Medicare isn’t mandatory, but delaying enrollment may come with lifelong penalty fees. Therefore, it is wise to explore all your options before postponing coverage.
If you’ve worked at least 10 years (40 quarters), you automatically get Medicare Part A premium-free, but delaying Medicare Parts B and D could result in costly monthly fees. That’s why you should sign up when you first become eligible.
If you’re approaching 65, now is the best time to consider your next steps when it comes to your health care. This article explains the pros and cons of delaying Medicare, how to avoid penalties, and scenarios when it’s acceptable to wait for coverage.
Reasons People Delay Medicare
Life happens, and now may not be the right time to enroll. Keep in mind that delaying Medicare isn’t always a bad thing, and it could make sense in certain situations. Luckily, not all circumstances will result in late fees.
Following are the most common reasons people delay Medicare:
- Having employer coverage or insurance through your spouse’s employer
- Having CHAMPVA, COBRA, or TRICARE insurance
- Having private insurance or through the Marketplace
If you have insurance at the time you’re eligible for Medicare, do your research before delaying enrollment.
Medicare Part A Enrollment Penalty
Part A covers hospital expenses. Again, Part A is premium-free for everyone who has worked long enough to pay Medicare taxes. If you get Medicare Part A for free and decide to delay enrollment, you won’t have to pay a late penalty. Yet, those who don’t qualify for free Part A and sign up when they turn 65 could face higher premiums.
Do I Need Medicare Part B?
Part B pays for outpatient medical costs and covers 80% of doctor visits, lab work, and physical therapy, among other expenses. While Part B is optional, it will certainly help with unexpected medical bills.
If you currently have insurance through your employer, you have the option to delay Part B until you retire. However, keep in mind that you can use your employer’s plan and Original Medicare together.
Medicare Part B Enrollment Penalty
You should enroll during your Initial Enrollment Period, which begins three months before your 65th birthday, or three months before your 25th month of receiving Social Security disability benefits. If you don’t enroll during your IEP, you may have to wait for the Annual Enrollment Period, which runs from October 15 through December 7.
The penalty for Part B increases the longer you go without it. Your monthly premium goes up 10% every 12 months you’re not enrolled. There’s a chance that you may have to pay this penalty along with your premium as long as you have Part B.
Late enrollment fees for disabled people under 65 start after their 65th birthday. Medicaid beneficiaries don’t have to worry about Part B premiums, since their state covers them.
You could also avoid paying the late fee if you meet certain requirements that allow you to sign up during a Special Enrollment Period.
Medicare Part D Enrollment Penalty
Medicare Part D pays for prescription drug costs. Similar to Part B’s fine, beneficiaries pay the penalty for late enrollment at the same time as they pay their monthly premium. The Part D enrollment penalty is 1% for every month you went without coverage when you first became eligible.
If you’re currently not on any medications, you may be wondering if you even need to enroll in Part D. Life is unpredictable, so it helps to prepare for the worst. We advise enrolling even if you don’t need it today, as you may greatly benefit from prescription drug coverage tomorrow.
Employer Coverage from Work or Through a Spouse
People who have creditable coverage through their employer can enroll later without being penalized. However, the employer must have at least 20 employees.
If you sign up for Medicare within eight months of losing your employer coverage or leaving a job, you won’t have to pay any late fees. In this case, you should sign up for Medicare immediately.
If you delayed your Medicare, what’s something you wish you knew beforehand? What’s one piece of advice you would share with someone considering delaying Medicare? Please share your answers in the comments below!