Missing your Initial Enrollment Period (IEP) can earn you late penalties for Medicare Part A, Medicare Part B and Prescription Drug Plan (Part D)
Part B and Part D enrollment penalties are lifetime penalties; Part A is limited to two years for every year you delayed enrollment
You may be able to delay enrollment without penalty if you had other coverage through an employer
For all the helpful benefits Medicare offers, there is one thing you’ll want to avoid: enrollment penalties. If you sign up late, you may be stuck paying a higher monthly premium amount for years.
Is it mandatory to go on Medicare when you turn 65? No, but if you don’t, each part of Medicare is subject to its own enrollment penalty. Skipping your Initial Enrollment Period could mean you’re on the hook for three different Medicare late enrollment penalties. That includes:
- Medicare Part A
- Medicare Part B
- Medicare Prescription Drug Plan (Part D)
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The first thing to know is that Medicare late enrollment penalties vary and each part of Medicare, Part A, Part B, and Part D, has a specific penalty if you neglect to enroll on time. Keep reading to learn about each part of Medicare and the possible penalty for late enrollment.
For every year you weren’t enrolled in Part A, you’ll pay a 10% penalty for two years.
Your Part B premium will increase by 10% for each eligible year you don’t enroll in Part B. The cost of your premium (penalty included) will remain your monthly premium for the duration of your Medicare plan.
An extra 1% of the average Part D premium for each month you don’t enroll and don’t have creditable coverage.
If you delay Part A enrollment because you (or spouse) have employer group coverage, you can enroll without penalty during a special enrollment later when group coverage ends.
If you work past age 65 with employer group insurance, you can delay Part B enrollment. When group coverage ends, you have a special enrollment period (SEP) to enroll in Part B. If you neglect to enroll during the SEP, you will incur the standard Part B penalty.
If you go more than 63 days without creditable prescription coverage, a penalty may be assessed. You’ll receive a Late Enrollment Period Reconsideration notice through the mail. To challenge your enrollment penalty, return this form with proof of your previous coverage
Medicare Part A is the portion of Medicare that provides your hospital coverage
Part B provides the medical portion of your Medicare coverage
Medicare prescription drug coverage (Part D) helps you pay for both brand-name and generic drugs. Medicare drug plans are offered by private insurance companies approved by Medicare.
The easiest way to avoid all late enrollment penalties is to enroll in Medicare Part A and Part B when you’re first eligible. Even if you don’t have monthly prescriptions, enrolling in Part D during your initial enrollment period may help you avoid late penalties down the line.
Don’t wait to enroll after you lose creditable coverage
You have the option to delay Part B and Part D enrollment if you work past 65 and use your employer-sponsored group insurance. When you leave your employer’s group plan, you have a special enrollment period for Medicare. Don’t miss this opportunity to enroll, or you may be penalized.
Keep track of your past insurance coverage
If you choose to delay your Medicare enrollment because of your existing insurance, it’s important to keep track of records that show when your insurance began and ended. Your records show creditable coverage and can help you avoid late penalties within Medicare enrollment guidelines.
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If you’ve missed your IEP, you may qualify for a Special Enrollment Period (SEP) under certain circumstances. If so, you’re allowed to enroll in a Medicare plan after your IEP without penalty. Special Enrollment Periods open after certain events, including:
- Loss of other coverage
- Medicare changes its contract with your plan
- And more [i]
If you have health insurance through a job-based group plan, an eight-month SEP will open when that coverage ends. At that point, you can sign up for Medicare without penalty. SEPs that open for different reasons may have different timeframes.
The year you turn 65. Three months before your birth month, your Initial Enrollment Period opens. It remains open for you to enroll until three months after your birth month, for a seven-month window.
Your next chance to enroll in Medicare is the General Enrollment Period. This is held each year from January 1 to March 31. If you enroll during the GEP, your plan begins July 1. In this case, you’ll probably have to pay late enrollment penalties.
You may qualify for equitable relief if you enroll incorrectly and incur a penalty. Some people know this as the Medicare Part B late enrollment penalty appeal. To file your appeal, you’ll need to provide proof to the Social Security Administration. [i] If your appeal is accepted, you may see a reduction or elimination of your penalty, and even receive retroactive coverage.