Medicare provides high-quality healthcare for senior citizens across the country. With that being said, there are penalties that you can incur if you enroll in Medicare too late or outside of the Initial Enrollment Period.
When Is the Initial Enrollment Period?
Your Initial Enrollment Period is a 7-month period that starts three months before you turn 65 and lasts for three months after. During this period, you can enroll in the following coverage options:
- Medicare (Parts A and B)
- Stand-alone Medicare prescription drug plan (Part D)
- Medicare Advantage plan (Part C)
You may be eligible for Medicare earlier than 65 if you have a disability, end-stage renal disease (ESRD), or ALS (also called Lou Gehrig’s disease).
What Are Medicare Late Enrollment Penalties?
Medicare late enrollment penalties are penalties or charges you incur when enrolling for Medicare outside the designated enrollment periods. If you miss the designated enrollment period, you may experience delays in receiving your coverage.
If you miss your Initial Enrollment Period, here are some of the penalties you can incur:
Part A Late Enrollment Penalty
If you buy Medicare Part A coverage outside your Initial Enrollment Period, your monthly premium will increase by 10%. This 10% penalty on your monthly premiums will need to be paid for twice the number of years you didn’t sign up for Part A, even though you were eligible.
Part B Late Enrollment Penalty
If you qualify for a Special Enrollment Period (SEP), you won’t be required to pay a Part B late enrollment penalty. However, if you do not qualify for a SEP and you missed your Initial Enrollment Period, you will pay 10% extra for each year you could have signed up for Part B but didn’t. You may also have to pay a higher premium depending on your income.
Part D Late Enrollment Penalty
You won’t need to pay the late enrollment penalty for Medicare Part D if you have creditable drug coverage or qualify for Extra Help.
The standard late enrollment penalty for Medicare Part D includes an extra 1% per month if you don’t join Part D when you first get Medicare or if you go 63 days or more without creditable drug coverage.
In the case of Part D late enrollment, you may also be required to pay a higher premium depending on your income level. After joining a Medicare Part D plan, you will be informed if you have to pay a penalty and how much your premiums will be.
How Can You Avoid Paying Late Enrollment Penalties?
The simplest way to avoid paying any late enrollment penalties is to make sure you enroll when you’re eligible during your Initial Enrollment Period. Apart from that, it’s always good to ensure that your employer coverage is considered creditable for Medicare Parts B and D.
If you would like more assistance navigating your Initial Enrollment Period and avoiding late enrollment penalties, contact us today!