Enrollment and Penalties
Understanding enrollment periods and potential penalties for late enrollment in Medicare is crucial, as missing these deadlines can result in higher costs over time. Here’s how penalties can apply for late enrollment or non-enrollment in different parts of Medicare:
Part A (Hospital Insurance)
Who it affects:
Most people don’t pay a premium for Part A if they or their spouse paid Medicare taxes while working. For these individuals, there is no late enrollment penalty.
For those who pay premiums:
If you aren’t eligible for premium-free Part A and you don’t buy it when you’re first eligible, your monthly premium may go up 10%. You will have to pay the higher premium for twice the number of years you could have had Part A but didn’t sign up.
Part B (Medical Insurance)
Penalty:
If you don’t sign up for Part B when you’re first eligible, you could be subject to a late enrollment penalty. This penalty is an additional 10% for each full 12-month period that you could have had Part B but didn’t sign up for it. The penalty is lifetime and will be added to your monthly Part B premium for as long as you have Medicare.
Avoiding the penalty:
You can avoid this penalty if you or your spouse are still working and you have health insurance through an employer or union. When this coverage ends, you have a Special Enrollment Period (SEP) to sign up without penalty.
Part B (Medical Insurance)
Penalty:
If you don’t sign up for Part B when you’re first eligible, you could be subject to a late enrollment penalty. This penalty is an additional 10% for each full 12-month period that you could have had Part B but didn’t sign up for it. The penalty is lifetime and will be added to your monthly Part B premium for as long as you have Medicare.
Avoiding the penalty:
You can avoid this penalty if you or your spouse are still working and you have health insurance through an employer or union. When this coverage ends, you have a Special Enrollment Period (SEP) to sign up without penalty.
Part D (Prescription Drug Coverage)
Penalty:
If you don’t join a Medicare Prescription Drug Plan when you’re first eligible and you don’t have other credible prescription drug coverage, or you go 63 or more days in a row without prescription drug coverage, you may owe a late enrollment penalty. This penalty is calculated by multiplying 1% of the “national base beneficiary premium” ($32.74 in 2023) times the number of full, uncovered months you were eligible but didn’t join a Medicare drug plan and didn’t have credible coverage. This extra amount is also added to your Part D premium for as long as you have Medicare Part D.
Avoiding the penalty:
Maintaining credible drug coverage or joining a Part D plan when first eligible can help avoid this penalty.
Part C (Medicare Advantage)
Penalty relevance:
Medicare Advantage plans cover everything Original Medicare does and sometimes more, including drug coverage. Late enrollment penalties for Part B and Part D also apply to Medicare Advantage plans if they include this coverage.
General Tips:
Know your Initial Enrollment Period (IEP): This is a 7-month period that begins three months before the month you turn 65, includes the month you turn 65, and ends three months after that month.
Review during Open Enrollment:
Each year, during the Annual Enrollment Period (October 15 to December 7), you can change or enroll in different Medicare plans, which can help you avoid gaps in coverage.
Part C (Medicare Advantage)
Penalty relevance:
Medicare Advantage plans cover everything Original Medicare does and sometimes more, including drug coverage. Late enrollment penalties for Part B and Part D also apply to Medicare Advantage plans if they include this coverage.
General Tips:
Know your Initial Enrollment Period (IEP): This is a 7-month period that begins three months before the month you turn 65, includes the month you turn 65, and ends three months after that month.
Review during Open Enrollment:
Each year, during the Annual Enrollment Period (October 15 to December 7), you can change or enroll in different Medicare plans, which can help you avoid gaps in coverage.
Understanding these rules and managing your enrollment periods effectively can help you avoid unexpected penalties and ensure that you have health coverage when you need it.