Medicare Late Enrollment Penalties Explained

Written by: Vanessa Jerusalimiec (*Amsive Digital)  |  Reviewed by: Shelley Wyant  |  *MHP partners with Amsive Digital on news content

Medicare Late Enrollment Penalties Explained

Most Americans enroll in Medicare at 65. Medicare helps pay for hospital and medical care, preventive care, prescription drugs, and other services to maintain your health and wellness. Enrolling in Medicare gives you great benefits, but there's a catch. If you don’t enroll in Medicare at 65, you could be stuck paying late enrollment penalties for years.

What Are Late Enrollment Penalties?

Medicare late enrollment penalties can increase your monthly premiums. The penalties are not a one-time fee. Instead, late enrollment penalties are added to your monthly health insurance premiums, and you may be paying these penalties as long as you have Medicare coverage. Medicare Part B and Part D have late enrollment penalties that could increase your monthly premiums.

What is the Medicare Penalty for Late Enrollment?

The Medicare late enrollment penalties may catch you unaware. For example, if you’re working past 65, you may forget to check the Medicare requirements. If you don’t have creditable coverage through your employer, you may pay late enrollment penalties when you retire and enroll in Medicare. For others, paying late enrollment penalties is as simple as forgetting to enroll in Medicare during the Initial Enrollment Period (IEP). This period starts three months before the month you turn 65 and ends three months after the month you turn 65.

Part B Late Enrollment Penalty

The Medicare Part B late enrollment penalty is a 10% increase in monthly premiums for each year that you don’t have Part B coverage. For example, if you miss your Initial Enrollment Period and you don’t enroll in Medicare for another three years, your monthly premiums will go up by 30%. And unlike the Part A penalty, the Part B late enrollment penalty never expires. You will continue paying 30% more per month for as long as you have Medicare coverage. However, if you or your spouse are still working and have other coverage, you do not have to sign up for Part B and will not pay a Part B late enrollment penalty if you sign up within the 8-month special enrollment period.

Part D Late Enrollment Penalty

The Part D late enrollment penalty may catch you by surprise. If you don’t enroll in a Medicare Part D or a Medicare Advantage plan during your Initial Enrollment period, your monthly premiums will increase. The Part D late enrolment penalty is 1% for every month you don’t have a Part D plan, a Medicare Advantage plan with prescription drug coverage, or other creditable drug coverage. If you have to pay the penalty, it is 1% times the national base beneficiary premium times the number of full months that you did not have Part D or creditable coverage (then rounded to the nearest .10). For example: If you had 10 uncovered months, the calculation is: 1% x $34.70 x 10 = $3.47. You will pay this monthly penalty as long as you have Medicare Part D, even if you switch to another plan.

How to Avoid Late Enrollment Penalties

Late enrollment penalties can increase your monthly premiums forever, so avoiding late enrollment penalties is one of the best ways to keep your healthcare costs affordable. You can avoid enrollment penalties by:

  • Enrolling in Medicare during your Initial Enrollment Period. Enroll in Medicare Part A, Part B, and Part D to avoid late enrollment penalties, or choose a Medicare Advantage plan that bundles all your benefits in one plan.
  • Checking your employer-sponsored health insurance. If you’re working past 65, make sure your health insurance plan offers creditable coverage for Medicare Part B and Part D. If not, it’s best to enroll in Medicare even if you’re still working.
  • Enrolling in Medicare if you lose other coverage. When you retire and lose your workplace health insurance, you’ll have a Special Enrollment Period. Enroll in Original Medicare right away and make sure you have creditable drug coverage through a Part D plan or a Medicare Advantage plan.

For more information about late enrollment penalties and how you can avoid them, contact McLaren Medicare at 833-358-2404 (TTY: 711). We’ll help you understand your Medicare options, and enroll in the right plan at the right time.

If you're a Michigan resident considering Medicare, McLaren Health Plan has you covered with a variety of Medicare plans offering extensive benefits. Learn more about how our plans are specifically designed to support your health journey in Michigan.

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