How Waiting to Enroll in Medicare Can Incur Costly Penalties

Waiting to sign up for Medicare could be costly. Here’s what older adults need to know about when to sign up for Medicare, penalties, and how to avoid them.

Medicare Sign-Up Times

New Medicare recipients may enroll during the seven-month Initial Coverage Election Period (ICEP); the month of your 65th birthday and the three months before and after you turn 65. If you are not enrolling in Medicare for the first time, then you are most likely reenrolling in a plan during the Annual Enrollment Period (AEP). There are also times when Medicare recipients can change their coverage outside of the normal AEP. For a detailed explanation of key Medicare enrollment dates, click here.

Late Enrollment Penalties Explained

Medicare may charge late enrollment fees if you don’t sign up for services when you first become eligible.

“You may pay a higher monthly premium once you do get Medicare benefits, or Medicare may deduct the penalty directly from your Social Security check,” said Teresa Lara, senior Medicare education consultant at Zing Health. Medicare has several components, and each have penalties to discourage late signups:

• Medicare Part A: The penalty for not signing up for Medicare Part A (inpatient/hospital coverage) when you are first eligible is a 10% increase in premium for twice the number of years you did not enroll. For example, if you enrolled two years later than you should have, you will pay the penalty for four years.
• Medicare Part B: If you do not enroll in Medicare Part B (outpatient/medical coverage) when you become eligible, Medicare will assess a permanent 10% penalty for each 12-month period you did not.  Therefore, a two-year delay will cost you an additional 20% until your Medicare coverage ends.
• Medicare Part D: To assess your Part D (prescription drug coverage) late penalty, Medicare adds 1% to the national base beneficiary premium for each month without coverage, starting 63 days after the eligibility date. The national base beneficiary premium changes each year, so the penalty is subject to change as premiums increase.

Avoiding Late Penalties

The first and most important step to avoid late enrollment penalties is to read any piece of mail you receive from Medicare carefully. “When you receive the ‘Medicare & You’ book from Medicare, it’s important to take the time to read through it,” said Lara. “If you’re planning to enroll, it’s best to do so during ICEP when you first become eligible.”

Employer-Based Coverage

People who are 65 and older but are still working can choose to keep insurance through their employer, and can wait to join Medicare without penalty, if their current plan is deemed creditable (meaning the health plan must provide coverage that is at least as good as what Medicare provides) for both parts B and D.

“If you’re still employed and paying for job-based insurance, that will continue to be your primary coverage,” said Lara.

However, health plans outside of employment may not qualify as equivalent to Medicare. Suppose you leave your employment but choose to continue health insurance under COBRA, the law that allows former employees to extend their coverage. In that case, Medicare does not count the COBRA plan as creditable coverage.

Medicare-eligible people who retire or end their employer insurance have eight months to enroll in Medicare Part B and D, and 63 days to enroll in Part C (Medicare Advantage) before facing late penalties. Otherwise, those who are late may go uninsured for months while they wait for the next enrollment period.

How Zing Can Help

Zing Health can help its members navigate the Medicare maze. Schedule a call online or call 1-866-946-4458 (TTY 711) to speak with a specialist who can explain all the coverage options that are available.

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