Will I Pay Penalties if I’m Late to Enroll in Medicare?
If you’re approaching Medicare eligibility, you may have a lot of questions about the rules, coverage, costs, and when to sign up. The regulations can seem strict, but understanding a few important factors can help you avoid any major problems or penalties.
Let’s dive into the rules together and learn more about the enrollment deadlines and potential late fees.
Should I Sign up for Medicare As Soon as I Turn 65?
The right time to sign up varies for everyone. But in general, it’s a good idea to enroll in Medicare as soon as you are eligible. The Initial Enrollment Period starts three months before you turn 65 and ends three months after you turn 65.
Here are a few things to consider as you approach Medicare eligibility:
- Most people who worked and paid taxes will not pay a premium for Medicare Part A (hospital insurance). The insurance will be premium-free even if you still have coverage through an employer.
- Medicare Part B (medical insurance) has a monthly premium — an average of $164.90 per month in 2023. However, this premium can increase depending on your income.
- Although you may feel you don’t need Medicare Part B, you could pay a late enrollment penalty when you do enroll later. This penalty is reflected in a higher monthly premium.
- Medicare Part D (prescription drug coverage) also has late enrollment penalties if you don’t already have coverage from an employer or another source.
What Happens if I Don’t Enroll Right Away?
If you don’t enroll in Medicare when you are first eligible, you could pay a penalty. Medicare charges these penalties to encourage people to sign up when they are first eligible, even if they are healthy. The premiums healthy people pay can help offset the costs of individuals using more Medicare services and benefits.
Part A Penalties
If you’re not eligible for free Part A coverage because of your work history, you will pay a penalty on your monthly premium if you don’t sign up when you’re first eligible.
The penalty can increase your premium by 10% and you will have to pay that penalty for twice the number of years you didn’t sign up for Part A.
Part B Penalties
You will also pay a penalty on your Part B monthly premium if you don’t sign up when you’re first eligible. Your premium may increase 10% for every 12-month period you could have had Part B but didn’t sign up.
The Part B penalty is not a one-time fee — you will pay it in higher monthly premiums for as long as you’re enrolled.
Part D Penalties
Like Part B, the Part D late enrollment penalty is something you will pay for as long as you’re enrolled in the Part D plan. The penalty will depend on how long you went without Part D or other prescription drug coverage.
The Part D late enrollment penalty is based on 1% of the “national base beneficiary premium,” which is about $33 in 2023. Then, Medicare multiplies that by the number of months you didn’t have prescription drug coverage and rounds to the nearest $.10. That amount is added to your monthly Part D premium.
Because the national base beneficiary premium changes each year, this penalty can also change yearly.
What if I Still Have Coverage Through an Employer?
If you’re still working when you turn 65 and have group health coverage through your employer, you may be able to delay Medicare enrollment without penalties. You may also be able to delay enrollment if you’re covered under a spouse’s work plan.
With group health coverage, you may qualify for a Special Enrollment Period (SEP) if your coverage ends. The SEP allows you to sign up for Medicare Part and B when certain events happen in your life, such as losing coverage or moving. Generally, the SEP lasts for eight months after your coverage ends.
Before making a final decision on your coverage, take time to explore and understand your options. Talk to your plan administrator to learn more about how it works with Medicare, the best time to enroll, and how you can avoid a penalty.
If you’re interested in learning whether Medicare is right for you, we’re ready to help. Are you ready to talk to one of our specialists about Medicare plans? Please call us at 305.541.5366 to schedule an appointment or learn more about the Medicare plans offered through Leon Health.