We get a lot of questions from folks who are worried about incurring a Late Enrollment Penalty for Medicare Part B. The Late Enrollment Penalty is 10% of the Part B monthly premium for every full 12-month period when you could have had Part B and elected not to enroll in it. This penalty will be assessed as long as you have Part B in the future.
There are two enrollment periods you should be aware of which will help you avoid this penalty.
Initial Enrollment Period
You are eligible to enroll in Medicare Part A and Part B when you turn 65. You have a seven-month window during which you can enroll. This period, called the Initial Enrollment Period, includes the three months before your birthday month, your birthday month, and the three months after your birthday month.
If you are already receiving Social Security or Railroad Retirement Board benefits prior to turning 65, or have applied to receive them when you turn 65, you will be automatically enrolled into Medicare Parts A and B by Social Security, starting the first day of the month you turn 65. If your birthday happens to fall on the first of the month, your effective date will be the first day of the prior month.
If you are not receiving these benefits and don’t plan on doing so when you turn 65, you will have to apply for Medicare. To avoid the Late Enrollment Penalty, you should enroll during the Initial Enrollment Period mentioned above.
You can do so by calling the national Social Security number, 800-772-1213; by visiting a local Social Security office; or you can enroll online at https://www.ssa.gov/medicare/.
Special Enrollment Period
Nowadays, many people are electing to continue working past 65 and may have employer-provided healthcare coverage. They don’t want to pay two premiums for healthcare if they don’t have to. Check with your employer to see if your employer’s plan or Medicare will be the primary insurance after you turn 65. If your employer coverage is primary, you may elect to postpone getting Part B, as long as you have this employer coverage.
When you do decide to retire and your employer coverage will be ending, you may enroll in Medicare Part B under a Special Enrollment Period (SEP). With this SEP, you will be eligible to enroll in Part B while you’re still covered under the group health plan or during the eight-month period beginning the month after the employment ends or when the health plan coverage ends, whichever happens first. (COBRA does not count as employer coverage.) During this Special Enrollment Period, you will not incur a Part B Late Enrollment Penalty.
The bottom line is you can avoid a Part B Late Enrollment Penalty by checking your calendar as you approach turning 65 and enrolling in Medicare in a timely manner. Also, if you are continuing to work past age 65 and you have a group health plan, make sure your employer plan is primary so you can use the Special Enrollment Period, in the future, when you do stop working to enroll in Part B.