Medicare FAQ #4
Are There Penalties If I Don’t Sign Up for Medicare
When I Am First Eligible?
Medicare is a federal health insurance program that provides coverage to Americans who are 65 years old or older, as well as people with certain disabilities and those with end-stage renal disease. While many people enroll in Medicare as soon as they become eligible, some may choose to delay their enrollment for various reasons. It’s important to understand that there can be penalties for not signing up for Medicare when you are first eligible. Let’s take a closer look.
Initial Enrollment Period
When you first become eligible for Medicare, you have a seven-month period called the Initial Enrollment Period (IEP) to sign up for Medicare. This period includes the three months before your 65th birthday, the month of your birthday, and the three months after your birthday. If you don’t sign up during this period, you may have to pay a penalty when you do enroll.
Part A Penalties
Most people don’t pay a premium for Part A. If you or your spouse worked 40 quarters, or in other words, 10 years, and paid into Medicare taxes, then you are entitled to Part A without having to pay a premium. In this case, you would not have to pay a late enrollment penalty, even if you did not sign up when you were first eligible. However, if you or your spouse have not paid Medicare taxes, or did so for less than the 40 quarters, then you would have to pay a premium for Part A. On top of the premium for Part A, you will also pay a late enrollment penalty for Part A if you do not sign up when you are first eligible. That penalty is 10% of the monthly premium and is added to that monthly premium. This penalty will be in place for twice the number of years that you could have been paying premiums for Part A. For example, if you delayed enrolling for 2 years, you would pay that penalty for 4 years.
Part B Penalties
If you’re eligible for Medicare Part B (medical insurance) and don’t sign up during your IEP, you may have to pay a penalty of 10% for each full 12-month period that you were eligible but didn’t enroll. This penalty will be added to your monthly Part B premium for as long as you have Part B coverage.
There are some exceptions to the Part B penalty, such as if you have health coverage from your employer or spouse’s employer that is considered “creditable coverage.” If you’re not sure whether your coverage is creditable, you can check with your employer or health plan.
Part D Penalties
If you’re eligible for Medicare Part D (prescription drug coverage) and don’t sign up during your IEP or a Special Enrollment Period (SEP), you may have to pay a penalty of 1% of the national average premium for each full month that you were eligible but didn’t enroll. This is a lifetime penalty that will be added to your monthly Part D premium for as long as you have Part D coverage.
Exceptions to Penalties
There are some exceptions to the penalties if you do not sign up for Medicare when you are first eligible.
- If you delay your enrollment because you have coverage through your employer or your spouse’s employer, you may not have to pay a penalty if your coverage is considered “creditable.”
- If you’re eligible for Medicare because of a disability, the rules for penalties may be different.
In conclusion, it is important to be aware that there can be penalties for not signing up for Medicare when you first become eligible. The penalties can vary depending on which parts of Medicare you’re eligible for and how long you delay enrollment. It’s important to understand the rules and exceptions for each part of Medicare and to make an informed decision about when to enroll. If you have questions about when you should enroll to avoid any penalties, VibrantUSA agents are available to help at 866-733-5111.