How Much will a Late Enrollment Penalty Cost Me?
How Can I Avoid the Medicare Late Enrollment Penalty?
Nobody wants to spend more than they have to on their health care coverage (or anything else, for that matter). So if you’re eligible for Medicare, make sure you’re enrolled in Part B (Medical Insurance) and Part D (prescription drug coverage). If you wait too long, you’ll end up paying more than you should.
Why There’s a Penalty
It takes a lot of money and resources to run Medicare. But making sure that Medicare is available to everyone who needs it-today, and in the future-is something from which we’ll all benefit. That’s why enrolling in Parts A, B & D as soon as we’re eligible is so important.
The reason is simple, if everyone waited until they were sick to enroll in Part B or Part D, Medicare would never be able to sustain itself. The cost of paying for care for individuals who are ill and/or require expensive medications would far outstrip the amount of money taken in by Medicare in the form of premiums. So Medicare needs everyone to begin paying their premiums for Parts B and D as soon as they’re eligible so there’s enough money to care for everyone when they need it.
Understanding Enrollment in Medicare Part B
For most people, enrollment in Medicare Parts A & B is automatic. When you turn 65, and start receiving Social Security or Railroad Retirement Board benefits, you’re automatically enrolled in Medicare Parts A & B.
There are instances, however, when you may not be enrolled in Part B. This may be because you, or your spouse, have other health insurance through an employer. Or maybe you had Part B at one time, and then dropped it when it you got other insurance.
Whatever the case, if you have no other insurance and you’re eligible for Part B, you must enroll to avoid a penalty.
Also, you may have to wait until the General Enrollment Period (from January 1 to March 31) to enroll in Part B, and coverage will start July 1 of that year. Usually, you don’t pay a late enrollment penalty if you meet certain conditions that allow you to sign up for Part B during a Special Enrollment Period. If you have limited income and resources, your state may help you pay for Part A, and/or Part B. You may also qualify for Extra Help to pay for your Medicare prescription drug coverage.
Understanding Enrollment in Medicare Part D
Part D, Medicare Prescription Drug Coverage, is different from Part B in two important ways. First and foremost, enrollment in a Medicare Prescription Drug Plan (PDP) is never automatic. Secondly, the only way you can get a Medicare Prescription Drug plan is through a private insurance carrier.
Unlike Part B, premiums for Medicare Prescription Drug Plans will vary between different insurance carriers and by your income. One company may even have several different drug plans, all with different premiums and coverage levels. Furthermore, the same plan may vary between two individuals if their income levels are different.
Add to that the fact that not all insurance companies offer plans in all states or areas, and it really starts to sound confusing. Fortunately, there are a lot of resources available to help you find the right plan.
And remember, if you’re eligible for Medicare and already have Part A or Part B (and don’t have creditable prescription drug coverage from an employer or other source) you’re eligible for Part D.
How Much is the Late Enrollment Penalty for Part B?
In most cases, if you don’t sign up for Part B when you’re first eligible, you’ll have to pay a late enrollment penalty for as long as you have Part B. Your monthly premium for Part B may go up 10% for each full 12-month period that you could have had Part B, but didn’t sign up for it. If you meet certain conditions that allow you to wait until the General Enrollment Period (from January 1 to March 31) to enroll in Part B, and coverage will start July 1 of that year, you will not need to pay the penalty.
You can use Medicare.gov’s Part B Late Enrollment Penalty Calculator to get an idea of what you might have to pay. Also, keep in mind that Medicare has some special enrollment periods, which may help you avoid a Part B late enrollment penalty.
Usually, you don’t pay a late enrollment penalty if you meet certain conditions that allow you to sign up for Part B during a Special Enrollment Period.
How Much is the Late Enrollment Penalty for Part D?
Calculating the late enrollment penalty for Part D is a bit more complicated, in part because Part D premiums aren’t standard. In addition, you can be penalized anytime you go a period of 63 days or more without a Medicare prescription drug plan or some other creditable coverage (from a former employer, for example).
Medicare calculates the penalty by multiplying 1% of the “national base beneficiary premium” ($34.10 in 2016) times the number of full, uncovered months you didn’t have Part D or creditable coverage. The monthly premium is rounded to the nearest $.10 and added to your monthly Part D premium. The national base beneficiary premium may increase each year, so your penalty amount may also increase each year. You can learn more about the Part D late enrollment penalty at Medicare.gov.
If you’re eligible but haven’t yet enrolled in Medicare Part B or D, getting started is simple. Call 1-800-MEDICARE to find out your options for Part B. Or use their Medicare Plan Finder to find a prescription drug plan in your area.
If you prefer, you can talk to a Licensed Sales Agent at MedicareSolutions. They’re all professionals who can help you understand what policies are available in your state, what coverage you may qualify for and how much you’ll pay.