Avoiding Medicare's Enrollment Penalties - Medicare Consumer - Medicare Consumer

Avoiding Medicare’s Enrollment Penalties

 

Medicare wants you to enroll as early as you can and remain enrolled while you’re at your youngest and healthiest eligible age.   To incentivize you to do so, there are a variety of penalties imposed for later enrollment and interrupted enrollment.   Here are some of the common ones:

Late Enrollment in Part B

If you don’t sign up for Medicare Part B when you are first eligible, then you will have to pay a late enrollment penalty in the form of higher monthly premiums for as long as you are enrolled in Medicare. That penalty is equivalent to 10 percent of your Part B premium for every year that you delayed your enrollment after you were eligible.    So, for example the basic 2015 premium for a single retiree earning less than $85,000 is $104.90.   But if that same person postpones enrollment by two years, the premiums increase by $20.98 to $125.88.

There are some exceptions – known as Special Enrollment Periods – that may exempt you from the Part B late enrollment penalties.   Special Enrollment Periods are covered in another article.

Withdraw then Re-enroll in Part B

The same penalty logic applies for someone who terminates Part B coverage and then re-enrolls in it later.   For every year that you opt out, you’ll be imposed a 10 percent premium penalty upon re-enrolling.

Medicare Part D (Prescription Drug) Plan Penalties

Medicare Part D prescription drug coverage plans could also impose an enrollment penalty if you do not sign up for a plan within your initial enrollment period.   With Medicare Part D, you will owe a late penalty if you fall into one of the following categories:

  • You did not enroll in a Medicare prescription drug plan when you first became eligible for Medicare, and you did not have any other type of creditable prescription drug coverage*, or
  • You did not have Medicare prescription drug coverage or another type of creditable prescription drug coverage for 63 days in a row.

* Creditable coverage is health insurance coverage that you had before you enrolled in your new health insurance plan – perhaps through an employer or a spouse’s employer.  For your coverage to remain “creditable” it cannot be be interrupted by a period of 63 or more days.

 

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