Enrollment penalties for Medicare can affect your healthcare costs for years to come – and some do so for the lifetime of your enrollment. Whether you forgot to enroll during the Initial Enrollment Period or end up lacking credible coverage from your employer when working past 65, you could face penalties for Medicare Part A, Part B, and Part D.
If you’re late enrolling and do not qualify for a special enrollment period, the costs could add up to thousands over the years. To help you avoid this costly mistake, we’ve compiled answers to all-too-unfortunate questions regarding late enrollment penalties.
Is it possible to avoid late enrollment penalties altogether?
First things first: Planning ahead can help ensure that you don’t face the possibility of late enrollment penalties. To do so, make sure that you:
- Enroll during your Initial Enrollment Period (which starts three months before you turn 65)
- Make certain your employer coverage is credible (if still employed)
- Get written proof that you have credible prescription coverage
- Enroll in Part D within the first two months of your Special Enrollment Period (if qualified)
- Work with a Medicare agent to ensure that you’ve crossed your T’s and dotted those I’s
What happens if I miss a Medicare deadline?
They say that the best-laid plans of mice and men often go awry. And the same goes for your Medicare enrollment. Sometimes life gets in the way. If you’ve missed a deadline, it’s essential to understand what types of late fees you could face. The bottom line is: You can accrue penalties for Medicare Part A, Part B, and Part D.
Here’s how they work:
Part A – If you do not enroll in your Initial Enrollment Period, you could face a 10% penalty for 2x the number of years that you did not enroll.
Example: You became eligible to enroll in Part A in 2017 but did not enroll until 2021. Your penalty would present itself as the extra 10% for eight years!
Part B – If you do not sign up for Part B during your Initial Enrollment Period, you might face a 10% late enrollment penalty imposed for each 12-month period that you delayed enrollment.
Example: You did not enroll in Part B for the first two years of your Medicare coverage. You then would pay 20% more for your Part B premium. And because the premium is based on each year’s standard premium, each increase in your premium means an increase in the penalty – for life!
Part D – If you do not enroll in Part D coverage during your Initial Enrollment Period, you can face a penalty of 1% for each month you went without Part D or other qualifying prescription coverage (rounded to the nearest $0.10).
Do I have options?
Understanding the rules and how they can work for your situation regarding Medicare enrollment is key. The good news is that there are safeguards in place to help when your Medicare situation does not align with the set timelines.
Consider your options for Part A, Part D, and Part C enrollments:
Part A – There are two ways to avoid Part A premiums when enrolling outside of the standard enrollment period: (1) You had qualifying coverage through your employer or your spouse’s employer, or (2) you qualify for a Special Enrollment Period (SEP).
Part B – If you have qualifying health insurance coverage (such as a large employer group health plan), you can delay part B while covered because your employer plan is primary and Medicare is secondary.
Part D – There are two circumstances in which you can avoid late fees for Part D – (1) You qualify for the Extra Help program that subsidizes the costs of Part D for low-income individuals or (2) You’ve had credible coverage through an employer or spouse.
Worried You’ll Incur a Late Enrollment Penalty?
Don’t risk incurring late enrollment penalties for Medicare. Instead, schedule an appointment with one of our licensed Medicare advisors, who can help you make the best Medicare decision based on your situation.