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Health and Benefits

Medicare Enrollment Penalties

Medicare takes over when workplace health coverage ends. As people age out of the workplace it is important to understand the rules governing Medicare. There are serious financial penalties for failing to enroll in Medicare at the proper time.

What is the Initial Enrollment Period?

The age for Medicare eligibility is 65. The initial enrollment period begins 3 months before a person turns 65 (it includes the month of the 65th birthday) and ends 3 months after the month the person turns 65.

For example:

Jack turns 65 on November 20, 2020. His initial Medicare enrollment period started August 1, 2020. It ends February 28, 2021. That gives him a total of 7 months to complete and submit his enrollment forms.

Is a person automatically enrolled in medicare?

Many people are automatically enrolled in Part A when they turn 65. Enrollment in Part A (hospital coverage) is automatic if the person worked and paid Medicare taxes for at least 10 years during their working life. If they qualify for automatic enrollment, there will be no premiums for Part A. If they did not work outside the home and pay Medicare taxes for 10 years, they must apply during their enrollment period. They will be charged a monthly premium.

There is no automatic enrollment for Part B. If a person wants Medicare - Part B, they must take the necessary steps to enroll. Part B Medicare is the part that covers doctor visits, diagnostic tests, physical therapy, etc.

What if a person is still working at 65 or disabled?

If a person is still working when they turn 65 and have health insurance coverage under a group insurance plan through your employer, they may be able to sign up for Medicare during a special enrollment period (SEP). They will be able to sign up for Medicare, Parts A, B, and D, at a later time, without penalty. This also applies if they are disabled and covered by employer provided health coverage through their spouse. If either of these special circumstances apply, they will have an 8 month special enrollment period to sign up for Medicare that begins: (1) the month after the employment ends, or (2) the month after the group health plan based on current employment ends, whichever event occurs first.

What if the person missed their initial enrollment period?

If they did not sign up for Medicare during their initial enrollment period, they are eligible to apply for both Medicare Part A and Part B during the general enrollment period between January 1 and March 31, but only if both of these circumstances apply:

  • They did not sign up when they were first eligible, AND 
  • They are not eligible for a special enrollment period (SEP)

What are the penalties for failing to sign up for Part A?

If a person is not automatically enrolled in Part A, and if they fail to sign up during the initial enrollment period and do not qualify for a SEP, they will face a financial penalty when they get around to signing up. They will be charged the penalty amount each month for twice the number of years they delayed enrollment.

For instance: If a person waits 1 year past the initial enrollment period, they will pay a monthly penalty for 2 years. If they wait 2 years to sign up, they will pay the penalty for 4 years.

What are the penalties for failing to sign up for Part B?

If a person fails to enroll in Medicare Part B during the initial enrollment period and if they do not qualify for a SEP, they can expect their monthly Part B premium to increase 10% for each 12-month period of delayed enrollment. There is no time limit on this penalty. A delay in Part B enrollment means they will be charged a monthly penalty for so long as they have Medicare. The longer the delay, the higher the penalty will be.

What are the penalties for failing to sign up for Part D?

Part D is the portion of Medicare that covers prescriptions. Not enrolling in part D coverage can also subject a person to penalties. There will be a penalty amount added to a monthly premium if there is any continuous period of 63 days or more after the initial enrollment period, when one of the following is in place:

  • A Medicare Advantage Plan (Part C) or other Medicare plan that offers Medicare drug prescription coverage, OR
  • Creditable prescription drug coverage.

The amount of the penalty depends on how long the person went without Medicare prescription coverage.

What is the National Base Beneficiary Premium under Part D?

Medicare calculates the penalty by multiplying 1% of the National Base Beneficiary Premium by the number of full months the person went without either Medicare Part D coverage or a creditable prescription plan. The calculated penalty is then rounded up or down to the nearest $00.10. This penalty is a permanent cost that is added to a monthly premium. The National Base Beneficiary Premium can change from year to year, so the penalty will change with it.

Is there a Penalty for Late Enrollment in Medigap Coverage?

Medigap coverage is also known as a Medicare Supplement. It is not required coverage, so there is no penalty for late enrollment. Most Medicare recipients have either original Medicare with a Medicare Supplement or a Medicare Advantage Plan. There are others, but these two types are by far the most common. While there is no penalty for late enrollment in Medigap coverage, but a person will get the best rates and not be penalized for preseisting conditions if a plan is purchased during the initial enrollment period.

What Do I Do if I Do not Agree with a Penalty?

A person has the right to ask for a reconsideration. They can ask for a reconsideration form if it is a Part D penalty. For Part A and Part B penalties, they will need to contact Medicare and file an appeal. They will be required to pay the penalty while the appeal is pending.



This website has been prepared for general information purposes only. The information on this website is not legal advice. Legal advice is dependent upon the specific circumstances of each situation. Also, the law may vary from state-to-state or county-to-county, so that some information in this website may not be correct for your situation. Finally, the information contained on this website is not guaranteed to be up to date. Therefore, the information contained in this website cannot replace the advice of competent legal counsel licensed in your jurisdiction.