In the months before your 65th birthday, Medicare will send you a packet in the mail that contains information about your Open Enrollment period. Your Open Enrollment period lasts a total of seven months: three months before your 65th birthday, the month of your 65th birthday, and three months after your 65th birthday. If you miss this enrollment period for any reason, you will be subject to a Medicare late enrollment penalty.
Medicare Late Enrollment Penalty
There are four parts of Medicare: Parts A, B, C, and D. There are different penalties for Parts A, B, and D. Learn more about each Part’s late enrollment penalties.
Medicare Part A Late Enrollment Penalty
Most Medicare beneficiaries automatically qualify for Medicare Part A when they turn 65. When you or your spouse works in the United States and pays Medicare taxes for at least 40 quarters (10 years), you are automatically eligible. If you are one of these people who automatically qualifies, you will receive Medicare Part A premium-free.
However, if you or your spouse do not qualify for automatic enrollment, you must buy it when you are first eligible. While you will not get this premium-free Part A, it is still essential for you to get Part A coverage. If you do not enroll when you are first eligible, then you will be subject to a Medicare Part A late enrollment penalty. This penalty increases your monthly premium by up to 10%. You would pay this increased penalty for double the amount of time you could have had Part A but did not sign up.
For example, if you did not sign up for Part A until the second year you are eligible, you will pay an increased premium for four years.
Medicare Part B Late Enrollment Penalty
Like Part A, some people qualify for automatic enrollment of Part B. If you receive Social Security or Railroad Retirement Benefits, it is likely that you qualify for this automatic enrollment. For those who do not qualify for automatic enrollment of Part B, you must enroll when you first become eligible. If you don’t, you will have to pay the Medicare Part B late enrollment penalty.
If you enroll late, you will have to pay a Part B penalty for as long as you have Part B. This penalty might increase up to 10% for each year you were eligible but did not enroll.
For example, if you waited five years to sign up for your Part B coverage, your penalty would be 50% of your monthly premium. Medicare adds this amount to your premium, and this is the price you will pay each month for coverage.
You are not required to enroll in Part B, but it is highly encouraged. Part B covers all outpatient medical expenses, so in the event you need to go to the doctor, your visits are not covered unless you have Medicare Part B.
Medicare Part D Late Enrollment Penalty
Medicare Part D is another example of elective Medicare coverage. You do not have to sign up for Medicare Part D, but it is highly encouraged. Part D covers the cost of your prescription drugs. Even if you are perfectly healthy now, there may be a chance in the future that you will need to take some type of prescription medications. If you do not sign up during your open enrollment period, you will be subject to a Medicare Part D penalty at the time you decide to sign up.
Your initial enrollment period for Part D is the same as Parts A and B. This period starts 3 months before your 65th birthday, and lasts through the month of, and three months after your 65th birthday.
Part D Penalties are more intricate and complicated than Part A or Part B penalties. For Part D, Medicare multiplies 1% of the national base beneficiary premium ($35.02 in 2018) times the number of months you did not have Part D or another type of prescription drug coverage (such as plans included in Part C or other drug plans). Medicare rounds this number to the nearest 10 cents and adds this number to your monthly premium.
For example. If you delay enrollment for 10 months, your multiplier would be .10 (because of the 10% penalty). You would then multiply this number by the national base ($35.02) and round it to the nearest 10 cents. In this example, the total penalty added to the monthly premium would be $3.50.
Medicare Late Enrollment Penalty Exceptions
If you qualify for a Special Enrollment Period, you might not have to pay a late enrollment penalty for Parts A and B. Most people who are still working when they become eligible for Medicare and do not enroll for this reason qualify for this Special Enrollment Period.
For example, if you or your spouse were covered by your job’s insurance plan and you recently stopped working, your Special Enrollment Period would start anytime while you are still covered by your job’s plan. It would end eight months after your employment coverage ends, starting the month after your employment coverage ends.
Late Enrollment Penalties for Medicare Supplement Plans
Medicare supplement plans do not have late enrollment penalties. After your Medicare Part B starts, you will enter a 6-month period in which you can enroll in a Medigap plan. Once this period ends, you will not have to pay a late enrollment penalty to receive a plan, however, you might have to undergo medical underwriting to get approved for a plan.
We can help you through the process of enrolling in your plans. We don’t want you to experience these late enrollment penalties. For any help or questions, please feel free to call us at (800) 310-2550. You can also view your Medicare supplement rates online.