Medicare provides crucial health coverage for millions of Americans, but timing is everything when it comes to enrollment. In some cases, missing the initial enrollment period can result in Medicare late enrollment penalties and a lapse in coverage.
We will provide some information about Medicare enrollment periods and how to avoid late enrollment penalties.
Enrollment periods for Original Medicare
- Initial Enrollment Period (IEP): A 7-month window that starts 3 months before the 65th birthday, includes the birthday month, and extends 3 months after.
- Special Enrollment Periods (SEP): Available for certain qualifying life events, such as losing employer-based coverage.
- General Enrollment Period (GEP): Each year from January 1 to March 31 there is a general enrollment period for those who missed other enrollment opportunities.
Those who don’t sign up during their IEP and don’t qualify for an SEP may face late enrollment penalties.
Late enrollment penalties
1. Medicare Part A
Most people receive Part A premium-free if either they or their spouse paid Medicare taxes for at least 10 years. Although, if you must pay for Part A and do not enroll during your IEP, your monthly premium increases by 10%. This penalty applies for twice the number of years you delayed enrollment.
2. Medicare Part B
Those who neglect to sign up for Part B when either first eligible for Medicare or if they come off a qualified healthcare plan such as employer coverage receive a penalty.
The penalty they pay is a 10% increase in their monthly premium for every 12-month period they were eligible but didn’t enroll. The penalty applies to their premium for as long as they have Part B coverage.
3. Medicare Part D (Prescription Drug Coverage)
The Part D penalty is a 1% increase in the “national base beneficiary premium” for every month they went without Medicare prescription drug coverage (Part D) or other creditable prescription drug coverage.
Click here for the Part D late enrollment penalty calculator
Unfortunately, this penalty is similar to the Part B penalty and applies to the monthly premium for life as long as the beneficiary has Part D coverage.
GEP (General Enrollment Period)
Those who miss enrolling in Medicare Parts A or B during their IEP can sign up during the GEP. This enrollment period runs from January 1 to March 31 each year. Coverage starts the month after they sign up.
Please note: Those who use the GEP to enroll in Medicare A and/or B qualify for a Part D SEP to enroll o in a prescription drug plan. The SEP starts once they apply for Part A or Part B and lasts for two months. Prescription drug coverage starts the first day of the month after the month of enrollment.
Avoid Late Enrollment Penalties
- Be aware of the IEP (Initial Enrollment Period) . Do not delay enrollment. It is important to sign up before the 7-month window for enrollment closes.
- Make sure you maintain creditable coverage if you are on employer-sponsored health coverage. Be sure to your coverage qualifies as creditable to avoid penalties.
- In the event you lose creditable coverage, use an SEP quickly to avoid a lapse in coverage.
- Consult a licensed Medicare agent for advice and assistance navigating enrollment periods and eligibility requirements.
Watch our YouTube video on Medicare Enrollment Periods
Please note: individuals who have income and resources below specific limits may qualify for financial assistance programs and may not have to pay late enrollment penalties.
To Sum it up
Missing Medicare enrollment deadlines can result in significant penalties and coverage delays. Those either nearing 65 or managing Medicare on behalf of a loved one must be proactive to avoid making costly mistakes.