How The Medicare Part B Late Enrollment Penalty Works
In this article, we will discuss the Medicare Part B Late Enrollment Penalty. If you are not familiar with it, please pay close attention because this is a penalty that could stay with you a lifetime if you miss your enrollment window.
Before discussing the late enrollment penalty for Medicare Part B, let’s talk about when you can enroll in Medicare.
When To Enroll In Medicare Part B
There are 3 times that you can enroll in Medicare Part B. Those enrollment periods include:
- Initial Enrollment Period (IEP)
- General Enrollment Period (GEP)
- Special Enrollment Period (SEP)
Initial Enrollment Period
The Initial Enrollment Period is your first chance to sign up for Medicare. Your IEP typically happens around the time of your 65th birthday.
You will have 7 months to sign up for Medicare during the year of your 65th birthday. Those months include:
- 3 months prior to your 65th birthday
- 1 month of your 65th birthday
- 3 months after your 65th birthday
If a disability is the event that qualifies you for Medicare, your IEP will be after the 24th consecutive month that you have had a disability.
If you miss your IEP, you could face a penalty if you did not have sufficient health insurance on your 65th birthday. The most common example of sufficient health insurance is someone working past 65 and using their employer-sponsored health insurance.
Editor’s note: If you are working and approaching your 65th birthday, you’ll want to speak to human resources to ensure your employer health coverage is considered sufficient coverage by Medicare.
General Enrollment Period (GEP)
The General Enrollment Period is the 2nd window that you can use to enroll in Medicare. This period takes place every year from January 1st to March 31st.
Special Enrollment Period (SEP)
The Special Enrollment Period is a timeframe that you can use to enroll into Medicare when specific life events occur. Some of those events include:
- Switching from your employer health insurance to Medicare after the age of 65
- When you move out of your current plan’s service area
- If at no fault of your own you lose your current health insurance plan
- The current plan changes its contract with Medicare
- You become eligible for both Medicare and Medicaid
- You develop a chronic condition and want to switch to a Special Needs Plan or SNP
- Your chronic condition goes away which disqualifies you for the SNP
You can learn more about qualifications for Special Enrollment Periods on the Medicare special circumstances page.
Late Enrollment Penalty For Medicare Part B
Individuals who miss their first chance to enroll into Medicare Part B (Initial Enrollment Period or a Special Enrollment Period) could receive a late enrollment penalty. This is a penalty that will last as for the rest of your life or as long as you have Medicare.
The late enrollment penalty is 10% of your monthly premium for each 12-month span that you could have been covered by Part B. Here is an example…
If someone was eligible for Medicare Part B in 2016 but waited until 2020 to enroll they would face a 40% enrollment penalty because they waited 4 years to enroll.
Based on the 2020 monthly premium of $144 per month, this individual who waited 4 years to enroll and incurred a 40% penalty would pay $198 per month. For this reason, it is extremely important to enroll in Part B on time.
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 B premium.
If you had sufficient health insurance when you first became eligible for Medicare Part B, you may not have to pay the late enrollment penalty. Here is another example…
If you were still working on your 65th birthday and still had your employer health insurance then you may be protected from the late enrollment penalty. The key is having a sufficient health insurance plan during your initial enrollment period.
If you were to retire 2 years later at 67, then you can enroll into Medicare Part B during your Special Enrollment Period and potentially avoid the late enrollment penalty.
How To Enroll In Medicare Part B
There are 3 ways to enroll in Medicare Part B. Regardless of the option you chose, you will go through the Social Security Administration because they manage this program.
- Visit the Social Security Administration website to complete an online application. This process takes less than 10 minutes.
- Visit a local Social Security office.
- Contact the Social Security Administration at 800.772.1213 any day Monday through Friday from 7 am to 7 pm
Because late enrollment penalties can impact you for the rest of your life, it is important to understand exactly when you can apply for Medicare B.
The Initial Enrollment Period is the first chance you get to apply for Medicare. This can take place during the year of your 65th birthday or after 24 consecutive months of a disability. If you miss this window you will be forced to pay 10% for every 12-month period you went without having insurance.
If you have questions about the Medicare Part B Late Enrollment Period or any other issues, simply comment below and I will answer your question as soon as possible.