When to Apply for Medicare & How to Avoid Late Penalties

How to Avoid the Medicare Late Enrollment Penalty

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Medicare Late Enrollment Penalty

Three months before your 65th birthday, you will receive information in the mail about your Medicare open enrollment period. This enrollment period lasts the three months before, the month of, and three months after your 65th birthday. If you apply for Medicare outside of this period, you may be subject to a Medicare late enrollment penalty.

What is the Medicare Late Enrollment Penalty?

There are different penalties for each part of Medicare. Medicare consists of four parts: Part A, Part B, Part C and Part D. Late enrollment penalties incur for the delayed enrollment in Parts A, B, and D. Learn more about the late enrollment penalties for each part.

Medicare Part A Late Enrollment Penalty

It is common and likely that you will automatically qualify for Medicare Part A when you turn 65. If this is the case, often times you will receive Part A premium-free. You are automatically eligible for a premium-free Part A if you or your spouse worked at least 40 quarters (10 years) in the United States.

If you or your spouse do not meet the requirements to qualify for a premium-free Part A, you must buy it when you are first eligible. If not, you will be subject to the Medicare Part A late enrollment penalty. This penalty increases your monthly premium by up to 10%. You will have to pay this increased premium for double the number of years you could have had Part A but did not sign up.

For example, if you qualified for Part A for three years but didn’t sign up until the third year, you will have to pay an increased premium for six years.

Medicare Part B Late Enrollment Penalty

Much like Part A, many people receive automatic enrollment in Part B. This is likely if you are already receiving Social Security or Rail Road Benefits. If you are not automatically enrolled in Part B, you must enroll when you become eligible. If you wait too long, you will be subject to pay the Medicare Part B late enrollment penalty.

Unlike Part A, you will have to pay a Part B penalty for as long as you have Part B. Your penalty has the potential to increase up to 10% for every year you were eligible but did not sign up.

For example, if you were eligible for Part B for four years before you signed up, your penalty would be 40% of your monthly premium. Medicare adds this amount to your monthly premium.

Remember: Part B is completely elective. You are not required to enroll in Part B, but it is encouraged.

Medicare Part D Late Enrollment Penalty

You will not be automatically enrolled in Part D; you must enroll yourself. Part D is prescription drug coverage. It is not required, but it is encouraged that you enroll. The enrollment period for Part D is the same as Parts A and B, which is three months before your 65th birthday, the month of your 65th birthday, and three months after your 65th birthday.

For Part D, you may be subject to a penalty if you do not enroll during your initial enrollment period and you do not have any credible prescription drug coverage. Medicare considers programs such as Medicare Part C (Medicare Advantage) or any other Medicare health plan that offers prescription drug coverage as credible prescription drug coverage.

Part D penalties are more complicated than those of Parts A or B. Medicare multiplies 1% of the “national base beneficiary premium” ($35.02 in 2018) times the number of months you didn’t enroll in Part D or have coverage. This premium is rounded to the nearest 10 cents.

For example, if you do not enroll for 20 months, your multiplier is .20 (20% penalty). This number would be multiplied by the national base ($35.02) and rounded to the nearest 10 cents. This totals to $7.00. This $7.00 penalty would be added to your monthly premium.

Are There Any Exceptions to the Medicare Late Enrollment Penalties?

For Parts A and B, you may not have to pay a late enrollment penalty if you qualify for a Special Enrollment Period. You might qualify for a Special Enrollment Period if you were eligible for Medicare but did not take it because you were still working. This would exempt you from penalties.

For example, if you or your spouse recently stopped working and were previously covered by your job’s insurance plan, your Special Enrollment Period begins anytime you are still covered by your job’s plan, or during an eight-month period starting the month after your employment or your coverage ends.

For Part D, you will not have to pay a late enrollment period if you qualify for Extra Help.

Is There a Late Enrollment Penalty for a Medicare Supplement Plan?

There are not late enrollment penalties for Medicare supplement plans. Your enrollment period for a Medicare supplement plan starts once you enroll in Part B and lasts six months. While you will not have to pay a late enrollment penalty if you miss your enrollment period, you will have to undergo medical underwriting when applying for your Medicare supplement plans. Feel free to view your Medicare supplement rates online.

How GoMedigap Can Help

 If you have any questions about your enrollment periods, feel free to contact one of our friendly agents at (800) 310-2550. They can walk you through the process. Additionally, we can help you purchase your Medicare supplement plan during your enrollment period and discuss which plans meet your needs.

Compare Your Medicare Supplement Rates Immediately!

2 Replies to “How to Avoid the Medicare Late Enrollment Penalty”

  1. Im 67 year old and will be 68 in June of 2019 I retired on December 31, 2018 but my health insurance was through my wife employer. My wife is till working and her policy still covers us both. Am I required to sign up for Medicare now ? do I face a penalty if I don’t ?

    1. Hi Hugh,

      You are not required to start Medicare if you have credible coverage through your wife’s insurance. If you would like us to assess your personal situation more thoroughly, and go over the steps you will need to take when you are ready to get onto Medicare, you can give us a call at (800)310-2550.

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