In the case of Medicare late enrollment penalties, what you don’t know can hurt you. The penalties are both long-lasting and expensive. Enrolling on time is essential in order to avoid extra costs.
Initial Enrollment Period
Eligibility for Medicare is based on your age, and so is your enrollment deadline. When you turn 65 and age into Medicare, you have a seven-month initial enrollment period. It covers your birthday month, the three months before your birthday month and the three months after your birthday month.
In most cases, this is when you are expected to enroll. Failure to do so can result in hefty penalties. It can also result in coverage gaps. To avoid a coverage gap, it’s best to enroll in Medicare in the first three months of the initial enrollment period – the three months before the month you turn 65.
Special Enrollment Period
Some individuals who receive employee benefits qualify for a special enrollment period. If you or your spouse is still working when you first qualify for Medicare, you may be able to delay Medicare Part B enrollment without facing a penalty. The employer must have at least 20 employees and offer group coverage.
If you delay Medicare enrollment because you have employee coverage, your special enrollment period lasts for eight months and begins when the employee coverage or employment ends.
Although you may qualify for COBRA coverage, this does not replace Medicare coverage or affect the enrollment deadline. You must enroll in Medicare whether or not you have COBRA coverage or face penalties.
Other Exceptions
CMS recently announced that some penalties would be waived or reduced in light of a specific situation caused by the Affordable Care Act. Apparently, there has been a great deal of confusion over whether or not people who qualify for Medicare Part B can elect to enroll in a Marketplace plan and receive cost-sharing assistance instead. (They can’t.)
CMS believes that many people did not have the information needed to make good decisions and is now giving people until September 30, 2017, to address the issue. Those who qualify will receive a reduced or completely waived penalty. This is good news for many individuals who enrolled in Medicare Part A and an ACA Marketplace plan but not Medicare Part B.
Late Enrollment Penalties
Late enrollment penalties can be severe. For Medicare Part B, in particular, the penalty is a 10 percent premium increase for every 12-month period of delayed enrollment. This penalty lasts as long as the individual has Medicare Part B. In other words, it’s a lifetime penalty.
The penalties for other Medicare plans work differently, but they can still be severe. For Medicare Part A, a 10 percent penalty is charged, and it lasts for twice as many years as the enrollment was delayed. Individuals who fail to enroll in Medicare Part D may also face penalties.
Avoid the penalties by enrolling on time. Need assistance or guidance? Contact PTT Financial.