Enrolling in Medicare is crucial to maintaining your health past age 65. While some people are automatically enrolled in Medicare Part A and Part B, others have to enroll in these two initial Medicare programs by themselves and there is a time limit that needs to be met. You will have to enroll in Medicare Part B yourself if you meet the following conditions:
- You are not receiving Social Security or RRB benefits.
- Your Medicare eligibility is due to having End-Stage Renal Disease.
- You reside in Puerto Rico, receive Part A automatically and are seeking to sign up for Part B.
If you fall under any of these three categories, you must enroll in Part B on time. If not, you will face the Part B penalty, one that you will have to pay for the rest of your life while enrolled in Part B. That is why it is often referred to as the “Part B lifetime penalty”.
The Medicare Part B Enrollment Penalty
The Medicare Part B enrollment penalty is an added monthly cost to your Part B premium. This penalty is enforced upon beneficiaries who enroll late to Medicare Part B. Enrolling late in Part B means not signing up for during the Initial Enrollment Period—the seven months surrounding your 65th birthday.
You may qualify for financial assistance with paying the Part B penalty from your state if you have limited income. You can also get Extra Help to pay for your Medicare prescription drug coverage.
Cost Of The Part B Penalty
The cost of the Part B penalty is not universal for all enrollees. Instead, it is a calculation of how long you went without having Part B when you could have signed up for it. Specifically, it depends on how many 12-month periods you have gone without Part B after your Initial Enrollment Period.
For every 12-month period you didn’t enroll in Part B when you could have, you will pay a 10% penalty added to your Part B premium. The 10% is multiplied by the number of 12-month periods you missed signing up for Part B.
Here is an example of a Part B penalty:
Jeremy turned 65 in 2011. He did not sign up for Medicare Part B until 2017.
His penalty is:
10% x 6 years = 60
His penalty is thus 60% on top of the premium
0.6 X $134 (2017 Part B premium) = $80.40 penalty
$80.40 + $134= $214.4
Jeremy will pay $214.4 on a monthly basis as his penalty Part B premium.
How To Avoid The Part B Penalty
The only solution to avoiding the Part B late enrollment penalty besides enrolling on time or within your IEP is to delay enrollment permissibly. There are certain conditions that allow you to delay Part B enrollment without incurring the Part B penalty. These conditions give you a Special Enrollment Period, which nullifies your penalty.
The Special Enrollment Period
The Special Enrollment Period allows you to legally delay your Part B enrollment without it resulting in any penalties. Only those that match the following criteria are qualified for a Special Enrollment Period.
- If you are still covered by your or your spouse’s employer or union group health plan or from active employment from your spouse.
If you are within the eight months after the month your employer or union group health plan ends its coverage, or when the employment ends.
Who Is Not Eligible For The Special Enrollment Period
The Special Enrollment Period is not granted to everyone who has missed their Part B enrollment deadline. You do not qualify for the SEP in the following situations:
- Your or your spouse’s employer health plan is secondary to Medicare once you turn 65. This may occur if your employer has under 20 workers.
- You are retired and get retiree health benefits but aren’t covered by your spouse’s employee insurance.
- You get coverage by COBRA group health insurance.
- You get insurance from the employer of your co-inhabitant who you aren’t married to.
If you match any of these conditions, then you are at risk for the Part B penalty the month after your Initial Enrollment Period ends.
What To Do If You Don’t Want To Enroll In Part B
You may not need Part B if you haven’t started Medicare yet. There are two ways you may get automatically signed up for Part B:
- Via a Medicare card (JPG)
- If you signed up for Medicare via Social Security.
Send your card back if the first case applies to you. If you don’t, you will be enrolled in Medicare. If you fall upon the second case, just contact Social Security and let them know you want to be out.
In summary, Part A and Part B begin with the Initial Enrollment Period. If you miss enrolling during the IEPI, you will incur the Part B penalty, which can be waived if you qualify for a Special Enrollment Period.