Should I Enroll in the Medicare Program When I’m First Eligible?

Nathaniel Salburo

Sep 1

3 min read

You may see phrases like “Medicare penalty” or “late-enrollment penalty” while researching Medicare insurance. If you don’t sign up for certain parts of the Medicare program in the proper time, these penalties may apply to you. The penalties differ depending on which part of the Medicare program you are enrolling in.

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Penalties Avoided by Enrolling in Medicare When Eligible

Part A

If you’re not eligible for premium-free Medicare Part A and you didn’t enroll during your Initial Enrollment Period (IEP), you may get a premium penalty of 10 percent for twice the number of years you could have been enrolled in Part A.

Example: You waited until you were 69 to enroll in Part A (four extra years), making the penalty last for eight years.

To avoid a penalty for Part A: Enroll in Part A during your IEP if you aren’t automatically enrolled or work until you’re eligible for premium-free Part A.

Part B

If you don’t enroll in Part B during your IEP and don’t have qualified coverage, you may get a 10 percent penalty each 12-month cycle you could have signed up while enrolled in Part B. Without a Special Enrollment Period (SEP), you may not be able to enroll until the General Enrollment Period (January 1 to March 31), starting coverage the next month.

Example: You waited 24 months to enroll in Part B, receiving a 20 percent penalty on top of your monthly premium. If you drop Part B, but sign up again later, you may still have the penalty.

To avoid a penalty for Part B: Enroll during your IEP or have qualified group health plan coverage from an employer.

Part D

If you don’t enroll in a Medicare drug plan when you first get Medicare insurance or go without creditable drug coverage for any continuous period of 63 days or more, you may be subject to a premium penalty when you enroll in Part D. The size of your penalty grows by one percent each month you go without creditable coverage.

Example: You go without coverage for 25 months, so your penalty is 25 percent. Your penalty is based on the “national base beneficiary premium.” We’ll use $33, making your penalty $8.30 (33x.25=8.25, rounded to the nearest $.10). The national base beneficiary premium may change each year, and the penalty will change with it.

To avoid a penalty for Part D: Join a Medicare drug insurance plan or a comparable plan during your IEP to prevent going 63 days or more in a row without creditable drug coverage.

Medicare Part D Appeals

If you disagree with a Part D penalty, you can ask for a reconsideration. Send supporting evidence that you had creditable coverage and a completed reconsideration form within 60 days of learning about the penalty.

Special Enrollment Periods

In most circumstances, you will not incur a late enrollment penalty if you sign up during an SEP.

Examples:

• You have an SEP to enroll in Original Medicare at any time while you have a plan through an employer.

• You have an eight-month SEP beginning the month after your employment or the employer health plan ends (whichever comes first).

Nobody wants the first time they hear about Medicare insurance penalties to be when they’re receiving them. Knowing what causes these penalties is an important step in avoiding them.

Read more: Medicare.gov. Avoid late enrollment penalties. – https://www.medicare.gov/basics/costs/medicare costs/avoid-penalties

Not affiliated with or endorsed by Medicare or any government agency.