To avoid Medicare penalties, you should know your Medicare deadlines. Missing your deadlines can mean that you pay lifelong penalties.
(Enter your date of birth to view your Medicare deadlines on our site. If you qualify for Medicare before age 65, your deadlines will be different than what you see on our site or in this blog post. Call me for your deadline information.)
There is no one penalty for not signing up for Medicare at age 65. There are Medicare penalties for not enrolling on time. If you fail to sign up for Medicare Part B during your window you may pay more for Medicare each month. There is also a Medicare Part D late enrollment penalty for not having credible prescription drug coverage when the government expects you to.
Why is There a Late Enrollment Penalty for Medicare?
The purpose of enrollment period limitations for various types of health insurance and other plans is to help the insurance companies avoid something called “adverse selection.” It is the same reason you aren’t allowed to bet on a horse race after it started.
In a horse race, more people would bet on the horse that is leading at the first turn if they could wait to place their bets.
Without Medicare enrollment period limitations and deadlines, more people who were starting to have medical problems would enroll. This would increase the ratio of claims to premiums in a way that would not serve the insurer, or the average policyholder because they would have to raise prices.
There are Medicare Deadlines and Penalties for the following:
- Medicare Part A
- Medicare Part B
- Medicare Part D (Prescription Drug Plan)
You will also have deadlines for enrolling in:
- CT Medigap Plan
- Medicare Advantage Plan
Although there are no official penalties for late enrollment in these plans, if you find yourself without appropriate coverage when you need expensive, lifesaving Medical care you will have a more hard-hitting cost to deal with.
(There are Medicare late enrollment penalty exceptions. If you will continue to get creditable coverage from an employer, and time your enrollment in Medicare so that you have no lapse in coverage, you will not incur a Part D or Medicare part B penalty. Creditable coverage is coverage that meets the government standards. You may want to make a quick call to your human resources department to make sure that your coverage meets the standard.)
Medicare Deadlines and Medicare Penalties – Part A
If you do not qualify for one of the Medicare late enrollment penalty exceptions, you will have a seven-month period to enroll in Medicare Part A. This seven-month period is your Initial Enrollment Period or IEP.
Your IEP starts on the first of the month three months before your 65th birthday, unless your birthday is on the first of the month. In that case, your enrollment period starts one month earlier.
If you want your coverage to start on time you should enroll during the first three months of your IEP. You will avoid government penalties by enrolling in the last four months of your IEP but you may spend months without proper coverage.
Failing to enroll on time can mean that you pay a surcharge of 10% over and above the standard premium for Medicare Part A. However, since most Americans qualify for premium-free Medicare Part A, this probably won’t affect you.
However, being uninsured or poorly insured for months or years is a gamble. Be sure to sign up for Medicare Part A during your Initial Enrollment Period. If you have paid payroll taxes in the US for ten years or more, you won’t pay for this coverage.
(You can enroll in Medicare Part A and continue to get group insurance from your job. This is what I suggest you do if you will get health insurance coverage from work after age 65: Enroll in Part A during your IEP, if you qualify for premium free coverage. Delay enrolling in Part B so you delay having to pay for it.)
Medicare Deadlines and Medicare Penalties – Part B
Your window for enrolling in Part B is the same is for Part A. The penalty for missing your window is different, however. Also, most Americans will pay this penalty if they let the window close on them.
(If you will get creditable medical coverage from work you will avoid the Medicare part B penalty. Creditable coverage is coverage that meets the standards of the Centers for Medicare and Medicaid)
If you miss your IEP window and do not qualify for one of the Medicare Part B late enrollment penalty exceptions, you will be subject to a lifetime penalty.
You will pay an extra 10% for Part B for each twelve-month period that you could have had Part B, but did not sign up for it. So, if you were 2 years late enrolling in Part B, you would pay an extra 26.80 each moth for 2017 if you would have otherwise paid the standard premium of $134. And next year, you would pay 10% more than you would have paid for that year’s premium and so on.
Medicare Deadlines and Medicare Penalties – Part D
Medicare Prescription Drug Plans are known as Part D. These plans are purchased through private insurers. An agent like myself can help you select a good Part D plan, you can’t enroll through Social Security like you do for Medicare Part A or B.
You can also get Part D drugs covered by a Medicare Advantage Plan. Most Medicare Advantage Plans cover drugs. All that do cover prescriptions provide creditable coverage.
Your window for enrolling in Part D coverage is probably the same as for Medicare Part A and Part B.
Medicare Part D penalty exceptions include getting creditable drug coverage from your job or from the Veterans Administration.
The penalty is calculated a little differently, you will pay 1% of the “national base beneficiary premium” for every month you could have had creditable prescription drug coverage but didn’t.
CT Medigap and Medicare Advantage Plan Deadlines
Be sure to enroll in the coverage you need during your Initial Enrollment Period to avoid penalties for not signing up for Medicare.
The first three months of your IEP is the best time to enroll in your CT Medigap policy (Medicare Supplement Plan) or your Medicare Advantage Plan.
You cannot enroll in both.
To have drug coverage you should either enroll in a Medigap plan and a separate Prescription Drug Plan or enroll in a Medicare Advantage Plan with built in Prescription Drug coverage.
The Worst Medicare Penalty
Is the one you pay if you are uninsured during an expensive medical event, or are denied care because you cannot show your hospital the right insurance card.
If your seven-month Initial Enrollment Period closes and you haven’t enrolled, you may have to wait well over a year to get all the coverage you need. If you miss your IEP, you will have to wait for the next open enrollment period to sign up.
(If you will continue to get coverage from a job you won’t have to wait for the Annual Enrollment Period. You can apply just before your group health coverage will end.)
When Are Your Deadlines?
You can get a lot of information about Medicare on our site or by calling me, including how to sign up for Medicare at age 65. To make it easier to enroll in Original Medicare and your CT Medigap plan on time and avoid Medicare penalties, you can also view your Medicare deadlines instantly on our site.