Medicare has several enrollment periods during which a beneficiary can enroll, cancel, or change their Medicare coverage. When you sign up outside of these enrollment windows, a late enrollment penalty may be applied by Medicare. CMS aims to prevent Medicare beneficiaries from signing up late to have their health coverage when required. Medicare usually penalizes beneficiaries for late enrollment by increasing their monthly premium. The late enrollment penalties for each Medicare plan include:
Late Enrollment Penalty for Medicare Part A
Many Medicare beneficiaries are automatically eligible for Part A coverage at no cost. Those who didn’t work enough hours during their lifetime can still be eligible; they can still purchase Medicare Part A. However, these people need to pay a monthly premium. If you are not automatically enrolled for Part A and don’t sign up during your IEP, you will incur a late enrollment penalty for signing up late.
Medicare Part A has a late enrollment penalty, which is 10% of the cost of a monthly premium. This additional cost will have to be paid each month for twice the number of months/years you were eligible and didn’t sign up.
Late Enrollment Penalty for Medicare Part B
As mentioned earlier, many recipients are automatically enrolled in Medicare Part A and Part B. If you are not automatically enrolled in Part B and didn’t enroll when you were eligible, you’ll be subject to a penalty, which adds to your Part B premium. The penalty amount for failing to enroll could go up to 10% for every year when the beneficiary is eligible.
For instance, if you waited for two years to enroll, your penalty could be 20% of the premium. With this, you might pay your Medicare Part B monthly premium with an additional 20% for as long as you have the plan. Even those who are automatically enrolled and decided to drop the plan to enroll again could still face a penalty.
Late Enrollment Penalty for Medicare Part D
Those eligible for Original Medicare can enroll in Medicare Part D at the same time. You can sign up for Part D without being penalized during the three-month period that starts when your Original Medicare becomes active. Any beneficiary who waits past this period to enroll will incur a late enrollment penalty. It will be added to their monthly premium.
The late enrollment fee is 1% of the average monthly premium cost, multiplied by the number of months it took you to enroll. This additional cost for late enrollment is permanent, and Medicare will add it to each of your monthly premiums as long as you have Part D.
You can contact us to learn more about late enrollment penalties for Medicare. If you are not sure whether you may need to sign up for Medicare when you reach the age of 65 or if you can delay, it is best to talk to our experienced insurance agents.