Many of Medicare’s different policy options have set periods where it is best to enroll. In fact, many people are forced to pay late enrollment penalties when they fail to enroll during those periods. This is what you need to know to avoid Medicare’s late enrollment penalties.
Medicare Part A Late Enrollment Penalty
If you are not enrolled in Part A immediately after you become eligible for coverage, you may be faced with a late enrollment penalty. The penalty is set at an additional charge equal to 10% of your current Part A premium that must be paid for twice the number of years that you were eligible for Part A but not enrolled. As an example, someone who was eligible for Part A benefits for 3 years, but only recently got them, would owe an additional 10% in premiums for the next six years.
Medicare Part B Late Enrollment Penalty
If you enroll in Part B late, you will be required to pay 10% more for each 12 month period you are not enrolled but eligible. For example, if you delayed signing up for Part B for a total of 7 years, your premium would be 70% higher for as long as you have Medicare. This is a lifelong penalty, so make sure you do your best to avoid it.
If you have coverage through your employer or your spouse’s employer, you may not be required to pay this penalty. People who are eligible for special enrollment periods may also be able to avoid this penalty. Consult with a local Medicare specialist to learn more.
Medicare Part D Late Enrollment Penalty
If you need prescription drug coverage, you should enroll within 3 months of receiving Part A or part B coverage. If you do not enroll during this period, the late penalty is 1% of the average monthly prescription drug premium times the number of months late. The penalty is permanent and must be paid for as long as you are enrolled in a prescription drug coverage plan. If you had insurance through your employer or a spouse’s employer, you may not be charged this penalty fee. Individuals who hold creditable coverage like retirement coverage or Veterans Administration coverage may also be able to avoid the late enrollment penalty.
Medicare Supplement Insurance Late Enrollment Penalty
Although Medicare Supplement Insurance (Medigap) policies do not have a direct late enrollment penalty, there are some downsides to enrolling late. If you enroll when you are first eligible for Medicare benefits, your Medigap application is not subject to underwriting and must be offered to you at the minimum cost possible. If you choose to wait, you may not have access to the best policies due to underwriting and the plans you do find will not be locked in at the lowest rates. Therefore, you may be forced to pay more over the lifetime of your policy.
Avoid Late Enrollment Penalties
If you recently became eligible for Medicare benefits, start searching for your policy now. Avoid late enrollment penalties and secure the health care coverage you need. Contact Cornerstone Senior Advisors now to schedule a call where we can discuss your Medicare needs!