-term care funding, incapacity documents, and the estate plan. The Holmes Law helps California families fit those pieces together, including how Medicare and Medi-Cal interact for dual eligible beneficiaries and how income planning affects both IRMAA and share of cost.
To discuss elder law planning, contact the office. You may also want to review our pages on California elder law, CA long-term care, CA Medicaid planning, and CA veterans benefits.