Some penalties are incurred only once, such as a 10% penalty for early withdrawal from a retirement plan. But the Medicare Part B penalty can follow you for the rest of your life.
If you enroll late in the federal health insurance program, you will face a late enrollment penalty, and it will never drop to the pre-penalty level for as long as you have that insurance (potentially, for the rest of your life). Understanding this penalty and how to avoid it can protect you from unnecessary costs.
What is the Medicare Part B late enrollment penalty?
Medicare Part B covers medical expenses such as what you have to pay for doctor visits, outpatient care and preventive services. It comes with a premium.
The premium is usually deducted from your Social Security benefit, but you will be billed directly if you have not yet received Social Security. You usually don’t have to re-enroll in Medicare Part B each year, but late enrollment will incur a 10% penalty for each full 12-month period you had Part B but didn’t enroll.
A two-year delay can mean a 20% penalty is added to the regular Part B premium. You can delay coverage without penalty if you already have eligible coverage through your current employer, but waiting too long can result in an excessive penalty that never ends.
Who is most at risk for stroke
Anyone who delays Medicare coverage without qualifying health insurance is at risk. People age 65 who have not claimed Social Security may be required to enroll in Medicare. And not all COBRA, retirement health benefits or market coverage are enough to allow them to delay Part B without consequences.
Talking to a professional – such as a medical agent or a National Health Insurance Assistance Programs (SHIP) adviser – about whether your coverage is sufficient to delay Part B can be a good idea. You can ask if your current coverage is enough and if you can delay Medicare Part B without penalty.
How to avoid or minimize damages from a penalty
You can avoid the penalty by enrolling in Medicare during the first enrollment period. This period starts three months before you turn 65 and ends three months after that month. For example, if you turn 65 in June, your first enrollment period is from March 1 to September 30.
If you already have health coverage, contact Medicare and get written confirmation that your coverage qualifies for the special enrollment period later. Make sure you keep any records about your current health coverage in case you have to show Medicare that you don’t have to pay a premium.
Anyone with a limited income can qualify for the Medicare Savings Plan, which can help some people avoid the penalty for Part B. Even if you have enough income and enroll late, you can still minimize the damage. Registering soon after missing the deadline can prevent the fine from adding up and make it more manageable.
