You may receive information about enrolling in Medicare when you turn 65 but wonder if you should wait to enroll. There are a few things to consider when deciding whether or not to wait. There are some real disadvantages to waiting, especially if you don’t have other health insurance.
This article will discuss the pros and cons of waiting to enroll. We will also cover some options you may have when registering later.
The Dangers of Delaying Your Enrollment
There are substantial financial penalties for applying late, and we will discuss that below. However, there are other risks.
#1. Coverage gap
Another problem with delaying Medicare enrollment is that you may experience gaps in coverage. If you miss your enrollment period, you must wait until the next open enrollment period to sign up. During this time, you won’t have access to Medicare’s benefits, leaving you vulnerable if you have a medical emergency.
#2. Worsening health conditions
Without proper coverage, you may be putting off routine doctor visits. This can lead to worsening conditions and more significant bills in the long run. Medicare helps cover many preventative services which help keep you healthy and can catch health problems before they become serious.
Now let’s outline the big one – the financial implications of missing your Initial Enrollment Period.
Late Enrollment Penalties
The Initial Enrollment Period (IEP) for Medicare is a seven-month period that begins three months before your 65th birthday month and ends three months after your 65th birthday month. During this time, you can sign up for Medicare Parts A and B and any additional coverage, such as Part D coverage or a Medicare Advantage plan.
If you miss your IEP, you will be subject to late enrollment penalties. Late enrollment penalties are:
- added to each monthly premium (this is not a one-time fee),
- typically charged for as long as you have that coverage (for most of us, that is our lifetime), and
- Likely going to increase the longer that you wait.
Part A late enrollment penalty
If you do not sign up for Part A coverage during your IEP and are not eligible for premium-free Part A coverage, your monthly premium may go up 10% for a period that is twice as long as your delayed coverage.
For example, Anne joins Medicare 2 years after her IEP and will pay a monthly premium of $278. She will also pay a monthly late enrollment penalty of $27.80 each month for four years.
Part B late enrollment penalty
If you did not sign up for Part B during your IEP and did not have other qualifying healthcare coverage, your monthly premium may go up 10% for each year you delayed. This penalty will stay with you for as long as you have coverage.
Let’s go back to Anne. Since she delayed her enrollment two years, she will pay a 20% monthly premium penalty. The standard Part B monthly premium in 2023 is $164.90. Her monthly premium would be $164.90 + $32.98 (20% late enrollment penalty) for a total of $197.90 (rounded to the nearest $0.10).
Part D late enrollment penalty
You’ll pay an extra 1% each month if you don’t join a Medicare drug plan when you first get Medicare or go more than 63 days without drug coverage. Again, that late enrollment penalty is applied to each month so long as you have that coverage, even if you switch plans.
In our previous example, Anne waited 24 months to join a Medicare drug plan and must pay a 24% late enrollment penalty. The penalty is based on the national beneficiary premium of $32.74 in 2023. It’s worth noting that the premium changes each year, so your penalty will also.
Anne’s monthly premium will go up as follows: $32.74 x 0.24 = $7.86, rounded to $7.90.
Delaying enrollment will cost you
Clearly, there are significant financial implications to delaying Medicare enrollment, and many of those penalties stick with you.
While you may be tempted to delay enrolling because you have other existing health coverage, we generally advise against it. However, you can lower your costs by applying during your initial enrollment period and making strategic choices when selecting your plan. You can learn more about avoiding Medicare penalties here.
I missed my initial enrollment period. Now what?
Unfortunately, you only have one option available: wait until the General Election Period (which is between January and March) and sign up at that point.
This is a costly mistake, especially if you are waiting closer to a year for the General Election Period to begin. That is why we strongly encourage you to make sure you do not miss your Initial Enrollment Period.
Make sure you enroll for the right plan at the right time.
At The Medicare Family, we want you to know and understand all of your options and be able to lower your payments where you can. Our team of Medicare specialists can help you find the best plan for your situation and guide you through the enrollment process. Contact us today to learn more about enrolling for Medicare and avoiding potential penalties.
