Are you currently, or soon to be, eligible for Medicare? Signing up for Medicare, and understanding when to sign up, can be a complicated process. Most importantly, there are some late penalties that baby boomers absolutely need to know about. By signing up on time, you can avoid these penalties - but only if you know that they exist in the first place.
Understanding The Signup Process
Medicare Parts A, B, and D all have penalties if you sign up too late. Plus, if you don't enroll in a Medicare Supplement plan during your Open Enrollment period, you may end up paying a premium that's higher than it would have been than if you signed up when you were first eligible.
How And When To Sign up
Age 65 is the magic number when it comes to signing up for Medicare. Your 7-month Initial Enrollment Period (the time during which you can sign up for Medicare) begins 3 months before you turn 65, includes the month you turn 65, and ends 3 months after you've turned 65. You can sign up in a number of ways:
- Enroll online using the Social Security Administration's website
- Call Social Security at 1-800-772-1213
- Go to your local Social Security office to sign up in person
If you miss your Initial Enrollment Period, then you may have to go without Medicare coverage until the next enrollment period. You might also face many Medicare late penalties.
Medicare Parts A, B, and D all carry late penalties. If you're unaware of those penalties, enrolling at the wrong time could mean significant financial costs.
Medicare Part A Late Enrollment Penalty
Most people are eligible for Medicare Part A coverage without being required to pay a premium. You'll usually be eligible for premium-free Part A coverage if you're eligible to get or already get Social Security or Railroad Retirement Board benefits. If you or your spouse had Medicare-covered government employment, then you're likely also eligible for premium-free coverage.
If you need to buy Part A coverage, then your monthly premiums can cost up to $422. You also need to be aware of the Part A late enrollment penalty, which can affect those who are paying premiums.
If you are required to pay a premium for Part A coverage and you don't enroll when you're first eligible, then your monthly premium may increase by 10%. You will then need to pay this higher premium for twice the number of years that you were eligible for Part A coverage, but didn't sign up for it.
Medicare Part B Late Enrollment Penalty
There's also a late enrollment penalty for Medicare Part B, which covers things like ambulance services and mental health services. If you don't sign up when you're first eligible for Medicare Part B, then you'll need to pay a late enrollment penalty when you do finally sign up. This penalty means that your monthly premium may go up 10% for each year you were eligible for Part B, but didn't sign up.
In addition to this penalty, you may not be able to sign up for Part B right away. Instead, you may have to wait for the General Enrollment Period, which lasts from January 1 to March 31 of each year, in order to enroll.
Medicare Part D Late Enrollment Penalty
You should also be aware that Medicare Part D has a late penalty, too. Like Parts A and B, you'll be eligible to sign up for Medicare Part D's prescription drug coverage during that initial seven-month enrollment period that surrounds the month when you turn 65.
If you don't enroll in Medicare Part D during that initial period, then you may face penalties if you go without any of the following prescription drug plans for 63 days or more:
- Medicare Part D plan
- Prescription coverage through your Medicare Advantage plan (also known as Medicare Part C)
- Another Medicare plan that includes Medicare PDP coverage
- Another healthcare plan that includes prescription drug coverage (the coverage needs to be at least as good as the coverage provided by Medicare)
If you enroll in Medicare Part D late, then your penalty will depend on how long you went before enrolling. For every month you went without coverage, you will pay 1% of the "national base beneficiary premium." As of 2018, the beneficiary premium is $35.02. That percentage is rounded to the nearest $0.10, and you will pay that penalty every month that you are enrolled.
For example, if you went 33 months before signing up for Part D, then your penalty would be calculated at $35.02 x .33 - $11.56. The penalty would be rounded up to $11.60, and you would pay that penalty every month.
How to Avoid Medicare Late Penalties
Not only should you want to avoid late penalties because of the financial consequences, but if you enroll late, you may need to go without coverage until the next General Enrollment Period.
The best way to avoid these late penalties is to make sure you know when you should sign up for Medicare. Put a reminder in your phone or calendar so that you don't forget to enroll, and enroll in the beginning of your Initial Enrollment Period. That way, you have plenty of time to get things straightened out in case you run into questions or problems.
Medicare is a great program with many benefits. Just make sure you're familiar with the penalties you may face if you don't enroll on time.
Lindsay Malzone is the Medicare Consultant for MedicareFAQ. She has worked in the Medicare industry since 2017 and is featured in many publications as well as writing Medicare focused columns for other publications.
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