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Medicare is a very popular program and most kupuna look forward to switching to Medicare coverage on their 65th birthday. In order to make the transition to Medicare go smoothly, it’s important to understand how the process works, starting with the Initial Enrollment Period (IEP). When kupuna know when they become eligible for Medicare and take advantage of that window, they can avoid penalties for not signing up for Medicare by the deadlines.
As Medicare insurance agents we look out for our customers like family, helping them navigate choices and deadlines to ensure they get the best possible Medicare experience. Read on to learn about Medicare penalties so you can avoid them.
Avoid Penalties for Not Signing up for Medicare
Medicare has several late-enrollment penalties in place to encourage seniors to sign up for Medicare coverage as soon as they are eligible so they don’t end up with expensive medical bills due to lack of insurance.
Original Medicare and all Medicare Advantage plans include Part A (hospital insurance) and Part B (medical insurance). Seniors are also required to sign up for Part D (prescription drug insurance), either on its own or included in a Medicare Advantage plan, if they want to avoid paying a penalty.
Here are the Medicare penalties that seniors should know about:
Is there a Part A penalty?
The vast majority of Americans qualify for premium-free Part A insurance because they or their spouse has paid Medicare taxes through their job or business for at least 10 years. Those who qualify for premium-free Part A are not at risk for a Part A penalty.
If you don’t qualify for premium-free coverage, you are still obligated to sign up for Part A insurance within your Initial Enrollment Period (a 7-month window around your 65th birthday). If you do not do so, then Medicare increases your premium by 10% when you do sign up. This penalty stays in place for twice the number of years you failed to enroll past eligibility.
What is the penalty for Medicare Part B?
Unlike Part A, everyone pays a monthly premium for Part B insurance. Seniors who fail to enroll in Part B within their IEP window (without creditable* group health insurance through an employer) are charged a 10% penalty for the life of their Part B insurance. In addition, the penalty increases by 10% for each 12-month period that passes without enrolling after eligibility. Yes, that means if you wait two years to enroll in Part B past your IEP you would be stuck with a 20% penalty for the rest of the time you carry Part B insurance.
*"Creditable" means the coverage is at least as good as what Medicare covers.
What is the penalty for Medicare Part D?
Part D prescription drug coverage is technically optional but it is a good idea to choose a Part D plan when you’re first eligible to avoid paying a penalty when you decide you want coverage later. Any time you go without creditable drug coverage from Medicare or an employer for 63 days after your IEP ends, means you are at risk for a penalty. Medicare uses a complicated formula to determine your penalty and it sticks with you for the length of time you have Part D insurance.
How do I avoid a Medicare penalty?
For seniors who don’t have group health insurance when they turn 65, the easiest way to avoid Medicare penalties is to sign up during their initial 7-month enrollment period that starts three months before the month of their 65th birthday and ends three months after the month of their 65th birthday. If you have documentation proving that you had creditable group health insurance when you first became eligible for Medicare, then you can avoid Medicare penalties if you sign up for Medicare during your Special Enrollment Period (SEP). For Parts A and B, seniors get up to eight months after either their job or other health coverage ends, whichever comes first. For Part D, on the other hand, seniors only have 63 days to enroll without incurring a penalty.
If you are turning 65 and have an existing health plan, contact your plan administrator to find out how your insurance works with Medicare and whether you have creditable coverage for Parts B and D. Some employer plans require seniors to enroll in Part A and Part B to get the best coverage.
Can I request a review of a Medicare penalty?
If you think Medicare has assessed a penalty against you incorrectly, you can request a review by filling out a Medicare reconsideration request form. Generally, you will want to request a review within 60 days of the date on the penalty letter Medicare sends you. You will be expected to provide evidence such as proof that you had creditable health insurance or drug coverage.
You can get help with the review process through your State Health Insurance Assistance Program (SHIP), a Medicare aid organization, or your Medicare insurance agent.
Our independent insurance agents are dedicated to assisting people on Medicare and those who are ready to transition from employer coverage to personal retirement coverage. We help kupuna understand their benefits options and apply for additional coverage, as needed. Because we represent all the major Medicare Advantage and supplement plans in Hawaii, we are able to offer unbiased advice; all at no cost to our clients.
At PBC, our clients are our number one priority and we look forward to getting to know you and your needs. Call us today at (808) 738-4500 to see how we may be of assistance.