Penalties come in all forms. Whether you pay a fine for that library book you forgot to return or are charged for a late payment, we’ve all been assessed a penalty at some time. However, many people don’t realize that you can be charged penalties for not signing up for Medicare.
Medicare penalties are no fun.
The various Medicare penalties for late enrollment vary based on several factors, such as how long you delay enrollment and whether you had other creditable coverage. For example, it’s perfectly acceptable to delay enrollment into Medicare (with no late penalty) if you have creditable employer group health coverage from a large employer. Many people do this when they continue working past age 65. Maintaining employer group coverage through a spouse who is still working also allows you to delay without penalty.
However, the same rules do not apply when you work for a small employer or when you simply didn’t know you needed to enroll and therefore missed your initial enrollment period altogether.
It’s important to understand how a Medicare late enrollment penalty is assessed.
Medicare Part A Late Penalty
Anyone that has worked at least 10 years in the United States and has paid Medicare taxes is eligible for Part A at $0/month. Nearly 100% of Medicare beneficiaries are eligible for premium-free Part A.
If you did not work the minimum amount of years or qualify for premium-free Part A through your spouse you will have to pay for Part A. If you have to pay a premium for Part A, you must enroll in Medicare Part A during your initial enrollment period to avoid paying late penalties. However, if you have creditable coverage, you can delay Part A until you retire.
In 2019, if you delay enrolling in Part A, even though you are eligible and don’t have creditable coverage, you could pay an additional 10 percent on top of your Part A premium once you finally enroll.
You pay your penalty amount on top of your Part A monthly premium. You will pay this amount for twice as long as you delayed enrollment. For instance, if you delay enrolling in Part A for 12 months, you must pay your late penalty for the next 24 months.
However, late penalties for Part A are rare since most people qualify for Part A at $0/month.
Medicare Part B Late Penalty
Many people choose to enroll in both Medicare Part A and Part B at age 65. However, some may think they are automatically enrolled in Medicare Part B and fail to verify their enrollment.
This could face a Medicare Part B late penalty.
Another common Part B late penalty scenario is when someone works for a small employer with less than 20 employees. They think their employer coverage is enough and so they don’t enroll in Part B. Later when they go to retire, they get a very unwelcome surprise. A Part B late penalty will follow you for life.
As with the Medicare Part A late penalty, if the Medicare deadline is missed, you will pay the penalty with your monthly premiums when you finally enroll. The longer you wait, the higher your penalty.
For example, the Medicare Part B late penalty is 10 percent of your premiums for every 12 months you delay enrollment. So, if you do not enroll until 3 years after you are first eligible for Medicare, you could face a Medicare late enrollment penalty of 30 percent of your premium. You’ll pay the penalty for as long as you have the coverage, which is usually for life.
Over the years, we’ve seen this affect many people. The penalties for not signing up for Medicare Part B are significant and so you want to avoid them at all costs.
Medicare Part D Late Penalty
Beyond facing penalties for Medicare Part A and B late enrollments, you could also face fines for delaying your enrollment in the Medicare Prescription Drug Plan Program. Although Part D is voluntary coverage, you must sign up during your Initial Enrollment Period. Otherwise, Medicare will assess a late penalty later when you do enroll.
The Medicare Part D late penalty is assessed based on how many months you waited to enroll. Medicare will fine you 1 percent of the typical monthly premium for every month that you waited to enroll.
Let’s break it down.
If your premium is $35 per month and you waited 12 months to enroll, your Medicare Part D late penalty would be 1 percent of the premium times 12. Medicare will round to the nearest 10 cents. So, your total Medicare late enrollment penalty would be around $4.20.
Keep in mind that this penalty does not apply if you had other creditable drug coverage. Having employer group health plan with drug benefits or VA drug coverage will exempt you from the Medicare late penalty.
You may be able to avoid any late penalties for Medicare Part D if you qualify for the Extra Help program.
Navigating Enrollment and Medicare Late Enrollment Penalty Options
It can be difficult to understand the basics of Medicare programs. No one wants to incur penalties for not signing up for Medicare simply because you didn’t know the rules. Fortunately, you don’t have to navigate the process alone, though. We are on your side and there is no cost to you for our services.
Give us a call at 1-855-732-9055. We Speak Medicare, and we’re here to help!