Signing up for Medicare is essential to help provide you with the coverage you need as you age. But if you miss the deadlines, you could risk a lifetime of penalties. Here is what you stand to lose if you incur Medicare late penalties.
1. Late Penalties May Last Forever
One of the most compelling reasons for avoiding Medicare late penalties is that they’re designed to last the rest of your life. For instance, if you don’t enroll in Medicare Part B (which covers all visits to a doctor and outpatient services) when you’re first eligible, you’ll have to pay a 10% penalty for each year of eligibility you missed.1 This extra cost is added to your monthly payment, and you must pay it as long as you remain on Medicare.
2. Late Penalties Add Up Over Time
The longer you wait before signing up for Medicare during the seven months before your 65th birthday, the more you’ll pay in penalties. Missing the deadline by a couple of months here and there might not be too costly, but wait several years, and those penalties may be painful.
Failing to enroll in Medicare Part D (prescription drug coverage), for instance, means you’ll end up paying your late enrollment penalty for every month that you missed. Over the long term, those payments may add up pretty quickly.
3. It’s Hard to Get a Special Enrollment Period
Individuals may qualify for a Special Enrollment Period (SEP) if they’re still working and have health coverage through their employer. However, there are few valid reasons for late enrollment, so someone without one of the recognized reasons is unlikely to get a SEP. This problem means that they could be stuck with the penalty. If the choice is between paying a penalty or paying the bills, you’d better enroll on time.
4. Medicare Enrollment Is Time-Sensitive
Medicare covers everyone, but there are enrollment windows.
The initial enrollment period (IEP) begins three months before the month when you turn 65, and it runs for an additional seven months, which is 12 months in total. If you miss this window, the next opportunity to enroll is the General Enrollment Period (GEP), which runs from when your IEP ends (early January) to March 31 of each year.
5. Late Penalties May Impact Your Budget
With a fixed income, budgeting may become more difficult as you age. Medicare late fees increase your healthcare expenses just when you might need to budget more carefully. By signing up on schedule, you avoid extra payments and lower your monthly premiums to assist your budget.
In Closing
You’ll probably end up paying more for your healthcare than you need to if you don’t avoid Medicare late penalties. That’s why it’s essential to know the deadlines for enrolling in Medicare and to sign up for benefits when you first become eligible. Create a plan and enroll in Medicare on time so that you won’t have to pay more for Medicare than you’re legally required to pay.
Important Disclosures:
Content in this material is for educational and general information only and not intended to provide specific advice or recommendations for any individual.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by WriterAccess.
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Footnotes
1 Avoid late enrollment penalties
https://www.medicare.gov/basics/costs/medicare-costs/avoid-penalties