Resources

How to Enroll in Medicare and Avoid Penalty Fees

Medicare eligibility and the Medicare enrollment process can vary from person to person depending on your individual situation. Your employment status, current insurance plan, and health needs are all factors that determine when and how you should enroll in Medicare. 

Learning who qualifies, when enrollment periods start and end, and which coverage plan to choose will help you best understand how your unique circumstances will impact your enrollment.    

Medicare Eligibility Criteria

Criteria to qualify for Medicare include: 

  • You are 65 or older
  • You are a US citizen, or you are a permanent legal resident who has lived in the United States at least five years 
  • You (or your spouse) are eligible for Social Security (or Railroad Retirement Board benefits); or
  • You (or your spouse) are a government employee or retiree who has not paid into Social Security but has paid Medicare payroll taxes while working

How to Apply for Medicare

1. Sign up for Medicare Part A and Part B first.

If you are approaching age 65 and already receiving Social Security, you will likely be automatically enrolled in Part A and Part B three months before your 65th birthday. This is also when you will receive your Medicare card.  

If you are not yet receiving Social Security, you may need to manually sign up for Medicare for the first time. Since this is highly dependent on your personal situation, it’s recommended to work through the details ahead of time. Your local Social Security office is a great resource that can help identify if any action is required on your part. 

2. Consider additional health plan options

Medicare provides a range of plan options that range in cost and flexibility. One signed up for both Medicare Part A and Part B, take time to evaluate the additional coverage available. Depending on your personal health needs, you may be interested in Part D Prescription Drug plans, Medicare Supplements, Medicare Advantage plans.

Important Enrollment Dates

The time frame in which you should start the Medicare enrollment process is also dependent on your individual situation. As such, there are different enrollment windows and associated prerequisites. 

Initial Enrollment Period (IEP): the first time you are eligible to sign up for Medicare (Parts A, B, C and/or D). 

This window opens three months before the month you turn 65 and extends to three months after the month of your 65th birthday. 

Example: if your 65th birthday is August 10, your IEP would begin May 1 and end November 30. By November 30, you should have chosen and enrolled in your desired health plan. 

Special Enrollment Period (SEP): You may qualify for SEP for a number of reasons, such as losing employer coverage either unexpectedly or if you retire after age 65 and deferred Medicare until then. 

SEP can begin the month after your employment ends or after your current employer health coverage ends (up to eight months).   

General Election Period (GEP): If you did not enroll during your IEP and do not qualify for SEP, you can enroll during the General Election Period every January 1 to March 31. Your health coverage will then begin July 1. 

However, this may mean you go without health insurance for a period of time and you will likely be subject to a late enrollment penalty. 

Avoiding Late Enrollment Penalties

Penalties incurred for late enrollment are an unnecessary and sometimes permanent line item in your finances. Late enrollment penalties can be issued for: 

Part A Penalty

Part A is often available for free, but there are some people who have to buy it if they don’t qualify for “premium-free” Part A. 

If you are required to buy Part A but do not enroll during your initial enrollment period, your monthly premium will go up by 10%. This 10% penalty will be in place for twice the number of years you were eligible for Part A but not enrolled. 

Part B Penalty

Similar to Part A, if you fail to sign up for Part B during your initial enrollment period you will incur a penalty fee. However, in addition to your monthly part B premium, this penalty stays with you for life. 

This penalty causes your Part B premium to increase 10% for each 12-month period that you went without it. The Part B penalty goes up the longer you go without Part B coverage. 

Note: if you enroll through a Special Enrollment Period, you may not be required to pay this penalty depending on the circumstance.

Part D Penalty

Medicare Part D is particularly difficult to understand, as there is often confusion as to what is considered “creditable” drug coverage from their employer. 

If your coverage is not creditable – and you do not sign up for Part D at the same time as Parts A and B – you will be penalized. The Part D penalty is added to the regular premium for your drug coverage and generally lasts for the remainder of your Medicare drug coverage. 

The cost of the penalty fee depends on how long you went without Part D or creditable prescription drug coverage. This means 1% of the average monthly prescription drug premium times the number of full months you went without Part D or creditable coverage, rounded to the nearest 10 cents. 

We’d Love to Hear From You!

Need help weighing your options of additional coverage? Unsure if you meet Medicare eligibility or qualify for special circumstances? Want to avoid penalty fees? 

When it comes to enrolling in Medicare, knowing what to sign up for and when can be complicated – but it doesn’t have to be. Experts at Medicare Choice Group can help walk you through the process. 

Connect with us online or give us a call at (855)-482-0574.

Related Articles