Medicare 2026

Self-Employed and Turning 65: What to Know About Medicare Enrollment and Taxes

If you work for yourself, turning 65 brings a set of questions a traditional employee usually doesn't face. You don't have an HR department to walk you through Medicare, and the health coverage you've been paying for may not do what a group plan at a large employer would do: let you safely delay Part B. Here's a plain-English look at how enrollment and taxes fit together when you're self-employed.

Why "self-employed" is a special case at 65

Medicare.gov tells self-employed people to ask their insurance provider whether their coverage qualifies as an employer group health plan under IRS rules. If it doesn't, you should enroll in Medicare when you turn 65 to avoid a monthly Part B late enrollment penalty that can stay with you for life.

That's a big deal because many self-employed people assume any health insurance "counts." It usually doesn't. Per Medicare & You 2027, an individual policy — including a Marketplace plan — does not count as active employer coverage for the purpose of delaying Part B.

There is a narrow situation in which a self-employed person can be treated as having group health plan coverage by virtue of current employment. Under federal Medicare Secondary Payer rules, you can be your own "employer," but only if your net earnings from the business in the preceding tax year met the Social Security Administration's definition of self-employment income. If that doesn't describe you, assume Medicare expects you to enroll on time.

Your enrollment windows

Most people first become eligible during their Initial Enrollment Period — the seven-month window around the 65th birthday month. If you miss it and don't qualify for a Special Enrollment Period based on true employer coverage, you may face the Part B late enrollment penalty and have to wait for the General Enrollment Period to sign up.

Once you're in Medicare, the Annual Enrollment Period runs October 15 – December 7, 2026 for coverage that starts January 1, 2027. During that window you can join, switch, or drop a Part D drug plan or a Medicare Advantage plan.

If you have Medicaid or Extra Help, you have additional flexibility. Since 2025, there's a monthly Special Enrollment Period that lets you move to Original Medicare with a stand-alone Part D plan, or switch stand-alone Part D plans. Full-benefit dual-eligible individuals can also enroll in an integrated D-SNP in any month.

Original Medicare + Medigap vs. Medicare Advantage

As a self-employed person, you'll choose a coverage structure like anyone else. Both paths have trade-offs, and only you can weigh them:

• Original Medicare (Parts A and B), often with a Medigap policy and a stand-alone Part D plan. You can generally see any provider nationwide that accepts Medicare. Medigap can smooth out cost-sharing, but it's an extra premium, and your ability to buy or switch Medigap outside your one-time guaranteed-issue window depends on federal and state rules.
• Medicare Advantage (Part C). These plans bundle Part A, Part B, and usually Part D, often with extra benefits. They typically use provider networks and require plan rules like referrals or prior authorization. Premiums, benefits, and networks vary by plan.

Neither is universally "better." Think about your providers, your prescriptions, your travel patterns, and your tolerance for network rules.

Part D and the 2027 out-of-pocket cap

If you take prescriptions, Part D matters. In 2027, the out-of-pocket cap on covered Part D drugs is $2,400 (it is $2,100 in 2026). The most any Part D plan may charge as a deductible in 2027 is $700. Actual plan premiums are set plan by plan; the national Part D base beneficiary premium for 2027 is $41.33, which is used to calculate the Part D late enrollment penalty.

Part B premiums and IRMAA for 2027

CMS typically announces the standard Part B premium, the Part B deductible, and the income-related monthly adjustment amount (IRMAA) brackets in the fall — usually November. Those 2027 figures have not yet been announced, so don't rely on estimates floating around online. Check Medicare.gov after the official release.

For context on cash flow: the Social Security Administration announced a 3.6 percent cost-of-living adjustment on October 14, 2026 for benefits payable beginning January 2027.

The tax side: what changes, what doesn't

Being on Medicare doesn't get you out of self-employment tax. The IRS is clear that the 15.3 percent self-employment tax — 12.4 percent for Social Security and 2.9 percent for Medicare — applies regardless of your age and whether you're already receiving Social Security or Medicare.

Two tax breaks are worth knowing:

1. The employer-equivalent deduction. Wage earners can't deduct their Social Security and Medicare taxes. Self-employed people can deduct the employer-equivalent portion of their self-employment tax when figuring adjusted gross income.

2. The self-employed health insurance deduction. Under the IRS's Form 7206 instructions for tax year 2025, Medicare premiums you voluntarily pay to insure yourself can be used to figure this deduction, which is reported on Schedule 1 (Form 1040). Generally, you need a net profit from self-employment (or qualifying partnership or S corporation income), and you can't include amounts for any month you were eligible to participate in a health plan subsidized by your own or a spouse's employer. Talk with a tax professional about your specific situation.

Where to go next

For official, up-to-date information — including the 2027 Part B figures and IRMAA brackets once CMS releases them — visit Medicare.gov or call 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048. For tax questions, work with a qualified tax preparer and refer to IRS guidance.

This article is educational only. It is not affiliated with any government agency and does not recommend specific plans.