Late enrollment penalties under Medicare apply to Part A (only if you are required to pay a premium), Part B, and Part D. (Part A is hospital services, Part B is everything else except prescription drugs, and Part D is prescription drug coverage.)
Part A is free for almost everyone, provided that they have turned 65 and worked 40 quarters or ten years in covered employment. Those who do not meet these requirements can enroll by paying a premium, which varies with the number of quarters worked. If they do not enroll when they turn 65, they face a penalty of an additional 10% premium for each two years, or part thereof, that they could have coverage but were not enrolled. For example, if you were first eligible in 2021 but did not enroll until 2025, you pay an additional ten per cent per year for eight years.
Part B has a premium, which is $148.50 per month for most people in 2021. Some have a higher premium due to higher income. If you do not enroll in Part B when first eligible, you pay a 10% higher premium for life for each year you could have been enrolled but were not. If you were first eligible in 2021 but did not enroll until 2025, you will pay a 40% higher premium for life.
These penalties do not apply if the reason for non-enrollment is that you had coverage equivalent to Part A or Part B from a current or former employer, referred to as “creditable employer coverage.” Please note that policies you buy yourself do not qualify for the exception, no matter how good or how expensive. They must be provided by a current or former employer.
For Part D, the penalty for late enrollment is 1% for each month you went without creditable prescription drug coverage. So, if you went ten months after you could have enrolled before enrolling, your monthly premium will be 10% higher for life.
If you qualify for the Medicare Extra Help program for prescription drug coverage, you do not have to pay the penalty.
When Can I Enroll?
You can enroll during your initial enrollment period (IEP), which runs from three months before your 65th birthday to three months after; a special enrollment period (SEP), if you or your spouse had creditable coverage but lost it, or the general enrollment period. The general enrollment period for Part A is anytime, and it can be retroactive for six months. For Part B, it’s January 1 to March 31 of each year, and for Part D, it’s from October 15 to December 7 of each year. If you qualify for the Extra Help program for Part D, you can sign up at any time.
To learn more about enrolling in Medicare and avoiding these late enrollment penalties, give Caring Insurance Solutions a call today!