How Railroaders Should Plan for Railroad Medicare

Getting Ready for Railroad Medicare: 8 Steps Every Railroad Retiree Should Take

By John McNamara | Highball Advisors

Turning 65 is an important milestone, especially for railroad employees and their families who are preparing for retirement. Medicare can provide valuable health coverage, and many people look forward to transitioning from employer-sponsored insurance to Medicare.

But enrolling in Medicare isn't simply a matter of reaching your 65th birthday and signing up. The decisions you make about enrollment, prescription coverage, supplemental insurance, health savings accounts, and retirement income can affect both your health coverage and your long-term financial plan.

Railroad Medicare follows the same basic federal Medicare coverage rules as Medicare for other beneficiaries. The Railroad Retirement Board (RRB) helps eligible railroad retirement beneficiaries enroll and handles certain Medicare-related responsibilities, while the Centers for Medicare & Medicaid Services (CMS) oversees the Medicare program.

If you're approaching 65, already eligible for Medicare, or planning to continue working beyond 65, here are eight important steps to consider.

1. Start Planning Six to Twelve Months Ahead

One of the biggest mistakes you can make is waiting until your 65th birthday to think about Medicare.

A little advance planning gives you time to understand your options, compare costs, and avoid gaps in coverage.

Start by making a list of your current healthcare needs:

• Which doctors, specialists, and hospitals do you want to continue using?
• What prescription medications do you take?
• Do you anticipate any major medical expenses?
• Will you continue working, or are you planning to retire?
• Will your spouse or other family members need to remain on your existing health plan?

Next, learn about the different parts of Medicare and the coverage options available to you.

For most people who qualify based on age, the initial Medicare enrollment period lasts seven months: the three months before the month they turn 65, their birthday month, and the three months afterward. Enrolling at the appropriate time helps you avoid unnecessary delays and potential late-enrollment penalties.

If you're already receiving railroad retirement benefits, you may be automatically enrolled in Medicare Parts A and B when you become eligible. Because Part B carries a monthly premium, you should review the enrollment information you receive and understand your options before making a decision.

The takeaway: Treat Medicare as part of your retirement-planning process, not as a last-minute task.

2. Coordinate Medicare With Your Employer Health Coverage

Are you planning to retire at 65, or do you intend to keep working? Your answer can make a significant difference in how Medicare fits into your healthcare coverage.

If you retire before 65, you may need another source of insurance until Medicare eligibility begins. Depending on your circumstances, options could include coverage through a spouse's employer, COBRA continuation coverage, or an Affordable Care Act Marketplace plan.

If you continue working after 65, the rules depend on the type of coverage you have and whether it is based on current employment.

For people age 65 or older with qualifying group health coverage based on current employment:

• Employers with 20 or more employees: The employer group health plan generally pays first, and Medicare pays second.
• Employers with fewer than 20 employees: Medicare generally pays first, and the employer plan pays second.

These rules have exceptions, including certain multiple-employer arrangements, so verify your situation with your benefits administrator.

If you have qualifying coverage through your own or your spouse's current employment, you may be able to delay Part B without a late-enrollment penalty. When that employment or coverage ends, an eight-month Special Enrollment Period generally applies, subject to the program's rules.

Be particularly careful with COBRA. COBRA is not generally treated like active-employment coverage for purposes of delaying Part B without a penalty. You may need to enroll in Medicare even while COBRA coverage is available.

Before making a decision, speak with your employer's benefits department and confirm how your coverage coordinates with Medicare. Do not cancel existing insurance until you know when replacement coverage will begin.

The takeaway: Never assume that working past 65 means you should automatically delay Medicare, or that keeping employer insurance means you can safely ignore enrollment deadlines.

3. Protect Your Health Savings Account (HSA)

If you have a Health Savings Account, Medicare enrollment requires special attention.

An HSA lets eligible individuals save money on a tax-advantaged basis for qualified medical expenses. However, you generally cannot contribute to an HSA for any month in which you have Medicare coverage.

The issue can become more complicated if you delay Medicare enrollment until after age 65.

When you enroll in premium-free Medicare Part A after turning 65, coverage can be retroactive for up to six months, but not earlier than the month you first became eligible. That retroactive coverage can affect the months in which you were eligible to make HSA contributions.

As a result, contributions made during months when Medicare coverage applies could create tax complications or potential excess contributions.

If you plan to keep working and contributing to an HSA, coordinate your Medicare enrollment date with your tax professional. Determine when contributions should stop, and account for any potential retroactive Part A coverage before applying.

The takeaway: Do not assume that you can keep contributing to your HSA simply because you are still working. Plan the timing carefully.

4. Understand the Difference Between Medigap and Part D

Medicare has several parts, and two of them deserve particular attention when you're choosing your coverage: Medigap and Medicare Part D.

Medigap: Supplemental medical coverage

Original Medicare includes Part A, which primarily covers inpatient hospital care, and Part B, which covers physician services and other outpatient medical care.

Original Medicare does not pay every covered healthcare expense in full. A Medigap policy, also called Medicare Supplement Insurance, is private insurance that can help pay certain deductibles, coinsurance, and copayments left by Original Medicare.

Medigap policies do not generally cover outpatient prescription drugs.

Medicare Part D: Prescription drug coverage

Part D provides outpatient prescription drug coverage through private plans that contract with Medicare. Coverage, premiums, formularies, pharmacy networks, and out-of-pocket costs can vary by plan.

Medigap and Part D solve different problems, so evaluate them separately.

If you choose Original Medicare with Medigap, remember that your ability to buy or change a Medigap policy without medical underwriting can depend on when you apply and which federal or state protections apply. Your initial Medigap open enrollment period generally lasts six months, beginning when you are at least 65 and enrolled in Part B.

The takeaway: Think about your medical coverage and prescription coverage as separate decisions that must work together.

5. Review Your Prescription Costs Every Year

Prescription costs can make a meaningful difference in your retirement budget.

A plan that works well this year may not be the best choice next year. Plans can change premiums, formularies, preferred pharmacies, and cost-sharing arrangements. Your medication needs may change, too.

During the annual Medicare Open Enrollment Period, review your Part D options and compare them with your current plan.

Consider the following questions:

• Are all your medications covered?
• Are your medications placed in affordable formulary tiers?
• Does your preferred pharmacy offer competitive pricing under the plan?
• Are prior authorization, step therapy, or quantity limits required?
• What are your estimated total annual costs, including premiums and prescription copayments?

Compare the total expected cost of your prescriptions, not just the monthly premium. A plan with a lower premium may cost more overall if your medications have higher copayments or less favorable coverage.

Medicare's drug-pricing policies have also changed in recent years, including negotiated prices for certain selected drugs. However, those negotiations do not mean every prescription's price is automatically reduced. Your actual costs depend on the medication, coverage, and applicable program rules.

The takeaway: Review your prescription coverage every fall rather than automatically renewing your existing plan.

6. Check Whether You Qualify for the Medicare GLP-1 Bridge

As of October 2026, a new program is available for certain Medicare beneficiaries seeking eligible GLP-1 medications for weight management.

The Medicare GLP-1 Bridge is a temporary federal demonstration program that began July 1, 2026, and is scheduled to continue through December 31, 2027.

Eligible beneficiaries enrolled in qualifying Medicare Part D prescription drug coverage may be able to obtain certain covered GLP-1 medications for weight management for a $50 copayment per month.

However, this is not blanket coverage for every GLP-1 medication or every person who wants a weight-loss prescription. Eligibility requirements apply, and only specified medications and formulations qualify under the program.

The Bridge operates outside the standard Medicare Part D benefit and payment process. Its $50 copayment does not count toward the Part D deductible or the Part D out-of-pocket spending limit.

If you're interested in the program, check the official Medicare GLP-1 Bridge information at Medicare.gov and speak with your healthcare provider about eligibility and appropriate treatment.

The takeaway: If GLP-1 medication is part of your healthcare planning, investigate the current eligibility rules rather than assuming your standard Part D plan will cover it.

7. Plan Ahead for IRMAA and Retirement Income

Medicare planning is also tax planning.

The Income-Related Monthly Adjustment Amount, commonly called IRMAA, is an additional amount that some higher-income beneficiaries pay on top of their standard Medicare Part B and Part D premiums.

For most beneficiaries, Social Security uses federal income tax return information from two years earlier to determine whether IRMAA applies. For example, 2026 Medicare premiums generally use 2024 tax return information.

That means financial decisions made today may affect your Medicare premiums in a later year.

Consider a few examples:

• Taking a large distribution from a traditional IRA or 401(k).
• Realizing substantial capital gains from selling investments.
• Converting traditional retirement assets to a Roth IRA.
• Receiving other income that increases your modified adjusted gross income.

Depending on your circumstances, these decisions could push your income above an IRMAA threshold and increase your Medicare premiums.

That does not mean you should automatically avoid a distribution, Roth conversion, or investment sale. The right decision depends on your broader tax and retirement goals. In some cases, spreading income across multiple tax years may help manage the impact, but the result needs to be calculated rather than assumed.

There is also an important distinction between a high-income year and a life-changing event. If your income has fallen because of a qualifying event, such as retirement that reduces your work income, you may be able to ask Social Security to reconsider an IRMAA determination using Form SSA-44.

The takeaway: Coordinate retirement distributions, tax planning, and Medicare premium planning well before the year in which the premiums will be determined.

8. Avoid the One-Size-Fits-All Approach

There is no single Medicare strategy that works for every railroad retiree.

Your best approach depends on your health, budget, prescription needs, current coverage, travel plans, and tolerance for financial uncertainty.

As you compare your options, consider:

• Your healthcare providers: Will your preferred doctors and hospitals accept your chosen coverage?
• Your prescription needs: Are your medications covered at an affordable total annual cost?
• Your budget: Can you comfortably afford premiums, deductibles, copayments, and other out-of-pocket expenses?
• Your travel plans: Will your coverage work when you travel within the United States or spend time abroad?
• Your spouse's coverage: Will your decisions affect insurance for your spouse or other dependents?
• Your financial plan: How will healthcare expenses fit into your retirement cash flow and tax strategy?
• Your preferred coverage structure: Do you prefer Original Medicare with supplemental coverage, or are you considering a Medicare Advantage plan?

Each option has trade-offs. Original Medicare with Medigap may provide broad access to providers who accept Medicare, while Medicare Advantage plans can offer different benefits, costs, and provider-network restrictions. Neither choice is automatically right for everyone.

Also remember that Medicare does not cover most long-term custodial nursing-home care. If long-term care is a concern, it deserves a separate discussion as part of your retirement plan.

The goal is not simply to enroll in Medicare. It is to choose coverage that fits your needs today and can be reviewed as those needs change.

Final Thoughts: Get on Track Before You Turn 65

For railroad employees and their families, Medicare is an important part of the transition into retirement. A little preparation can help you avoid enrollment mistakes, coordinate insurance effectively, manage prescription costs, and understand how your income may affect your premiums.

Start early. Ask questions. Review your coverage each year. And make sure your healthcare decisions fit into your larger retirement strategy.

At Highball Advisors, we help railroad employees prepare for the financial decisions that come with retirement, including planning for healthcare expenses and understanding how different choices may affect their overall retirement picture.

If you're approaching Medicare eligibility or already enrolled and want to review your retirement plan, consider scheduling a conversation with Highball Advisors.

Until next time, railroaders: stay safe, stay on track, and take care.

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Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. Highball Advisors encourages you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Highball Advisors, and all rights are reserved from Highball Advisors, and all rights are reserved.