Missing your Initial Enrollment Period can be costly.
You have many decisions to make when you first become eligible for Medicare. It’s important to know what the consequences of your choices are. Medicare Part A, Part B and Part D all may charge premium penalties if you miss your initial enrollment dates.The good news is that Medicare also provides other enrollment periods to accommodate people who choose to delay enrollment for specific reasons. But you must meet certain requirements to qualify for them.
Part A premium penalty
You will not generally have a Part A premium cost if you or your spouse worked and paid taxes for at least ten years. If you do have to pay a premium, then it’s important to apply for Part A when you’re first eligible. The penalty for waiting is 10% of the Part A premium, unless you qualify for a Special Election Period. You will have to pay the premium penalty for twice the number of years you delay enrollment. For example, if you wait two years, you will pay the additional 10% premium penalty for four years. The 10% premium penalty applies no matter how long you delay Part A enrollment.
Part B premium penalty
Part B charges a monthly premium. The amount that you pay is based on your income and tax-filing status.
If you don’t enroll in Part B when you are first eligible, then you may have to pay a penalty to get it later. The penalty is an additional 10% of the Part B premium for every 12-month period that you delay enrollment. For example, if your Initial Enrollment Period ended September 30, 2010 and you enrolled in Part B during the General Enrollment Period in March 2013, then your Part B premium penalty would be 20%. You waited a total of 30 months to sign up, but that included only two full 12-month periods.
In most cases, you will have to pay the Part B penalty every month for as long as you have Part B. If you’re enrolled in Part B because you’re disabled, and you’re paying a premium penalty, you no longer have to pay this penalty once you turn 65.
You can delay enrollment in Part B without penalty if you qualify for a Special Election Period (SEP). For example, if you or your spouse has health insurance through current employment, then you may not need Part B right away. You would qualify to sign up during an SEP without penalty when the employment or the health insurance ends.
Part D premium penalty
You need to sign up for Medicare Part D by buying either a standalone prescription drug plan or a Medicare Advantage plan that includes drug coverage. Some plans charge a premium. You may have to pay a premium penalty if you sign up after your Initial Enrollment Period unless you qualify for Extra Help . This penalty is set by Medicare. For each month you delay, you may pay an additional 1% of the average premium per month. You will pay that penalty for as long as you’re enrolled in a Medicare Part D plan.
You may delay enrolling in Medicare Part D without penalty if you have had other prescription drug coverage at least as good as Medicare. This is known as creditable coverage. If it’s been more than 63 days since you’ve had creditable coverage, then the penalty may apply.
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