Medicare Mistake #2: Forgetting to Sign Up for Medicare at Age 65

In our first article in the Medicare Mistakes Series, we dispelled a common misconception that Medicare health coverage is free. In Mistake #2, we’re going to address an equally important topic, getting enrolled on time and avoiding penalties.

Get It Right or Pay The Price

Medicare is a confusing topic. With so many moving parts, dates, deadlines, and options, it’s easy to miss a detail or two. Unfortunately, some of those little details can end up costing you money, coverage, or both.

Medicare is not a health insurance policy that you can turn on and off like a switch. After all, this is the government we’re talking about. It’s a rigid beast. It has various enrollment periods, and the government wants you to follow them.¹Medicare.gov, ”Joining a health or drug plan”, Accessed January 11, 2022

If you are thinking of delaying Medicare for a few years, maybe because you are healthy or don’t want the added expense, think again. Make sure you consider and fully understand the consequences of delaying enrollment if you do not have group health coverage through an employer.

The federal government has the power to charge you enrollment penalties if you miss your IEP and other enrollment windows. Not only will you not have coverage if you delay enrollment, but you will pay more when you do enroll.²Medicare.gov, ”When does Medicare coverage start?”, Accessed January 11, 2022

Your Initial Enrollment Period (When You Should Enroll)

For some people, Medicare enrollment happens automatically, and for others, it doesn’t. Regardless, IEP is the same, whether you’re a retiree already or not.

Your Initial Enrollment Period is a seven-month rolling period that includes:²Medicare.gov, ”When does Medicare coverage start?”, Accessed January 11, 2022

• The 3 calendar months before your 65th birthday
• The month of your 65th birthday
• The 3 calendar months after your 65th birthday

During your IEP you can enroll in Medicare Part A and Medicare Part BMedicare Part B is medical coverage for people with Original Medicare benefits. It covers doctor visits, preventative care, tests, durable medical equipment, and supplies. Medicare Part B pays 80 percent of most medically necessary healthcare services.. You may also join a Medicare Part DMedicare Part D plans are an option Medicare beneficiaries can use to get prescription drug coverage. Part D plans provide cost-sharing on covered medications in four different phases: deductible, initial coverage, coverage gap, and catastrophic. Each... prescription drug plan or a Medicare Advantage planMedicare Advantage (MA), also known as Medicare Part C, are health plans from private insurance companies that are available to people eligible for Original Medicare (Medicare Part A and Medicare Part B). (Medicare Part C) to replace your Original MedicareOriginal Medicare is private fee-for-service health insurance for people on Medicare. It has two parts. Part A is hospital coverage. Part B is medical coverage. with private health insurance.¹Medicare.gov, ”Joining a health or drug plan”, Accessed January 11, 2022

If you plan to keep your Original Medicare, your IEP is also when you can buy Medicare supplement insuranceMedicare Supplements are additional insurance policies that Medicare beneficiaries can purchase to cover the gaps in their Original Medicare (Medicare Part A and Medicare Part B) health insurance coverage. (aka, Medigap) from insurance companies with guaranteed-issue rightsGuaranteed-issue is a right granted to Medicare beneficiaries and applies to Medicare Supplement insurance (aka, Medigap plans). All states and the federal government enforce this essential right, which protects Medicare beneficiaries from medical underwriting.. This right guarantees that you can purchase supplemental insurance without going through medical underwriting (i.e., you can’t be turned down). This is critical if you have one or more chronic health conditions.³Medicare.gov, ”When can I buy Medigap?”, Accessed January 11, 2022

NOTE: If you live in Puerto Rico you will not receive Medicare Part B automatically. You will need to sign up for it during your IEP.⁴CMS.gov, ”Original Medicare (Part A and B) Eligibility and Enrollment”, Accessed January 11, 2022

Late Enrollment Penalties (Why Medicare Has Them)

When the Medicare program was signed into law in 1965, Congress realized that it would need a stick to get healthy people to join. After all, most people don’t like the idea of spending money on something they don’t use. So the law gives the Centers for Medicare & MedicaidMedicaid is a public health insurance program that provides health care coverage to low-income families and individuals in the United States. Services and the Social Security Administration the power to assess penalties. After all, if only unhealthy people enrolled, the cost for these people would skyrocket.

Three of the four parts of Medicare have potential penalties, A, B, and D. These penalties affect your monthly premiumsA premium is an amount that an insurance policyholder must pay for coverage. Premiums are typically paid on a monthly basis. In the federal Medicare program, there are four different types of premiums. , not the deductiblesA deductible is an amount a beneficiary must pay for their health care expenses before the health insurance policy begins to pay its share., copaymentsA copayment, also known as a copay, is a set dollar amount you are required to pay for a medical service., or coinsuranceCoinsurance is a percentage of the total you are required to pay for a medical service.  you pay when you use your Medicare benefits.⁵Medicare.gov, ”Part A late enrollment penalty”, Accessed January 11, 2022⁶Medicare.gov, ”Part B late enrollment penalty”, Accessed January 11, 2022⁷Medicare.gov, ”Part D late enrollment penalty”, Accessed January 11, 2022

Medicare Part A Late Enrollment Penalty

Most people (and their spouse) get their Medicare Part A coverage (hospital insurance)  premium-free by working 10 or more years and paying Medicare taxes⁸Medicare.gov, ”Medicare costs at a glance”, Accessed January 11, 2022. However, if you didn’t pay Medicare taxes for a minimum of 40 quarters (10 years), then you will pay a monthly premium for your Part A coverage. A penalty may apply for late enrollment.⁵Medicare.gov, ”Part A late enrollment penalty”, Accessed January 11, 2022

If you miss your IEP or intentionally delay Medicare Part A enrollment:⁵Medicare.gov, ”Part A late enrollment penalty”, Accessed January 11, 2022

• Your Part A monthly premium will be increased by 10%.
• The 10% penalty will continue for twice the number of years you were not enrolled when you were eligible.

Medicare Part B Late Enrollment Penalty

Everyone eligible for Medicare pays a Medicare Part B premiumThe Medicare Part B premium is the monthly charge paid by beneficiaries for their outpatient medical care, services, and supplies. A beneficiary's premium may be uplifted by an IRMAA surcharge if their income is above..., for their medical insurance, when they enroll. Medicare taxes collected during employment only apply to Part A for hospital inpatient coverageMedicare Part A is hospital coverage for Medicare beneficiaries. It covers inpatient care in hospitals and skilled nursing facilities. It also covers limited home healthcare services and hospice care., but not for Part B coverage, and late enrollment penalties apply.⁶Medicare.gov, ”Part B late enrollment penalty”, Accessed January 11, 2022

If you do not enroll in Medicare Part B when you are first eligible:⁶Medicare.gov, ”Part B late enrollment penalty”, Accessed January 11, 2022

• Your Part B monthly premium will increase 10% for each 12-month period that you are not enrolled.
• You will pay a higher premium for the remainder of your life.

Medicare Part D Late Enrollment Penalty

The Medicare prescription drug coverage program was added in 2003 to help aging seniors and people with Social Security Disability Insurance afford their prescription medications. Even though a Part D insurance plan is optional private insurance, CMS created a penalty structure to encourage people to join when first eligible.⁷Medicare.gov, ”Part D late enrollment penalty”, Accessed January 11, 2022

If you do not join a Medicare Part D plan when you are first eligible:⁷Medicare.gov, ”Part D late enrollment penalty”, Accessed January 11, 2022

• Your Part D monthly premium will increase by 1% of the national base beneficiaryA person who has health care insurance through the Medicare or Medicaid programs. premium average multiplied by the number of months you were not enrolled.
• In most cases, you will pay the premium for as long as you have Part D coverage.
• If you receive the Extra Help benefit from Social Security you will not pay the penalty.

Do Late Enrollment Penalties Apply When Employed?

Many of us work well past our 65th birthday, and Medicare takes this into account. If you are employed and your employer provides creditable health insurance, you can delay enrollment. However, it is not safe to assume that 100% of your employer coverage is creditable. It is highly advisable to call Medicare and confirm that you are in compliance.⁹Medicare.gov, ”Working past 65”, Accessed January 11, 2022

When your current employment group health planA group health plan is a health plan offered by an employer or employee organization that provides health coverage to employees, their families, and retirees. coverage ends you have the option to use COBRA to bridge the gap between your employer’s group coverage and Medicare. You’ll need to add Part B within eight months of the earliest of either the end of your employment or the end of your group health coverage.⁹Medicare.gov, ”Working past 65”, Accessed January 11, 2022

If you have a Health Savings Account (HSA) with a high deductible health plan through your or your spouse’s current employment, you may be eligible for a Special Enrollment PeriodSpecial Enrollment Periods (SEPs) allow beneficiaries to change their Medicare Advantage and Part D plans due to a special circumstance. Common reasons for a SEP include moving, losing employer coverage, and Medicaid eligibility, to name... (SEP). In this case, to avoid a tax penalty you must stop contributing to your HSA at least 6 months prior to enrolling in Medicare.⁹Medicare.gov, ”Working past 65”, Accessed January 11, 2022

How to Enroll in Medicare During Your IEP

If you receive Social Security, Railroad Retirement Board (RRB), or other federal retirement benefits four or more months prior to your 65th birthday, in most cases the Social Security Administration (SSA) will automatically enroll you in Part A and B. In this case, the SSA will send you a notice prior to your eligibility date.⁴CMS.gov, ”Original Medicare (Part A and B) Eligibility and Enrollment”, Accessed January 11, 2022

If you are not automatically enrolled, you must use the SSA website to start your enrollment or visit your local Social Security office.  If you get enrolled during your IEP, when your coverage begins will depend on the month you enroll.

If you enroll in Medicare Parts A and B:²Medicare.gov, ”When does Medicare coverage start?”, Accessed January 11, 2022

1. During the 3-month period before your birthday, coverage begins on the first day of the month you turn 65 (if your birthday is on the 1st, coverage begins the prior month).
2. During your birthday month, coverage starts on the first day of the next month.
3. During one of the three months after your birthday month, coverage starts on the first day of the month after you enrolled.

If you plan to stay in Original Medicare and want prescription drug coverage, you can enroll in a Part D plan as soon as you enroll in Medicare Part A and/or Medicare Part B.²Medicare.gov, ”When does Medicare coverage start?”, Accessed January 11, 2022

RELATED: Why Medicare Advantage Plans are Bad

Alternatively, you can join a Medicare Advantage plan that includes a Medicare Part D plan. To enroll in Medicare Advantage you must first enroll in Medicare Part A and B²Medicare.gov, ”When does Medicare coverage start?”, Accessed January 11, 2022. They will not enroll you until you have your Medicare number, which is printed on your Medicare card. In the past, it was the same as your Social Security number, but this is no longer the case. For security, your Medicare number is unique to you.¹⁰Medicare.gov, ”Your Medicare Card”, Accessed January 11, 2022

If You Missed Your IEP, Here’s What You Need To Do

Your IEP is the ideal time to enroll in Medicare. If you missed it, or if you delayed enrollment because you have creditable through your employer, your next option is the Medicare General Election Period (GEP), often referred to as the general enrollment periodThe General Enrollment Period (GEP) allows beneficiaries to enroll in Medicare Part A and Part B  from January 1 to March 31 if they missed their Initial Enrollment Period. Beneficiaries can also enroll in a....²Medicare.gov, ”When does Medicare coverage start?”, Accessed January 11, 2022

GEP is a three-month period from January through March of each year. No matter when you enroll during GEP, your coverage start date will be July 1st.²Medicare.gov, ”When does Medicare coverage start?”, Accessed January 11, 2022

If you miss the first GEP after your IEP, you will not be allowed to enroll until the following January. That means you will be without coverage for well over a year and you will incur late enrollment penalties.²Medicare.gov, ”When does Medicare coverage start?”, Accessed January 11, 2022

Not Enrolling On Time is a Costly Mistake

It’s important to get enrolled in Medicare during your IEP so you can begin taking advantage of the benefits you’re earned. One of those benefits is your free “Welcome to Medicare” visit. This doctor visit includes a review of your medical and social history related to your health and education and counseling related to preventive services, including:¹¹Medicare.gov, ”‘Welcome to Medicare’ preventive visit”, Accessed January 11, 2022

• Certain screenings, flu, and pneumococcal shots, and referrals for other care, if needed.
• Height, weight, and blood pressure measurements.
• A calculation of your body mass index.
• A simple vision test.
• A review of your potential risk for depression and your level of safety.
• An offer to talk with you about creating advance directives.
• A written plan letting you know which screenings, shots, and other preventive services you need.

You pay nothing for the “Welcome to Medicare” preventive visit if your doctor or other qualified health care providerA person or organization that’s licensed to give health care. Doctors, nurses, and hospitals are examples of health care providers. accepts Medicare-assignment. On this visit, the Part B deductible doesn’t apply.¹¹Medicare.gov, ”‘Welcome to Medicare’ preventive visit”, Accessed January 11, 2022

As we outlined above, gaps in Medicare coverage can be costly. In some cases, penalties can be waived, but this, too, can be very costly in the time and frustration spent trying to get a waiver approved. If you need a waiver, start on this Medicare.gov page.

Citations

• 1
  Medicare.gov, ”Joining a health or drug plan”, Accessed January 11, 2022
• 2
  Medicare.gov, ”When does Medicare coverage start?”, Accessed January 11, 2022
• 3
  Medicare.gov, ”When can I buy Medigap?”, Accessed January 11, 2022
• 4
  CMS.gov, ”Original Medicare (Part A and B) Eligibility and Enrollment”, Accessed January 11, 2022
• 5
  Medicare.gov, ”Part A late enrollment penalty”, Accessed January 11, 2022
• 6
  Medicare.gov, ”Part B late enrollment penalty”, Accessed January 11, 2022
• 7
  Medicare.gov, ”Part D late enrollment penalty”, Accessed January 11, 2022
• 8
  Medicare.gov, ”Medicare costs at a glance”, Accessed January 11, 2022
• 9
  Medicare.gov, ”Working past 65”, Accessed January 11, 2022
• 10
  Medicare.gov, ”Your Medicare Card”, Accessed January 11, 2022
• 11
  Medicare.gov, ”‘Welcome to Medicare’ preventive visit”, Accessed January 11, 2022