When approaching Medicare eligibility, many seniors are anxious about when they need to sign up for coverage. The Initial Enrollment Period is a seven-month period when those turning 65 can enroll in Medicare coverage. This period consists of the three months before the beneficiary turns 65, the month they turn 65, and the three months after they turn 65.
Enrolling in Medicare after your Initial Enrollment Period has ended is considered a late enrollment and often comes with a penalty in the form of a higher monthly premium. Medicare Part A, Part B, and Part D each carry a penalty for those enrolling outside the Initial Enrollment Period. Depending on the Medicare type, that penalty may be added to your premium for as long as you have Medicare.
Learn more about the late enrollment penalties for Medicare Parts A, B, and D—and how to avoid them.
Late Enrollment in Medicare Part A
Most beneficiaries are automatically enrolled in premium-free Medicare Part A when they become eligible. In cases where the beneficiary has a premium for Medicare Part A, they will not be automatically enrolled and will need to sign up.
A penalty is added to the monthly premium for those who sign up after their Initial Enrollment Period. The penalty for late enrollment in Part A is 10% of the premium payment, meaning the enrollee would pay their premium plus 10% each month.
The length of time the enrollee has to pay the penalty depends on how long they waited to enroll after they were eligible. They will pay the penalty for double the amount of time they were eligible but did not enroll. For example, if a senior eligible for Part A did not enroll for three years and then signed up, they would have to pay an additional 10% premium penalty for six years.
Late Enrollment in Medicare Part B
Some people are automatically enrolled in Medicare Part B when they become eligible. Those who are not will need to enroll in Part B during their Initial Enrollment Period. If they miss this period and do not have a special circumstance, they must pay a penalty.
The penalty for late Part B enrollment is up to 10% of the premium for each 12-month period they delayed enrollment. For instance, if an individual enrolled in Part B three years after first becoming eligible, they could pay 30% more for their monthly premium. Unlike Part A, Part B penalties last as long as you have Medicare.
Late Enrollment in Medicare Part D
Seniors can get Medicare prescription coverage by signing up for a Medicare Advantage plan that covers prescriptions or by enrolling in Medicare Part D. If they fail to enroll in Part D and do not maintain other credible prescription coverage, they will pay a lifetime penalty. This penalty is 1% of the “national base beneficiary premium” ($33.06 for 2021) for every month without Part D or other credible drug coverage.
What if I Still Have Coverage When I Become Eligible?
When a Medicare beneficiary becomes eligible, they may still have coverage under a group policy if they or their spouse is still working. In this situation, they can delay enrollment in Medicare without a penalty during a Special Enrollment Period when the group coverage ends. They will need to provide documentation to prove they previously had credible coverage before enrolling.
Final Thoughts
The simplest way to avoid Medicare late enrollment penalties is to enroll in all the Medicare coverage you want during your Initial Enrollment Period. Beneficiaries may also avoid the penalty if they enroll late because of a special circumstance (most commonly having other credible coverage when they became eligible). If unsure about when to enroll, beneficiaries should get help from a certified Medicare agent.
How Do I Learn More?
For information about Medicare enrollment procedures, deadlines, and premiums, contact Key Retirement Solutions. The experienced agents can assist you with any of your questions.
