why is there a penalty for late enrollment in medicare part a?

by Kiana Tremblay PhD Published 3 years ago Updated 2 years ago

Medicare created late enrollment penalties in order to encourage beneficiaries to enroll in health coverage insurance during the initial enrollment period. In order to fund Medicare, the program needs eligible beneficiaries to enroll when they’re first eligible. Part A Late Enrollment Penalty

Full Answer

What are the pros and cons of delaying Medicare enrollment?

The takeaway

Most people benefit by signing up for original Medicare when they first become eligible.
In some situations, though, it may make sense for you to wait.
Talk to your current employer or plan administrator to determine how you can best coordinate your current plan with Medicare.
Don’t let your healthcare coverage lapse. ...

How to avoid late penalties when enrolling in Medicare?

The parts of Medicare that charge a late enrollment fee are:

Part A (inpatient hospital insurance
Part B (outpatient medical insurance)
Part D (prescription drug coverage)

Can I delay Medicare Part B without paying a penalty?

You may choose to delay Medicare Part B and enroll during a special enrollment period. If you or your spouse is actively employed and covered under an employer group health plan, you may delay enrollment without penalty. Your 8 month special enrollment period begins when your group coverage ends.

How to get a Medicare late enrollment penalty revoked?

Your job-based insurance pays first, and Medicare pays second.
If you don’t have to pay a premium for Part A, you can choose to sign up when you turn 65 (or anytime later).
You can wait until you stop working (or lose your health insurance, if that happens first) to sign up for Part B, and you won’t pay a late enrollment penalty.

Does Medicare Part A have a late enrollment penalty?

Part A late penalties amount to an extra 10 percent of your current Part A premium added to the premium. Part A premiums are expensive — in 2020, they are $252 a month if you've earned 30 to 39 work credits, or $458 a month if you have fewer than 30 credits.

Why does Medicare have a penalty?

Medicare charges several late-enrollment penalties. They're meant to discourage you from passing up coverage, then getting hit with costly medical bills. To avoid higher Medicare premiums, you need to know about these penalties and take steps to avoid them.

What happens if you don't enroll in Medicare Part A at 65?

The Part A penalty is 10% added to your monthly premium. You generally pay this extra amount for twice the number of years that you were eligible for Part A but not enrolled. For example, suppose that: You were eligible for Medicare in 2020, but you didn't sign up until 2022.

Does Part A have a penalty?

Some people have to buy Part A because they don't qualify for premium-free Part A. If you have to buy Part A, and you don't buy it when you're first eligible for Medicare, your monthly premium may go up 10%.

Can you delay Medicare Part A?

However, if you have to pay a premium for Part A, you can delay Part A until you (or your spouse) stop working or lose that employer coverage. You will NOT pay a penalty for delaying Part A, as long as you enroll within 8 months of losing your coverage or stopping work (whichever happens first).

How does the late enrollment penalty work?

Medicare calculates the penalty by multiplying 1% of the "national base beneficiary premium" ($33.37 in 2022) times the number of full, uncovered months you didn't have Part D or creditable coverage. The monthly premium is rounded to the nearest $. 10 and added to your monthly Part D premium.

How do I avoid Medicare penalty?

Enroll in Medicare drug coverage when you're first eligible. Even if you don't take drugs now, you should consider joining a Medicare drug plan or a Medicare Advantage Plan with drug coverage to avoid a penalty. You may be able to find a plan that meets your needs with little to no monthly premiums.

What is the Part B late enrollment penalty?

If you didn't get Part B when you're first eligible, your monthly premium may go up 10% for each 12-month period you could've had Part B, but didn't sign up. In most cases, you'll have to pay this penalty each time you pay your premiums, for as long as you have Part B.

Is Medicare Part A free at age 65?

You are eligible for premium-free Part A if you are age 65 or older and you or your spouse worked and paid Medicare taxes for at least 10 years. You can get Part A at age 65 without having to pay premiums if: You are receiving retirement benefits from Social Security or the Railroad Retirement Board.

What does Medicare Part A pay for?

Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. coverage if you or your spouse paid Medicare taxes for a certain amount of time while working. This is sometimes called "premium-free Part A." Most people get premium-free Part A.

When does Medicare enrollment end?

The initial enrollment period normally begins three months before the month you turn 65, includes the month you turn 65, and ends three months after the month you turn 65. If you’re still working and receive coverage from your employer, you can tell Medicare that you’re already covered under an employer-sponsored plan.

What happens if you go without Medicare?

According to Medicare, if you go without one of the following for 63 days or more after your initial enrollment period, you may be on the hook for a late enrollment penalty: Part D prescription drug coverage. A Medicare Advantage plan (Part C) with drug coverage.

What is Medicare Advantage Plan?

A Medicare Advantage plan (Part C) with drug coverage . Another Medicare plan that offers prescription drug coverage. Creditable prescription drug coverage from another source. If you have prescription drug coverage through your current employer, you don’t need a plan from Medicare or other private insurers. 4.

Why does Medicare require healthy people to pay into the system?

In order to keep costs as low as possible, Medicare relies on healthy people paying into the system to make up for the costs that are paid out for the unhealthy. If Medicare allowed people to enroll later, when their health starts to degrade, the costs to everybody would be significantly higher.

How much is the penalty for a 12 month period?

The penalty is 10 percent for each 12-month period you should have been enrolled. Example: If your initial enrollment period ended July 31, 2015, and you waited until August 2 of 2017 to enroll, your premium will go up 20 percent.

How long do you have to pay the penalty fee for Part A?

If you should have been enrolled two years ago, you have to pay the penalty fee for four years. 5 Most people don’t pay for Part A and are automatically enrolled so there’s usually nothing to worry about here.

What is the Part B premium?

The Part B premium will be deducted from your monthly Social Security benefit check.

How Medicare Late Enrollment Penalties Work

Different parts of Medicare come with late enrollment penalties. These penalties fall under Part A & Part B. There’s also a penalty if you don’t take Part D when first eligible.

Part A Late Enrollment Penalty

For most Americans, this will not apply as they qualify for Medicare Part A for $0 premium due to working for at least ten years themselves or their spouse.

Part B Late Enrollment Penalty

The Medicare Part B penalty applies to beneficiaries that don’t take their Medicare Part B when first eligible and did not have creditable coverage.

Part D Late Enrollment Penalty

Similar to the Part A and Part B penalties, the drug coverage penalty revolves around not taking the coverage when first eligible. The drug coverage penalty is also called the Part D penalty. Qualifying for the low-income subsidy program (Extra Help) will waive the penalty.

How to Avoid Medicare Late-Enrollment-Penalties

Avoiding these penalties is relatively easy. As long as you worked for 10 years, or your spouse has, then you get Part A premium free. Whether you need it or not, it makes sense to enroll anyway.

How to Get Help with Medicare Late Enrollment Penalties

If you’re approaching your Medicare eligibility, give us a call or fill out our online request form. Let us help you navigate Medicare. We can help ensure you don’t end up with costly penalties.

What Is Premium-Free Medicare Part A and Who Receives It?

Premium-Free Medicare Part A is essential coverage that you receive for free. People who have worked for most of their life will receive free Medicare Part A coverage. To get this coverage you will need 40 credits.

When To Enroll In Medicare Part B

There are 3 times that you can enroll in Medicare Part A. Those enrollment periods include:

Late Enrollment Penalty for Medicare Part A

The Medicare Part A late enrollment penalty will charge you an additional 10% of your monthly premium for each 12-month period that you were eligible but did not enroll. Unlike the Part B penalty, this one will only follow you for twice the number of years that you went without Part A.

Exceptions To The Late Enrollment Penalty

There are some expectations to the late enrollment penalty that can save you from an extra charge on your monthly Medicare Part A premium.

How To Enroll In Medicare Part A

There are 3 ways to enroll in Medicare Part A. Regardless of the option you chose, you will go through the Social Security Administration because they manage this program.

Conclusion

Unlike the Part B penalty, this one will not follow you for a lifetime. Despite that, you still want to avoid it, because it can also be very costly.

How long can you delay Medicare enrollment?

For example, if you delayed enrollment for three years, you’d pay penalties for six years. There are some exceptions: If you receive health care coverage from an employer for which you or your spouse actively works, you have the right to delay Part A as well as Part B enrollment until the employment ends. By that time, if you or your spouse has ...

How much is Part A late penalty?

Part A late penalties amount to an extra 10 percent of your current Part A premium added to the premium. Part A premiums are expensive — in 2020, they are $252 a month if you’ve earned 30 to 39 work credits, or $458 a month if you have fewer than 30 credits. However, unlike Part B late penalties, that 10 percent is not multiplied by the number ...

How long do you have to sign up for Part A?

Instead, you get a special enrollment period of up to three months after your return to the U.S. to sign up. If you enroll in Part A at that time, you are not liable for late penalties. One important point: If you don’t yet qualify for Part A benefits without paying premiums, and you’re not covered under current employer health insurance, ...

Do you pay Medicare payroll taxes if you have 40 credits?

En español | If you or your spouse has earned at least 40 credits through paying Medicare payroll taxes at work, you are automatically entitled to Part A benefits (which cover stays in the hospital, home health services and hospice care) and you do not pay premiums for them.

What is the penalty for late enrollment in Medicare?

There are special circumstances that could exempt beneficiaries from a penalty. The Medicare Part A late enrollment penalty is 10 percent of the Part A premium, which must be paid for twice the number of years for which you were eligible for Part A but did not sign up. For example, if you were eligible for Part A for two years before finally ...

What happens if you wait too long to enroll in Medicare?

If you wait too long after your Initial Enrollment Period to sign up for Medicare Part A (hospital insurance), Part B (medical insurance) or Part D (Medicare prescription drug plans), you could be subject to a Medicare late enrollment penalty.

How much is Medicare Part A 2021?

In 2021, Medicare Part A premiums are either $259 or $471 per month, depending on the amount of Medicare taxes you paid during your lifetime. The 2021 Part A late enrollment penalty can be as high as $26 or $47 per month, depending on your Medicare Part A premium cost.

How long does Medicare enrollment last?

When you first become eligible for Medicare, you have an Initial Enrollment Period. This is a seven-month period that begins three months before you turn 65 years old, includes the month of your birthday, and then continues for three more months thereafter.

How much is Part D late enrollment?

The Part D late enrollment fee is calculated by multiplying 1 percent of the “national base beneficiary premium” (which is $33.06 in 2021) by the number of months you were eligible for but did not enroll in a Part D plan or other creditable coverage.

How long does it take to enroll in Medigap?

During your Medigap Open Enrollment Period (which is a six-month period that begins the day you are 65 years old and enrolled in Medicare Part B), insurance companies are not allowed to use medical underwriting to determine your Medigap plan rates.

How long can you go without Medicare Part D?

For most people, the Medicare Part D Initial Enrollment Period is the same period of time as their Medicare Initial Enrollment Period. If you go 63 consecutive days without “creditable drug coverage” after your Initial Enrollment Period is over, you could face a Part D late enrollment penalty if you eventually choose to sign up for a plan.

What is the late enrollment penalty for Medicare?

What Is the Late Enrollment Penalty. The Medicare Part B late-payment penalty amounts to an increase of 10% for each 12-month period that you were late enrolling in Medicare Part B. For example, if you were eligible when you turned 65, but didn’t enroll until you turned 67, you will be charged 20% more in Medicare Part B premiums as everyone else, ...

Does Medicare Part B late enrollment go away?

This penalty doesn’t go away, which is why you need to do everything you can to avoid it. The Medicare Part B late enrollment penalty is in place to help guide Medicare seniors to enroll in Part B at the right time. You can read more about the Medicare Part B late enrollment penalty on Medicare.gov.

How much is the penalty for Part B?

Your Part B premium penalty is 20% of the standard premium, and you’ll have to pay this penalty for as long as you have Part B. (Even though you weren't covered a total of 27 months, this included only 2 full 12-month periods.) Find out what Part B covers.

What happens if you don't get Part B?

When does the Part B enrollment period start?

They don’t qualify for the Part B Special Enrollment Period and can’t enroll in Part B until the next General Enrollment Period (GEP), which runs from January to March of each year, with Part B coverage beginning that July.

How much does Part B premium increase?

Part B premiums increase 10 percent for every 12-months you were eligible for Part B but not enrolled. People who delay Part B because they were covered through their own or a spouse’s current job are exempt from this penalty, and can generally enroll in Part B without any delays.

Can you ask to be enrolled in Part B?

You can ask to be enrolled in Part B with a retroactive effective date if bad advice caused you to have a gap in coverage. If you do this, you’ll need to pay Part B premiums for the entire time you want to be enrolled. Alternatively, you can ask to have the Part B penalty waived and just be enrolled going forward.

Can you get a penalty for delaying Medicare enrollment?

Key takeaways. The penalty for delaying enrollment in Medicare Part B is an increased premium. Beneficiaries can get a Part B penalty waived if their enrollment delay was the result of bad advice from the government. To file an appeal, you’ll need to provide details about the bad advice – including when you received it.