Three months before you turn 65 you should receive a packet of information that tells you exactly what you need to do during Medicare open enrollment to insure coverage. Open enrollment only lasts for three months before the month you are set to turn 65 and for three months after. If you choose to enroll in Medicare outside this period, you will be subject to a late enrollment penalty.
Late Enrollment Penalty
There are four different parts of Medicare which each have their own penalty for late enrollment. These four parts are: Medicare Part A, Medicare Part B, Medicare Advantage, and Medicare Plan D. There are penalties for each separate part of Medicare if you choose to enroll late.
Medicare Part A
Most likely you will automatically qualify for Medicare Part A when you turn 65. If you do automatically qualify, often there is not premium. Automatic coverage occurs for recipients who have, or who have a spouse who has, worked at least forty quarters in the United States. This equates to ten years of employment in the U.S.
If you have not met this qualification, then when eligible you will be required to pay for premium for Medicare Part A. If you choose not to at the time, waiting until a later date, your premium will increase monthly by 10%. The increased premium will need to be paid for double the number of years you could have had Medicare Part A but did not choose to sign up.
Medicare Part B
Medicare Part B is like Medicare Part A in that your enrollment in benefits are automatic. Like Medicare Part A, if you are not enrolled automatically you will need to enroll in Medicare Part B when you become eligible. If you choose not to enroll in Part B when you are first eligible you will be charged a late enrollment penalty for the entirety of your coverage. The penalty has the potential to increase by 10% for every year you did not sign up but were eligible to do so.
Medicare Plan D
Medicare Plan D, also known as prescription drug coverage, is one plan that you will not automatically be enrolled in. It is encouraged that you enroll in prescription drug coverage with in the enrollment period. If you do not and you are not enrolled in any other prescription coverage the penalty you pay multiplies 1% of the “national base beneficiary premium” times the number of months that you have not had prescription drug coverage. The premium is rounded to the nearest ten cents.
If you qualify for a Special Enrollment Period, you may avoid the late penalty for Medicare Part A and B. This special enrollment period occurs when seniors are still working at 65 and delay enrolling in coverage. The same is true as well if you are covered under your spouse’s medical insurance.
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