If you do not enroll in Medicare when you are first eligible, you may be faced with late enrollment penalties. The late enrollment penalty is an extra fee that is added to your Medicare premium for failing to enroll during your Initial Enrollment Period. The late enrollment fee can result in an increase in your Medicare costs for years, or lifetime in some cases.
The Initial Enrollment Period starts three months before you turn 65 and ends three months after turning 65. Even if you do not need the services currently, it is recommended to sign up for Medicare as soon as you become eligible so you can avoid these penalties.
Medicare Part A Late Enrollment Penalty
Usually, most Medicare enrollees do not need to pay premiums for Medicare Part A. As long as you have paid up to 40 quarters of Medicare taxes when you were working, you qualify for a premium-free Part A. If you do not, you can still sign up for Medicare Part A during the Initial Enrollment Period, but you will be faced with monthly premiums.
If you delay your Part A enrollment and you do not have a valid reason, you will have to pay the late enrollment penalty on top of your premium payment. The late enrollment penalty for Part A is a 10% increase in the cost of the monthly premium. This is not a permanent penalty, though. It will only last for twice the amount of time you were eligible for Part A, but never enrolled. For example, if you delayed Part A enrollment for three years, you will pay a late enrollment penalty each month for six years.
Part B Late Enrollment Penalty
Like Part A, the Initial Enrollment Period for Part B begins 3 months before you turn 65 and stops 3 months after your 65th birthday. If you receive benefits from Social Security, the monthly premium for Part B will be deducted from your benefits. If you do enroll for Part B during your Initial Enrollment Period, you will have a permanent penalty. This means an extra charge will be added to your monthly premium for as long as you have Medicare.
The late enrollment fee is a 10% increase in premiums for each year during which you were eligible for Part B but delayed your enrollment.
If you enroll for Part D within three months after your Medicare coverage kicks in, you will not pay a late enrollment penalty. If you enroll later and you did not have creditable drug coverage, you may be faced with a permanent late enrollment fee. This penalty is calculated in a very specific way by multiplying 1% of the national base premium by the number of months you didn’t enroll in Part D.
For more information on Medicare enrollment and how you can avoid these penalties, reach out to us today at 512-900-3008.