When it comes time to enroll in Medicare, it is crucial to understand that if you do not enroll during your Initial Enrollment Period, you could incur financial penalties that you may have to pay for the rest of your life. There are two important penalties you need to know about:
1. The first happens if you don’t enroll in Original Medicare Part B when first eligible.
2. The second is if you don’t enroll in a Part D prescription drug plan when you become eligible, if you disenroll, or have other gaps in Part D coverage
Part D Late Enrollment Penalty
Let’s start with the Part D late enrollment penalty. If you don’t enroll in a Part D prescription drug plan or a Medicare Advantage plan that includes Part D coverage when you are first eligible for Medicare, you will be assessed something called the Part D late enrollment penalty. This penalty is an amount added to your Part D premium, and once it is incurred, it never goes away. You will also be assessed a late enrollment penalty if, at any point, after your Initial Enrollment Period is over, you don’t have Part D coverage or other creditable prescription drug coverage for 63 or more days in a row.
How much you will have to pay depends on how long you did not have Part D or other creditable prescription drug coverage. The penalty is calculated by multiplying 1% of the “national base beneficiary premium” ($33.06 in 2021) times the number of full, uncovered months you did not have Part D or creditable coverage. The penalty is rounded to the nearest $.10 and added to your monthly Part D premium. The national base beneficiary premium can change every year, and as a result, the penalty amount can change each year. The Part D penalty takes effect as soon as you enroll in a Part D Prescription Drug plan after a break of 63 days or more.
You are not required to enroll in a Part D prescription drug plan when you become eligible for Medicare. Some people say “I don’t need Part D because I don’t take any prescriptions”, but that doesn’t matter when it comes to the penalty. Even if you don’t take any prescription drugs, you will be assessed a Part D late enrollment penalty when you eventually enroll in a Part D plan if you don’t enroll when you are first eligible. There are many Part D plans with low or even $0 premiums (for some MAPD plans), so you would be wise to enroll in a plan even if you do not take any prescription drugs to avoid what could be a costly penalty down the road.
Part B Late Enrollment Penalty
If you do not enroll in Part B when you are first eligible, your monthly Part B premium may go up 10% for each 12-month period you are not enrolled in Part B. In most cases, if you incur this penalty similar to the Part D penalty, you will have to pay this penalty each time you pay your premiums, for as long as you are enrolled in MedicarePart B. Just like the Part D penalty, the Part B penalty increases the longer you go without Medicare Part B coverage.
Reach out to your local Medicare Advisor for CNY, Maura O’Toole from the FitzGibbons Agency, who can help with any questions you may have; just give her a call at 315-312-0803.
Have further Questions? Just Ask Fitz!
Maura O’Toole
FitzGibbons Agency
44 E Bridge St, Suite 1
Oswego, NY 13126
(315) 312-0803
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