As a Medicare beneficiary, it’s important to understand the various rules and regulations surrounding the program. One such regulation is the Medicare penalty, which can be incurred if you fail to enroll in Medicare when you are first eligible or if you do not maintain continuous coverage. In this blog post, we’ll discuss how to avoid Medicare penalties and maintain your coverage.
Understanding Medicare Enrollment
Before we dive into the specifics of how to avoid Medicare penalties, it’s important to understand Medicare enrollment. Generally, you are first eligible to enroll in Medicare when you turn 65, or if you have a disability, after 24 months of receiving Social Security Disability Insurance (SSDI) benefits. If you don’t enroll during your initial enrollment period, which is a seven-month period that starts three months before the month you turn 65 and ends three months after the month you turn 65, you may incur a late enrollment penalty.
Avoiding the Late Enrollment Penalty
The late enrollment penalty can be avoided by enrolling in Medicare during your initial enrollment period. It’s important to note that if you have health coverage through your employer or your spouse’s employer. You may be able to delay enrollment in Medicare without incurring a penalty. In some cases, you may be able to enroll in Medicare without penalty during a special enrollment period, such as if you lose your employer-sponsored health coverage.
Maintaining Continuous Coverage
Once you are enrolled in Medicare, it’s important to maintain continuous coverage to avoid penalties. This means paying your premiums on time and not allowing your coverage to lapse. If you coverage lapses, you may incur a penalty when you re-enroll. Additionally, if you have Medicare Part D coverage, it’s important to maintain creditable coverage. This means having prescription drug coverage that is at least as good as Medicare Part D coverage. If you don’t have creditable coverage and you go without prescription drug coverage for more than 63 days, you may incur a penalty when you enroll in Part D coverage.
Medicare Penalties (A-D)
Medicare penalties can apply to all parts of Medicare, including Part A, Part B, Part C (Medicare Advantage) and Part D (prescription drug coverage).
Part A Penalties:
- Late Enrollment Penalty: If you don’t enroll in Medicare Part A during your initial enrollment period, you may incur a late enrollment penalty of up to 10% of the Part A premium for twice the number of years you were eligible for Part A but didn’t enroll.
- Hospitalization Co-insurance: If you stay in the hospital for more than 60 days, you may have to pay a co-insurance amount for each day you stay beyond 60.
Part B Penalties:
- Late Enrollment Penalty: If you don’t enroll in Medicare Part B during your initial enrollment period and you don’t have other creditable coverage, you may incur a late enrollment penalty of up to 10% of the Part B premium for each full 12-month period you were eligible for Part B but didn’t enroll.
- Monthly Premium Penalty: If your income is above a certain threshold, you may have to pay a higher monthly premium for Part B.
Part C (Medicare Advantage) Penalties:
- Out-of-Network Penalty: If you receive care from a provider that is not in your plan’s network, you may have to pay more for that care or even the full cost.
- Late Enrollment Penalty: There is no late enrollment penalty for Medicare Part C. However, you may only sign up for a Medicare Advantage plan at certain times of the year.
Part D (Prescription Drug Coverage) Penalties:
- Late Enrollment Penalty: If you don’t enroll in Medicare Part D during your initial enrollment period and you don’t have other creditable prescription drug coverage, you may incur a late enrollment penalty of 1% of the national base beneficiary premium ($32.74 in 2023) for each month you were eligible for Part D but didn’t enroll.
It’s important to note that some of these penalties may be waived in certain circumstances, such as if you have a special enrollment period or if you have proof of creditable coverage. Additionally, the penalties for Parts A, B and D can be avoided by enrolling in these parts of Medicare during your initial enrollment period or during a special enrollment period if you have other creditable coverage.
If you’re unsure about the penalties that apply to your Medicare coverage, it’s a good idea to talk to a Senior Financial Group Medicare expert who can provide guidance and answer your questions.