There are more than 10,000 Baby Boomers aging into Medicare each and every day. If you’re nearing your 65th birthday, you may have started researching what the world of Medicare is all about. There’s a lot of information out there, and it’s easy to get overwhelmed with all of the different parts and plans. Have you heard of the Medicare late enrollment penalty? It’s crucial you enroll during your Initial Enrollment Period (IEP) to avoid this fee down the road. Fortunately, there are Medicare late enrollment penalty exceptions.
Part A Late Enrollment Penalty
If you have worked and paid Medicare taxes for 10 years, you will be automatically enrolled in Part A and will not have to pay a monthly premium. If you aren’t eligible for premium-free Part A, and you don’t enroll during your IEP, your monthly premium will have an added penalty of 10%. This applies regardless of how long your delay was. You will continue to pay the additional 10% for twice the amount of time you postponed enrollment. For example, if you deferred enrollment for two years, you will be required to pay the penalty for four years.
Part A Late Enrollment Penalty Exceptions
The only exceptions to the Part A late-enrollment penalty are if you have qualifying coverage through your employer or your spouse’s employer or if you qualify for a Special Enrollment Period. If you received a Part A penalty when you believe you had a qualified exception, read how to file an appeal here.
Medicare Part B Late Enrollment Penalty
Like Part A, many beneficiaries are automatically enrolled in Part B. If you are not automatically enrolled and do not enroll during your IEP, you will have a late enrollment penalty that is added to your monthly Part B premium. The penalty can reach 10% for each year you were eligible for Medicare but did not enroll. For example, if you were eligible for three years before you finally enrolled, you will pay your monthly Part B premium plus an additional 30% of that amount. This penalty is not temporary like Part A. You will continue to pay this additional fee every month until you are no longer enrolled in Medicare.
Medicare Part B Late Enrollment Penalty Exceptions
If you have qualifying coverage through your employer, or spouse’s employer, you can postpone Part B enrollment without being penalized. In these scenarios, the employer plan is primary and Medicare is secondary. Many people will delay Part B while they are working so they don’t have to pay a monthly premium. Be aware that smaller employers (less than 20 employees) act secondary and Medicare is primary. This means for those scenarios, you still need to enroll in Part B or be subject to a penalty down the road. The last exception to the late enrollment penalty is if you are eligible for a Medicare Savings Program (MSP). MSPs are regulated by each individual state, and help low-income beneficiaries pay for some or all of their Medicare premiums, deductible, copayments, and coinsurance.
Part A and B Penalty Fee Waivers
If you feel that you were improperly charged a late enrollment penalty fee for either Medicare Part A or Part B, you can file a waiver. Begin by gathering proof of your Part B enrollment in the form of a copy of your application and your Medicare card. Then, call the Social Security Administration at 800-772-1213 (you can also visit www.ssa.gov or visit your local SSA office). Then, ask to use the “time-limited equitable relief” to eliminate your Part B penalty fee. You may or may not be granted this waiver based on your enrollment status.
Medicare Part D Late Enrollment Penalty
If you sign up for Original Medicare (Part A and B) but do not purchase an additional prescription drug plan for 63 days, you will be charged a late enrollment fee. You can enroll in a Part D plan or Medicare Advantage plan with drug coverage to avoid the fee.
The Part D penalty is calculated by multiplying 1% of the national base premium by the number of uncovered months. The base premium for 2019 is $33.19. That means that if you are uncovered for 20 months your additional fee will be 20% of $33.19, or $6.64 per month. Your full monthly premium will then cost you $39.83 for prescription drug coverage.
Medicare Part D Late Enrollment Exceptions
If you qualify for the Medicare Extra Help program, you will not have a late enrollment penalty. Extra Help helps pay the cost of prescription coverage for low-income beneficiaries. This means you cannot be penalized even if you haven’t had coverage for more than than 63 days.
If you have creditable prescription drug coverage through an employer or union, you are not subject to a late fee unless you lose this coverage and continue to postpone enrollment. However, keep in mind that you are responsible for providing proof of your creditable coverage. You should receive a letter from your employer or union after you quit your job or lose coverage.
Get Prescription Drug Coverage
If you’re looking to avoid late enrollment penalties, Medicare Plan Finder can help. Our agents can show you which Medicare Advantage and Part D plans are available in your area. Plus, they can answer any questions regarding pricing and which drugs are covered under which plan. Our agents work with all of the major carriers in your state so they can show you all of the available plans in your area with an unbiased approach. To schedule a no-cost, obligation-free appointment, fill out this form or give us a call at 833-438-3676.
This blog was originally published on 7/6/17 by Anastasia Iliou but was updated on 4/29/19 by Kelsey Davis.