Miss Your Medicare Initial Enrollment? What You Should Know.

Maybe your Medicare forms got lost in the mail or accidentally thrown away. Or you simply lost track of time. Whatever the reason, missing your Initial Enrollment Period (IEP) for Medicare can mean you’re stuck paying penalties for the rest of your life.

But before you panic, here’s our guide to what you need to know if you miss your IEP. When is your IEP? When else can you sign up? Is there a way to avoid late enrollment penalties? If you or a loved one is signing up for Medicare and may have missed your IEP, here’s how to make sense of the process.

The first step is knowing when your IEP takes place. Your initial enrollment window includes the month you turn 65, plus the three months before and after your birth month. This is known as the seven-month rule. For example, let’s imagine you turn 65 in June. Your IEP opens March 1 and closes September 30.

If it’s been three or more months since you turned 65 and you’re not sure if you’re enrolled, contact Medicare to find out. ^[1]

Missing your IEP can be a costly mistake. Whether you’re talking about Medicare Part A, Medicare Part B, or Medicare Prescription Drug Plan (Part D) — all three come with late enrollment penalties that get tacked onto your monthly premiums when you finally do sign up. Even worse, you’ll pay some of these penalties as long as you have the coverage. Here’s a breakdown of the current enrollment penalties for the different kinds of Medicare:

Medicare Part A late-enrollment penalty

Let’s start here: you won’t have to pay for Medicare Part A if you or your spouse worked for 10 or more years. If you worked less than that, you might have a monthly premium for Part A, also known as Medicare’s hospital coverage. If you worked less than 10 years and missed your IEP, you’ll have to pay a penalty.

The sentence: For every year you weren’t enrolled in Part A, you’ll pay a 10% penalty for two years.

For example, those that worked between 7.5 and 10 years pay a $259 Part A premium in 2021. If this is you and you signed up two years late, you’ll pay:

• Part A premium: $259 per month
• 10% penalty: $25.90 per month
• Part A premium amount with a penalty: $284.90

Because you signed up two years late, you’ll pay the increased monthly amount of $284.90 for four years. After that, it’ll drop back to the normal amount.

Medicare Part B late enrollment penalty

Your premium amount for Medicare Part B, also called medical insurance, is income-based. If you make $88,000 per year or less (or you and your spouse together make less than $176,000), your Part B monthly premium is $148.50. That amount increases to $504.90  per month for the highest incomes. Unless you have other creditable coverage, missing your IEP is almost always going to result in a financial penalty with Part B.

The sentence: A 10% penalty for every 12 months you didn’t sign up after becoming eligible. This is a lifetime penalty, meaning you’ll pay it each month you have Part B.

For example: Your Part B premium is $148.50, and you signed up two years late. you’ll pay:

• Part B premium: $148.50
  
• 20% penalty (10% x 2 years): $29.70
  
• Part B premium with a penalty: $178.20
  

That $29.70 penalty equates to an extra $356.40 per year you’ll pay because you missed your IEP. You’ll pay that amount every year you’re enrolled in Part B.

Medicare Part D late enrollment penalty

Medicare Part D costs are based on your income and specific needs. The average Part D premium in 2021 is  $33.06. That amount figures into the late enrollment penalty you’ll pay if you go more than 63 days past your IEP without creditable drug coverage. Here’s how:

The sentence: You’ll pay an extra 1% of the current average Part D premium for every eligible month you didn’t have creditable coverage. If you went six months past your IEP, your monthly penalty would be:

• Average Part D premium: $33.06 (in 2021) X .06 (1% each mo. at 6 mos.) = $1.98 per month.

Like Part B, a Part D late-enrollment penalty stays in place as long as you’re enrolled in a Part D plan, so quickly spotting your omission will pay off.

If you missed your IEP, there is good news–there are several enrollment periods during the year when you can sign up for whatever plan you missed. They are:

Special Enrollment Periods

The first thing to do if you’ve missed your IEP is to see if you qualify for a Special Enrollment Period (SEP). These are special windows during which you’re allowed to enroll in a Medicare plan outside the regular periods. Special Enrollment Periods open after certain Qualifying Life Events (QLE), including:

• Moving
  
• Death of someone in your household
  
• Loss of other coverage
  

If you’re covered under a group health plan based on current employment, you’ll have an eight-month SEP to sign up for Part A and/or Part B when that employment ends. That SEP will start at one of these times (whichever happens first):

• The month after the employment ends
  
• The month after group health plan insurance based on current employment ends
  

Usually, you don’t pay a late enrollment penalty if you sign up during an SEP.

Open Enrollment Period

For many, Medicare’s annual Open Enrollment Period (October 15–December 7) ^[2] each fall is the first chance to enroll in a Medicare plan if they missed their IEP. This is also a popular time for beneficiaries who initially declined Part D coverage to change their minds and find a plan.

General Enrollment Period

Medicare’s General Enrollment Period is for people who missed their IEP and didn’t qualify for a Special Enrollment Period. This enrollment period runs from January 1 through March 31. Plans purchased at this time are active July 1 of the same year. ^[3]

There are circumstances where you may be able to get your Part B enrollment penalty reduced or even eliminated. This is known as Equitable Relief, and it’s typically awarded only when:

• You had creditable coverage from a Marketplace plan when you turned 65.
• You received incorrect or misleading information from a Medicare or Social Security official that caused you to incur an enrollment penalty. If you qualify for Equitable Relief, you may even be given retroactive coverage. You’ll need to be prepared to pay the premiums for any previous months Medicare grants you retroactive coverage for. ^[4]

Like most late fees, Medicare’s late-enrollment penalties can come with some sticker shock. Instead of panicking or getting frustrated, give GoHealth a call. We can look at your fees, discuss your options, and help you develop a plan if you miss your IEP.