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The Consequences of Delaying Medicare


If you do not enroll in Medicare when you first become eligible, you can face late enrollment penalties and higher premiums. Some people are under the impression that if you delay Medicare health insurance, you can save money. However, this depends on your circumstances.

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Before you decide to delay Medicare, it is essential to weigh the cons and pros with your licensed Medicare agent. Deciding whether to postpone Medicare benefits can be difficult. We are here to help you understand how to avoid late fees, the consequences of waiting to sign up for Medicare, and more.

Is there a Penalty for Delaying Medicare Coverage?

If you decide to work past 65 and delay Medicare without creditable coverage, you may be responsible for paying a late enrollment penalty. Medicare recommends you sign up for at least Medicare Part A when you first reach Medicare eligibility.

This part of Medicare covers inpatient services while Medicare Part B pays for outpatient services. Plus, you will not have a monthly premium for Medicare Part A if you or your spouse pays Medicare taxes for 40 quarters. So, for many, enrolling in Medicare Part A makes perfect sense.

It is best to sign up for coverage during your Initial Enrollment Period. This window is unique to you. The window begins three months before you turn 65, lasting through the month of your birthday, and ending three months following your birth month. So in total, you receive seven months to enroll in Original Medicare coverage.

If you do not sign up for Medicare Part A and Part B when you are first eligible, you could face penalties. However, you do not need to let late fees intimidate you if you know how to avoid them.

Penalty for Delaying Medicare Part A

Most Medicare-eligible people qualify for zero-premium Medicare Part A, so they sign up as soon as they can. Yet, when you need to buy Medicare Part A but decide to delay Medicare enrollment, you may face a 10% premium increase for two times the number of years you went without the coverage.

For example, if you waited one year to enroll in Medicare Part A, you will pay the 10% late enrollment penalty on top of your premium for two years.

The Medicare Part A late enrollment penalty is the easiest to avoid, especially if you qualify for zero-premium Part A. Enrolling in Medicare Part A while you still have creditable coverage in place should not affect your current coverage in any way.

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Penalty for Delaying Medicare Part B

When you delay enrollment for Medicare Part B without qualifying health insurance in place, you must pay the Medicare Part B penalty. This penalty is a 10% fee on top of your Medicare Part B premium for each 12-month period you are eligible to enroll in coverage but do not.

This late enrollment penalty lasts the lifetime of your Medicare Part B coverage.

Can I Delay Medicare Part D?

Medicare Part D covers prescription drugs. Like Medicare Part B, it is recommended you apply as soon as you reach Medicare Part D eligibility.

Even if you do not take any prescription medications, delaying Medicare Part D could cost you a large penalty in the long run. The Medicare Part D penalty is 1% of the average Part D premium for every month you delay enrollment. This amount is added to the premium your prescription drug insurance company sets.

Here are three ways to avoid the Medicare Part D late enrollment penalty:

  • Enroll in Medicare drug coverage when you’re first eligible
  • Enroll in Medicare drug coverage if you lose other creditable coverage
  • Keep records handy (for your insurance carrier) proving when you had creditable drug coverage

Additionally, it is essential to know that your Medicare Part D late penalty never goes away. Thus, if you have Part D drug coverage, you must pay the penalty.

Will My Coverage Allow Me to Avoid Medicare’s Late Penalties?

What if you are approaching Medicare eligibility, but you have employer health coverage through your employer or your spouse? Medicare only considers this coverage creditable if it is from an employer with 20 or more employees. So, if this describes your employer health plan, you should be safe to postpone Medicare until the policyholder retires.

Once retired, your group coverage will no longer be creditable to Medicare. Thus, if you keep your group plan, you must enroll in Original Medicare and your employer coverage will become your secondary insurance.

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What Should I Do if I Missed My Initial Enrollment Period?

You can enroll in Medicare during the General Enrollment Period if you missed your Initial Enrollment Period. This window occurs annually from January 1 through March 31. Additionally, you could qualify for a Special Enrollment Period if you qualify due to certain life events.

One of the events that qualify you for a Special Enrollment Period is the loss of current health coverage. For this, you will receive an eight-month Special Enrollment Period. However, it is important to plan ahead, or else you could experience a coverage gap. Therefore, we strongly recommend to enrolling in Medicare Part B within a month of losing employer coverage or when you retire.

Think Before Delaying Medicare Coverage

By planning ahead, you save both money and time. One of your first steps to avoiding late fees is researching your options, then contacting a Medicare agent. Now that you understand the basics, jot down your questions and concerns for when it’s time to sign up for Medicare.

To enroll in coverage or speak with a licensed Medicare agent about your options, call us at the number above or complete our online rate form to review plans in your area.

Sources:

MedicareFAQ is dedicated to providing you with authentic and trustworthy Medicare information. We have strict sourcing guidelines and work diligently to serve our readers with accurate and up-to-date content.

  1. Deciding Whether to Enroll in Medicare Part A and Medicare Part B When You Turn 65, CMS . Accessed October 2022.
    https://www.cms.gov/Outreach-and-Education/Find-Your-Provider-Type/Employers-and-Unions/FS3-Enroll-in-Part-A-and-B.pdf

Jagger Esch

Jagger Esch is the Medicare expert for MedicareFAQ and the founder, president, and CEO of Elite Insurance Partners and MedicareFAQ.com. Since the inception of his first company in 2012, he has been dedicated to helping those eligible for Medicare by providing them with resources to educate themselves on all their Medicare options. He is featured in many publications as well as writes regularly for other expert columns regarding Medicare.

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