Enrolling in Medicare may be confusing, but one fact is clear – enrolling late in Medicare Parts A, B, or D can be costly. The initial enrollment period for Medicare Parts A and B lasts seven months and begins three months before your 65th birthday month. Once that initial enrollment period ends, you have 62 days to choose a prescription drug plan. Late enrollment can lead to long-term Medicare penalties and delays in coverage.
— If you claim Social Security benefits before your 65th birthday, you’ll be automatically enrolled in Medicare Parts A and B, with no risk of late enrollment. Keep in mind, you’ll still need to enroll in a drug plan on time to avoid a penalty.
Not everyone is at risk for a Part A penalty. If you or your spouse worked for at least 10 years and paid the Medicare tax during that time, you’re entitled to Medicare Part A for free. With no premium, there is no penalty, no matter when you enroll.
If you are not eligible for premium-free Medicare Part A and did not sign up during the initial enrollment period, the penalty is a 10 percent increase to your monthly premium. In addition, the longer you wait to enroll in Medicare Part A, the longer the penalty lasts. You pay the higher premium for twice the number of years you waited to enroll. So, if you wait two years after the initial enrollment period to sign up, you pay the penalty for four years.
The penalty for late enrollment in Medicare Part B is lifelong. For every full year that you delay Part B enrollment, your monthly premium increases 10 percent. You will pay this higher premium for as long as you have Medicare Part B.
Late enrollment for Medicare Part B also delays the start of your coverage. Once you miss the initial enrollment period, you cannot enroll in Part B until the general enrollment period (January 1 to March 31). Coverage does not start until July 1 of that year.
After your initial enrollment period, Medicare requires you to add prescription drug coverage in a timely manner. If you go without coverage for a period of 63 continuous days or more, you’ll be penalized when you enroll in Medicare Part D. To avoid that penalty, you to need prove that you have acceptable prescription drug coverage, such as:
The cost of your Medicare Part D penalty depends on the length of time you went without prescription drug coverage. To calculate the penalty, Medicare multiplies 1% of the national base beneficiary premium times the number of full months without drug coverage. They round the penalty to the nearest $.10 and add it to your monthly Part D premium. The penalty changes year to year, as the national base beneficiary premium changes. Plan to pay the penalty as long as you have a Medicare drug plan.