How Much will a Late Enrollment Penalty Cost Me, and How Can I Avoid This?
Late enrollment penalties can increase your premium by 10% or more
Nobody wants to spend more than they have to on their health care coverage (or anything else, for that matter). So if you're eligible for Medicare, make sure you're enrolled in Part B (Medical Insurance) and Part D (prescription drug coverage). If you wait too long, you'll end up paying more than you should.
Why There's a Penalty
It takes a lot of money and resources to run Medicare. But making sure that Medicare is available to everyone who needs it-today, and in the future-is something from which we'll all benefit. That's why enrolling in Parts B & D as soon as we're eligible is so important.
The reason is simple, if everyone waited until they were sick to enroll in Part B or Part D, Medicare would never be able to sustain itself. The cost of paying for care for individuals who are ill and/or require expensive medications would far outstrip the amount of money taken in by Medicare in the form of premiums. So Medicare needs everyone to begin paying their premiums for Parts B and D as soon as they're eligible so there's enough money to care for everyone when they need it.
Understanding Enrollment in Medicare Part B
For most people, enrollment in Medicare Parts A & B is automatic. When you turn 65, and start receiving Social Security or Railroad Retirement Board benefits, you're automatically enrolled in Medicare Parts A & B.
There are instances, however, when you may not be enrolled in Part B. This may be because you, or your spouse, have other health insurance through an employer. Or maybe you had Part B at one time, and then dropped it when it you got other insurance.
Whatever the case, if you have no other insurance and you're eligible for Part B, you must enroll to avoid a penalty.
Understanding Enrollment in Medicare Part D
Part D, Medicare Prescription Drug Coverage, is different from Part B in two important ways. First and foremost, enrollment in a Medicare Prescription Drug Plan (MA-PD) is never automatic. Secondly, the only way you can get a Medicare Prescription Drug plan is through a private insurance carrier.
Unlike Part B, premiums for Medicare Prescription Drug Plans will vary between different insurance carriers. One company may even have several different drug plans, all with different premiums and coverage levels.
Add to that the fact that not all insurance companies offer plans in all states or areas, and it really starts to sound confusing. Fortunately, there are a lot of resources available to help you find the right plan.
And remember, if you're eligible for Medicare Parts A & B and don't have creditable prescription drug coverage from an employer or other source, you're eligible for Part D.
How Much is the Late Enrollment Penalty for Part B?
For every 12-month period you don't enroll in Part B when you're eligible, you'll pay an extra 10% of your monthly premium. If you didn't enroll for two years, for example, you'd pay a penalty of 20% per month. Worst of all, you'll continue to pay that penalty for as long as you have Medicare.
You can use Medicare.gov's Part B Late Enrollment Penalty Calculator to get an idea of what you might have to pay. Also, keep in mind that Medicare has some special enrollment periods, which may help you avoid a Part B late enrollment penalty.
How Much is the Late Enrollment Penalty for Part D?
Calculating the late enrollment penalty for Part D is a bit more complicated, in part because Part D premiums aren't standard. In addition, you can be penalized anytime you go a period of 63 days or more without a Medicare prescription drug plan or some other creditable coverage (from a former employer, for example).
The penalty itself is calculated by multiplying 1% of the national base beneficiary premium by the number of full months you were eligible for coverage, but didn't enroll. You can learn more about the Part D late enrollment penalty at Medicare.gov.
If you're eligible but haven't yet enrolled in Medicare Part B or D, getting started is simple. Call 1-800-MEDICARE to find out your options for Part B. Or use their Medicare Plan Finder to find a prescription drug plan in your area.
If you prefer, you can talk to a Medicare insurance expert at MedicareSolutions. They're all licensed professionals who can help you understand what policies are available in your state, what coverage you may qualify for and how much you'll pay.