Once kupuna are eligible for Original Medicare (usually at age 65), it is important to know how to avoid additional costs such as late enrollment penalties. Medicare penalties are assessed for various reasons, but mostly for failing to sign up for coverage within designated enrollment windows. In this article we will take a look at how to avoid the Part B late enrollment penalty.
What is Medicare Part B?
Seniors receive their medical insurance through Medicare Part B, assuming they do not have other creditable coverage available to them. Part B provides coverage for medically-necessary health care such as doctors’ visits and tests, outpatient care, durable medical equipment, preventative care, home health care and other medical services. The Centers for Medicare and Medicaid Services (CMS) expects seniors to sign up for Medicare Part B within their Initial Enrollment Period, unless they have other creditable coverage. When a person fails to enroll in Part B when they should have, CMS will typically apply a 10 percent premium penalty on top of their Part B monthly premium for each 12-month period they could have enrolled but did not. That means that if you delay signing up for coverage by 24 months, you will be paying a 20% penalty on top of your Part B premium.
How to Avoid the Part B Late Enrollment Penalty
The best way to avoid the Medicare Part B penalty is to sign up for Medicare Part B during your Initial Enrollment Period. Your Initial Enrollment Period is a seven-month window that starts on the first day of the month, three months before you turn 65, lasts through your birth month and ends on the last day of the third month following your birth month.
If you do not enroll in Medicare Part B during your Initial Enrollment Period even though you do not have creditable coverage, you can use the General Enrollment Period to sign up. The General Enrollment Period runs from January 1 through March 31 each year, with coverage starting on July 1. If your Initial Enrollment Period ends on October 31 and you wait until the next General Enrollment Period to enroll in Part B, you will avoid a Part B penalty because less than 12 months passed between the end of your IEP and when you enrolled in Part B.
One other way to avoid the Part B late enrollment penalty is by getting approved for the Medicare Savings Program. Only kupuna with specific income criteria qualify for this program so speak to a Medicare agent about eligibility.
Do not make the following mistakes:
Failing to enroll in Medicare Part B during your IEP when you turn 65 even though you do not have health insurance.
Not signing up for Part B when you turn 65 because you have VA benefits (not creditable coverage).
Keeping your retiree insurance until age 70 even though you retired at 65 (you will need to ask your plan administrator if your retiree insurance is creditable).
Failing to sign up for Part B during your eight-month special enrollment period after you lose employer coverage.
Do I need to sign up for Medicare Part B if I still have employer group coverage when I turn 65?
Since Part B comes with a monthly premium, it may make sense to delay signing up until you need to. If you have creditable employer group coverage when you turn 65 - either through your own or your spouse’s employer – then you are not required to sign up for Medicare Part B until this coverage ends.
There are two things to keep in mind:
1. Employers with fewer than 20 employees may not offer creditable coverage to employees once they become eligible for Medicare as they are not required to.
2. If you have health coverage through your spouse’s employer, you may need to enroll in Medicare in order to stay on the employer plan as a dependent. This is true regardless of the employer’s size. You will need to check with the employer about their rules for covering Medicare-eligible spouses.
After your employer coverage ends, you will have a Special Enrollment Period (SEP) that lasts for eight months and you should sign up for Part B during this window. If you do not enroll during your SEP, then you risk the Part B late enrollment penalty.
How long does the Part B late enrollment penalty last?
In most cases, beneficiaries will have to pay the Part B penalty every month for as long as they have Medicare Part B. The main exception to this is when a person is enrolled in Medicare because of a disability and is paying premium penalties. Once these seniors turn 65, they will no longer have to pay the premium penalty.
How do I get rid of the Part B late enrollment penalty?
It is possible to appeal the penalty if you think you were continuously covered by Part B or employer-based insurance. Beneficiaries can also appeal to lower the penalty amount if they think it was calculated incorrectly. You will need to provide evidence that you had creditable coverage so call your former employer or plan and ask for a letter proving that you were enrolled in coverage.
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. We are the only insurance agency in Hawaii contracted with EVERY Medicare Advantage plan, which means 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.