Late fees?! On Medicare?! It’s true; they exist. And that’s why it is essential to be aware of the various enrollment deadlines for each part of Medicare. In this episode, our all-star Medicare agent, George, will explain each of the most common Medicare penalties, and even more importantly, how to avoid them.
How to avoid the most common Medicare penalties
If you’re like a lot of Americans, you probably thought you were forever free of late fees when your local Blockbuster went out of business a decade ago.
So you’ll probably be disappointed to learn that late fees are still alive and well on the Medicare program. And if you thought Blockbusters fees were bad, get ready! Medicare’s penalties are even worse, because they’re permanent.
That’s why it is important to become familiar with the various enrollment periods and deadlines, preferably before you become eligible for Medicare at 65.
While it isn’t technically mandatory to enroll for Medicare during your Initial Eligibility Period, if you don’t have qualifying coverage from another source after you turn 65, your monthly Medicare Part B and Medicare Part D premiums will be significantly higher as a result.
On top of being permanent, these penalties also increase over time, so they add up fast.
Medicare Part B Late Enrollment Penalties:
If you do not enroll when you become eligible, your monthly Part B premium will increase by 10% for each full year that has lapsed since your IEP. That means your monthly premium could increase by 50% in just five years.
Medicare Part D Late Enrollment Penalties:
Similarly, late enrollment penalties for Part D are calculated as 1% of the average monthly prescription drug premium multiplied by the number of months you went without creditable coverage, and they will also be tacked on to every monthly payment for as long as you maintain coverage.
Be aware of other Medicare Pitfalls
Getting stuck with a permanent late enrollment penalty isn’t the only mistake to be wary of under the Medicare program. We’ve compiled a list of the 8 most common Medicare Pitfalls. We recommend reading it as you prepare to make important coverage decisions.