Medicare Enrollment Penalties: Know the RisksPosted by Medicare Made Clear
It’s your choice whether or not to sign up for Medicare. But, as the Beatles sang about a love that could never die, some choices have long-term effects. These include when you sign up for Medicare coverage. You may have long-lasting penalties and higher costs if you don’t enroll at the right time.
But what are the penalties? That depends on the type of Medicare plan you’re talking about. Let’s take a look.
Please note: The penalties listed below may not apply to you if you (or your spouse) are still working, and you have primary health insurance through that employer. They also may not apply if you qualify for Extra Help. If you have questions about these penalties and how they apply to your situation, call the Medicare helpline at 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048. Help is available 24 hours a day, seven days a week.
If you qualify for Medicare Part A (hospital coverage) based on your or your spouse’s work record, there’s no penalty if you wait to enroll. But most of the time, there’s no reason not to enroll in Part A as soon as you’re eligible. It costs most people nothing to sign up, and most people don’t pay monthly premiums.
Medicare Part B (doctor visits) is different. If you wait to sign up for Part B past the time when you’re first eligible for it, you could incur a late penalty. The penalty permanently adds to the cost of your Part B premiums. It’s calculated at 10% for each year that you could have enrolled in Part B but did not. For example, if you delay five years, you’ll pay an extra 50% of the cost of that year’s premium. This penalty lasts for as long you pay for Medicare Part B coverage.
Medicare Part B is especially important if you (or your spouse) are 65 or older and still working. Once you retire, you may want to enroll in Part B within eight months (a “special enrollment period”), even if you are still covered by your employer’s health plan. Why? After you turn 65, a retiree health plan or COBRA only pays for medical expenses not covered by Medicare Part B. If you haven’t enrolled for Part B, then you need to pay those costs in full.
If you put off signing up for Medicare Part D (prescription drugs) beyond the time you’re first eligible for it, you could have a late penalty added to your premiums. The penalty amounts to 12% for each year (1% per month) that you could have had Part D or other “creditable prescription drug coverage” but did not. To avoid this penalty, it’s usually best to sign up for a Medicare Part D plan at the same time as you do Medicare Part B.
Medicare Advantage plans take the place of Original Medicare Parts A and B. So enrolling in a Medicare Advantage plan when you first become eligible would spare you Part B penalties. If the Medicare Advantage plan you choose also includes Part D coverage, then joining that plan when you’re first eligible would save you Part D penalties as well.
Ask for Help If You Need It
The rules for enrolling in Medicare are strict, and the costs of missing a deadline can be high. So if you’re putting off making a decision because you’re confused by the different options, get help.
For more information, contact the Medicare helpline 24 hours a day, seven days a week at 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048. If you have questions about Medicare Made Clear, call 1-877-619-5582, TTY 711, 8 a.m. – 8 p.m. local time, seven days a week.
Medicare Eligibility and Enrollment Windows – MedicareMadeClear.com
Medicare Decision Roadmap – MedicareMadeClear.com
Understanding Medicare Enrollment Periods – Medicare.gov
Y0066_120425_134430 File & Use 05052012