This article is part of an ongoing series of informative Medicare guest posts written by MedicareFAQ. Don't wait too long to enroll in Medicare. You don't want penalties. - Carol
Navigating through the waters of Medicare can be intimidating, but you still should enroll when you’re first eligible because Medicare will impose lasting penalties if you delay enrollment.
You Could Be Eligible for Medicare Part A & B
For Medicare Beneficiaries eligible for Medicare and turning 65, there is a 7-month window in which to review your options and enroll in Medicare Parts A and B.
The period starts three months before the month you turn 65, which includes the month in which you turn 65 and the three months after your 65th birth month.
If you have one of the following, you could be eligible for Medicare prior to age 65:
- End-Stage Renal Disease (ESRD)
- Amyotrophic Lateral Sclerosis (Lou Gehrig’s disease)
- You are under age 65 and have a disability
If any of the above situations apply to you, speak to a licensed agent to discuss your options.
There are instances when a Medicare Beneficiary is automatically signed up for Medicare Part A and Medicare Part B however, most people will need to actively decide to enroll in Parts A and B. A quick outline of those penalties follows with a more detailed review below.
The Truth About Medicare Penalties
When you’re first eligible for Medicare, enrolling in coverage means you avoid a number of possible penalties.
Some of the penalties associated with Medicare include:
- Late enrollment in Part A
- Part B penalties
- Lack of creditable prescription drug coverage penalties
There are exceptions to penalties; for example, if you have “creditable coverage”, then the late enrollment penalty may not impact you.
Avoiding the Part A Penalty
For some Medicare Beneficiaries, Part A is free. You may even experience automatic enrollment. However, there are some who aren’t eligible for premium-free Part A and those people will be required to pay a premium.
If you don’t enroll when first eligible, you will be penalized. For example, if a Medicare Beneficiary was eligible for premium imposed Part A and waited 12 months to enroll in Part A, the penalty is expected to be an additional 10% for 24 months.
You likely want to keep your monthly expenses at a minimum, knowing when you’re required to enroll in Medicare Part A will make it easier for you to avoid extra cost. otherwise, you could be paying extra dollars for the same coverage.
Late Enrollment in Part B Can Cost You
Medicare Beneficiaries avoiding enrollment in Medicare Part B will pay a penalty. Unlike Medicare Part A, the Medicare Part B penalty will be imposed for as long as you have Medicare Part B. Meaning the Part B penalty could be imposed for years or decades. For every 12-month period not enrolled in Medicare Part B, a 10% penalty will be added to the monthly premium.
There are a few situations in which you may qualify for a Special Enrollment Period (SEP), this would allow you to avoid the Part B penalty.
Part D: Get Covered or Get Penalized
Medicare Beneficiaries who experience a lapse in drug coverage that lasts 63 continuous days or more will incur a penalty. The penalty amount is 1% of the national base beneficiary premium, times the number of full months you did not have Part D or creditable coverage.
The national base beneficiary premium can increase year to year. This means the Part D penalty amount can continue to increase over time.
There are a few things you can do to protect yourself from the Part D Penalty:
- Keep records showing proof of your creditable coverage
- Don’t go more than 63 continuous days without prescription drug coverage
- Join a Medicare Prescription Drug Plan when you are first eligible.
Eligible drug coverage options include:
- Medicare Prescription Drug Plans also referred to as Part D
- Medicare Advantage Plans known as Part C.
Part D penalties imposed on Medicare Beneficiaries who incur a 63-day continuous gap in prescription coverage are set at 1%. The 1% is based on the national base beneficiary premium. That amount can change yearly. Not enrolling in Part D coverage is a choice that will continue to impact your Part D premiums year after year.
You Can Avoid EVERY Medicare Penalty
Actively engaging in your coverage options and selecting affordable coverage in a timely manner is vital, especially if you want to avoid Medicare penalties. In other words, not enrolling in coverage is a choice that can cost you more than the coverage itself. When you follow the guidelines set forth by Medicare, you’ll avoid a lot of unnecessary expense.
If you have limited income or resources, speaking with a licensed insurance agent could make all the difference. When you have Medicare questions or concerns, it’s helpful to have a trustworthy expert that you can contact.