One of the common problems new Medicare beneficiaries encounter is missing important Medicare enrollment deadlines and incurring the resulting penalties. How to Avoid Medicare Late Enrollment Penalties
There are certain times that you are eligible to sign up for Medicare Part B, Part D, and Medigap plans. To avoid those potential late enrollment penalties, you should be aware of these deadlines and abide by them.
Medicare Part B Enrollment Period and Penalties
If you are already receiving Social Security at the time that you turn 65, you will be automatically enrolled into Medicare Parts A and B. You should receive your Medicare card in the mail automatically about three months before your 65th birthday. In this case, there is nothing you need to do to enroll in Medicare.
If you are NOT receiving Social Security, you will have to proactively sign up for Medicare Part B. You can do this online at http://ssa.gov or by visiting a local Social Security office. It is important to do this with three months of the month that you turn 65. If you do not do it by the end of that 3rd month, you would face a Medicare Part B late enrollment penalty. The penalty is 10% for each 12-month period that you did not sign up for Part B but were eligible to do so.
Additionally, you may not be eligible to enroll until the next general enrollment period for Medicare, meaning that you could be without coverage until that time.
NOTE: If you are covered under a group insurance plan, the Medicare late enrollment penalty does not apply to you.
Medicare Part D Enrollment Period and Penalties
Just like Medicare Part B, Medicare Part D, the prescription drug part of Medicare, also has late enrollment penalties. Similarly, these penalties begin accruing after the 3rd month following the month of your 65th birthday.
For Medicare Part D, the penalty for not enrolling in Part D when first eligible is 1% per month that you do not have a plan. For example, if you delay enrollment into Part D for 3 years, you would pay 36% of the standard Part D premium on top of whatever the Part D premium is for the plan that you select. This penalty is perpetual and does not go away for the rest of your life.
Just like with Part B, if you are covered by a group policy that includes creditable drug coverage, you are exempt from the Part D late enrollment penalty, but you must sign up for Part D when that group coverage ends to avoid the penalty.
Medigap Initial Open Enrollment Period and Penalties
Medigap plans also have an open enrollment period. The open enrollment period for these plans is 6 months long and begins on the 1st day of the month that you are 65 or over and enrolled in Medicare Part B.
In other words, if you turn 65 in April, your Medigap open enrollment period lasts through September of that year.
There is not an annual open enrollment period for Medigap plans (exceptions: CA, MO and OR).
The penalty for late enrollment into Medigap is not a financial one; however, it could potentially be much worse. If you do not sign up for a plan when you are in your initial open enrollment, you have to “qualify medically” to get a plan later in most cases. This means that, if you have pre-existing conditions or ongoing health problems, you can be excluded from getting the coverage altogether or made to pay more as a result of those conditions.
For these reasons, it is crucial to know the Medicare enrollment deadlines and follow them when you are turning 65 or signing up for Medicare for the first time. Doing so can save you major headaches and money in the future.
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Garrett is the founder/President of Secure Medicare Solutions, a leading, independent Medicare insurance agency. Since 2007, Garrett has worked with tens of thousands of people turning 65 or already on Medicare to understand, compare and choose Medicare insurance that fits their specific needs and situation.
His latest project is 65Medicare.org, an online hub for people just starting with Medicare, which is focused on distilling difficult Medicare questions into easy-to-understand resources.
Garrett resides in North Carolina with his lovely wife, Celeste, and three spirited children.View All Articles