Some people don’t realize it, but there are penalties for not signing up for Medicare when they’re first eligible. Let’s go over the Medicare late enrollment penalties and what you can do to avoid them.

Medicare Part A

Typically, if you’re already receiving social security benefits when you turn 65, you’re enrolled in Original Medicare (Part A and Part B). But if you’re not already receiving social security benefits, then you should enroll in Part A as soon as you qualify. You can enroll during your Medicare Initial Enrollment Period (IEP), which starts 3 months before you turn 65, through your birthday month, and continues for 3 months after.

You could face a late enrollment penalty for Part A if you didn’t sign up for it during your IEP and you have to pay a Part A monthly premium. Both of those have to be true for a penalty to apply. If you’ve worked at least 10 years while paying Medicare taxes, you typically don’t pay a Part A premium.

The Part A penalty is 10% added to your monthly premium. It’s important to know that the penalties are more severe the longer you wait. You generally pay this extra amount for twice the number of years that you were eligible for but did not enroll. So, if you waited two years to enroll, you will have to pay the Part A penalty premium each month for the next four years.

Medicare Part B

As with Part A, if you are not already receiving social security benefits, you need to apply for Medicare Part B during your IEP.  If you have coverage under your employer or union plan, you may not need Part B coverage. If that’s the case for you, you might qualify for a Special Enrollment Period for enrolling in Part B later on and can avoid paying penalties this way.

While you don’t Part A premiums if you have worked in the US for at least 10 years, Part B costs you each month. In 2022, the standard monthly premium is $170.10 if you make $91,000 or less per year. The late enrollment penalty occurs if you don’t apply for Part B during your IEP and isn’t some one-time charge. You’ll have to pay it for as long as you have Part B. Also, keep in mind Part B premiums go up 10% each year you do not have credible coverage.

A white pill bottle spilling white pills on a yellow table.

If you fail to enroll in Part D, you’ll get a late enrollment penalty similar to Part B.

Medicare Part D

Part D is your Prescription Drug Coverage. It’s not required to obtain this, but it’s recommended that you do. This way you can have protection for current and future medications, as well as avoid late penalties if you decide you’d like this coverage in the future. Your IEP for Part D is the same as Part A and Part B. If you fail to enroll in Part D, you’ll get a late enrollment penalty similar to Part B.

The penalty is added to your Part D monthly premium and stays for as long as you have it. You calculate it by multiplying 1% of the national base premium by the number of uncovered months.

Avoiding Medicare Late Enrollment Penalties

The best way to avoid Medicare late enrollment penalties is to sign up for everything during your IEP. There are some situations where you don’t pay penalties even if you miss your IEP, like qualifying for a Medicare Special Enrollment Period or having credible coverage (when you have insurance through a different source other than Medicare that’s just as good). However, it will be for the best if you apply for Medicare as soon as you’re eligible.

Medicare isn’t always easy to understand, and late enrollment penalties can be intimidating. If you need help finding the right coverage and making sure you avoid any penalties, our agents at Jeffery Insurance are here to guide you. We are based in Scottsdale but are happy to assist you no matter where you are in Arizona. We are Arizona’s health care resource!