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Avoid Costly Late Medicare Open Enrollment Penalties

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The Medicare Open Enrollment Period runs from October 15 to December 7 every year. This is the primary time when people with Medicare can choose a plan or make changes in their healthcare coverage. Plans can change from one year to the next, so it is important to thoroughly review and compare plans during Open Enrollment.

When you first become eligible for Medicare, unless you are under an employer’s health plan or have other coverage similar to Medicare, it is important to sign up during your Initial Enrollment Period. Otherwise, you may be subject to late enrollment penalties. These penalties are not a one-time late fee. They are added to your monthly premium and usually charged for as long as you have that type of coverage – a lifetime for most people. The longer you wait to enroll in Medicare, the more these penalties increase.

When Is the Initial Enrollment Period for Medicare?

Initial Enrollment is a seven-month period. It begins three months before you turn 65 and ends three months after the month you turn 65. To avoid late penalties, enroll within that time frame. If you miss your Initial Enrollment Period, you may end up paying late enrollment penalties, which continue for as long as you have Part B coverage for medical services. Late penalties may also be applied to Part A coverage for hospitalization and Part D drug coverage.

How Are Late Enrollment Penalties Calculated for Medicare?

  • Most people do not have to pay a premium for Medicare Part A (hospitalization). However, if you are required to pay and do not enroll when you first become eligible, your monthly premium may increase by 10%, and you will pay the penalty for twice the number of years you failed to sign up. For example, if you became eligible for Part A and failed to enroll for two years, you may have to pay higher premiums for four years.
  • If you fail to sign up for Part B (medical services) within your Initial Enrollment Period, an additional 10% will be added to your monthly premium for every year you could have enrolled but did not. For example, if you waited two years to sign up for Part B, you could be charged a 20% late enrollment penalty in addition to monthly Part B premiums.
  • Penalties for late enrollment may also apply to Part D (prescription drug coverage). You could pay an extra 1% per month if you fail to join a Medicare drug plan when you first get Medicare or if you go 63 days or more without creditable drug coverage. For example, say you became eligible for Medicare and waited 14 months to join a Medicare drug plan. If you did not have creditable drug coverage during that time, you will be charged a 14% late enrollment penalty in addition to your monthly plan premium.

Make changes to your Medicare health coverage during Open Enrollment. To avoid late enrollment penalties, it is important to sign up for Medicare during your Initial Enrollment Period. If you need assistance, our experienced agent can help.