You may have heard that Medicare open enrollment begins October 15 and ends December 7 this year, but those who do not yet have Medicare coverage should be cognizant of the fact that open enrollment is intended for those who wish to switch plans.
The plan that previously suited your budget and medical needs may not be the best plan for you anymore. It is always wise to carefully review your Medicare options, as Medicare is subject to change from year to year.
Medicare “first timers” should be aware that there are penalties for signing up for Medicare coverage past the deadlines set for new enrollees. These deadlines are not related to open enrollment. The late penalties can be costly, and they include the following:
Medicare Part A
If you already receive benefits from the Social Security Administration or the Railroad Retirement Board, you are automatically entitled to Medicare Part A and Medicare Part B; no action is required on your part to enroll. If you do not meet the criteria listed above, then you must enroll in Medicare during the period beginning three months before you turn 65 and ending three months after your birthday.
Most people are entitled to Medicare Part A (hospital insurance) coverage for free due to being taxed on Medicare during employment, or due to their spouse being taxed. Those who are not eligible typically need to pay a premium in order to obtain coverage. The enrollment periods and the premium penalties are both the same whether you meet Part A requirements or need to purchase the plan.
The Medicare Part A late penalty is 10 percent of the current average Part A premium. Those subject to the penalty are obligated to pay the premium for twice the number of years they were eligible for Part A, but failed to enroll.
Medicare Part B
You are permitted to sign up for Medicare Part B (medical insurance) as early as three months prior to your 65th birthday. Doing so will ensure that your coverage will go into effect when you turn 65. You can also obtain Part B the month of your birthday or within the following three months, but doing so will delay the start of your coverage for one to three months.
Signing up late for Part B will incur the addition of a late penalty premium to your standard monthly premium. Your monthly premium will increase 10 percent for each full 12-month period that you could have had Medicare Part B coverage, but failed to obtain it, and this premium will be enforced for as long as you have a Medicare Part B plan.
You can receive an estimate of the late penalty you may face at the official Medicare website. The late enrollment penalty calendar uses your premiums from 2012 to generate the figure.
Medicare Advantage / Medicare Part C
To obtain a Medicare Advantage plan (hospital insurance and medical insurance), you must first sign up for Medicare Part A and Medicare Part B coverage.
Medicare Part D
You will be considered late for the Medicare Part D (prescription drug insurance) deadline if you do not sign up for a plan within three months after initially obtaining Medicare Part A or Part B.
As with Part B, a late penalty premium will be tacked onto your standard Part D premium. For Part D, this penalty is one percent of the average monthly prescription drug premium for every month you are late. You will be subject to this penalty for as long as you have Medicare Part D coverage.
Are there exceptions?
The brief answer is yes, but it is important to speak with a licensed insurance agent to obtain details on the exceptions for each type of Medicare and Medicare Advantage plan, to determine if any of these exceptions apply to you.