Medicare Late Enrollment Penalties and How To Avoid Them

on November 15, 2023 at 11:40 am

Medicare can be extremely helpful, but if you’re hit with a late enrollment penalty, you can expect to pay for it financially. Therefore, it’s vital to ensure that you avoid enrolling late. After all, most people who are eligible for Medicare are on a fixed income, so holding onto as much of your money as possible is important. Let’s take a closer look at Medicare Parts A, B and D to determine what the penalties are and how you can avoid them, to learn more about Medicare visit this page.

Things You Need to Know About Medicare’s Late Enrollment Penalties

Although Medicare Parts A, B and D each have their own separate rules, there are also a few general guidelines that apply to every part. You will usually have seven months to enroll without facing a penalty. If you fail to enroll during the three months before you turn 65, the month you turn 65 and the three months after, you will be penalized. The only exception is if you have an alternative form of coverage.

If you haven’t enrolled in Medicare within three months after you turn 65, you’ll face:

Having a late-enrollment fee added to your coverage for life. In other words, whatever your penalty is will be incurred forever, instead of just once. The only exception is for Part A.
Your monthly cost will continue to increase until you’re enrolled.
The fee will be added to your monthly bills.

Late Enrollment Penalties for Medicare Part A

Many people assume that they’ll be enrolled in Medicare Part A automatically, but this isn’t the truth. First off, you must take steps to enroll yourself. Secondly, if you’re not eligible to receive free Part A, you must pay for it. Failure to enroll and pay on time can cause:

Your monthly premium to increase by 10 percent.
A penalty will be assessed. It will be due for twice the number of years that you didn’t sign yourself up for Medicare Part A. For example, if you fail to sign up until you’re 66, you’ll owe a penalty for two years.

Late Enrollment Penalties for Medicare Part B

If you sign up late for Medicare Part B, you will typically have to pay a 10 percent penalty per year for life. To put this into perspective, let’s say that you didn’t enroll in Medicare Part B until you turned 67. Since you were two years late, you’ll owe an extra 20 percent. Likewise, if you didn’t sign up until you were 68, you’d owe an extra 30 percent. As you can tell, the late enrollment penalty can quickly become way too expensive, so be sure you sign up in a timely manner.

Additionally, if your income is above a certain amount, you’ll be charged a higher premium. The only way to stop the added fees is to enroll on time or to be eligible for a Special Enrollment Period. We’ll go into this in more detail later on.

Late Enrollment Penalties for Medicare Part D

The good news is that people can usually avoid a late enrollment penalty for Part D if they already have good prescription coverage or if they qualify for additional assistance. However, if neither of these exceptions apply to you, you’ll have to deal with paying an extra 1 percent per month (up to 12 percent per year) unless:

You join Medicare as soon as you’re eligible.
Avoid going 63 or more days without prescription coverage.

Medicare Part D late enrollment penalties add up very quickly. For example, if you sign up 15 months late, you’ll owe an extra 15 percent per month for life.

Medicare Special Enrollment Sessions

Fortunately, there are a few different ways to avoid paying a Medicare penalty. However, you must be able to fit your particular circumstance into one of the following categories:

Lost Medicare coverage on or after January 1.
Missed your chance to sign up because of a declared emergency or natural disaster on or after January 1.
Missed your chance to sign up for Medicare due to misleading or false information from your employer or health plan.
Missed your chance to sign up because you were incarcerated until January 1 or later.
Experienced a qualifying ‘exceptional condition.’
Have or had health insurance through your job or your spouse’s job.
Volunteered and served in a foreign nation.
Have TRICARE coverage.

For the most part, you’ll receive six months to enroll if you meet one of these qualifying conditions. However, if you were incarcerated, you’ll have 12 months. If you lose your insurance through your job or your spouse’s job, you’ll have eight months. Finally, if you have TRICARE, you’ll have 12 months to enroll once your special enrollment period begins.