Late enrollment penalties are typically enforced either when you do not enroll during your initial enrollment period, or how long you wait to enroll after no longer being covered by a group health plan.
Medicare Part A Late Enrollment
Medicare Part A’s premium can be free if you receive Social Security or disability benefits and are automatically enrolled. If you are not automatically enrolled, you will have to manually join during the Initial Enrollment Period (the time that spans from three months before to three months after your 65th birthday). If you miss this, you will have to wait until the General Enrollment Period, which is from January 1 to March 31.
Medicare Part A’s monthly premium can be anywhere from $259 to $471. With late enrollment, you pay an extra 10% on top of your premium. And for every year that you wait, you will pay that higher monthly premium for twice the amount of time you waited.
Medicare Part B Late Enrollment
Part B’s late enrollment penalty is permanent. The late fee gains an extra 10% every 12 months. For 24 months, the penalty is 20% added to the premium. For 36 months, it’s 30%, and so on.
The 2021 standard Part B premium is $148.50. This is an example of how a late enrollment penalty can affect a monthly premium:
- 12 months, 10% late fee – $163.35
- 24 months, 20% late fee – $178.20
- 36 months, 30% late fee – $193.05
Medicare Part D Late Enrollment
Like Part B, the Part D late enrollment penalty is permanent.
The late enrollment penalty is decided by how long you’ve been eligible for Medicare, and how long it’s been since you’ve had creditable drug coverage since being eligible for Medicare. Creditable drug coverage is where your monthly coverage costs roughly just as much or more than the standard Part D premium.
The penalty increases by 1% per month you’ve been without creditable drug coverage. That percentage is multiplied by the current standard Part D premium, then rounded to the nearest dime, and then that figure is added onto your premium.
Example – The 2021 base premium is $33.06. This is how your fees would be calculated if you were 14 months late:
- 14 months (14%). $33.06 x .14 is $4.62
- $4.62 rounded to nearest $0.10 is $4.60
- $4.60 is the late enrollment penalty
- $33.06 + $4.60 is $37.66
- Your monthly premium is $37.66 for 2021
Avoiding Late Enrollment Penalties
The first way to avoid a late enrollment penalty is to sign up when you’re first eligible for Medicare, during the Initial Enrollment Period.
If you’re under your employer’s group health plan, you can avoid the late enrollment penalty if your employer has at least 20 employees. With Part D, having creditable drug coverage despite meeting the age requirement for Medicare’s prescription drug plan does not subject you to late enrollment penalties, either.
Don’t Hesitate
One thing about Cornerstone Senior Advisors is that we are fast to act. We want you to get Medicare without paying the extra fees. Call us now at 316-260-3331.