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The Medicare program may charge a late-enrollment penalty if you don’t enroll in certain Medicare programs or plans when you’re first eligible. Delaying enrollment could increase your out-of-pocket costs for your coverage. There are late-enrollment penalties for Medicare Part A, Medicare Part B, and Medicare Part D plans.
It’s important to understand the period when you’re first eligible for Medicare. This period is called your Medicare Initial Enrollment Period (IEP), and if you qualify for Medicare by age, it starts three months before you turn 65 and lasts for a total of seven months.
Original Medicare refers to Medicare Part A (hospital insurance) and Part B (medical insurance). It is the government-sponsored health care program for those who qualify by age (usually 65 and over). You may also qualify for Medicare before age 65 if you receive Social Security disability benefits. Medicare Part D is optional prescription drug coverage, available from private Medicare-approved insurance companies.
Note that another eligibility requirement for Medicare is American citizenship or permanent legal residence for at least five years in a row.
Most Medicare beneficiaries get Medicare Part A premium-free. You won’t be charged a premium for Part A if you or your spouse worked at least 10 years (40 quarters) while paying Medicare taxes. And you’re automatically enrolled in Medicare Part A if you’re already collecting Social Security or Railroad Retirement benefits when you turn 65 or qualify through disability.
If you don’t qualify for premium-free Medicare Part A, and you’re not automatically enrolled, then you may be required to pay a 10% higher monthly premium if you do not enroll when you are first eligible. You will have to pay this higher premium for twice the number of years that you could have had Part A coverage, but did not enroll. The Part A premium can be as high as $437 in 2019 (without the penalty).
For example, if you delayed enrollment in Medicare Part A for one year after your IEP was over, you could pay a 10% higher monthly premium for two years.
Medicare Part B may also have a late-enrollment penalty if you don’t sign up when first eligible, depending on your situation. Your monthly premium may go up 10% for each full 12-month period that you went without Part B coverage after your IEP ended. You may have to pay this enrollment penalty for the remainder of the time that you are enrolled in Medicare.
For example, suppose your IEP ended August 6, 2017, and you delayed Medicare Part B enrollment until the Medicare General Enrollment Period (January 1-March 31) in 2019. This would only include one full 12-month period of delay, so in this case you’d pay a 10% penalty on top of your Medicare Part B premium — but you’d pay this penalty for as long as you’re enrolled in Medicare Part B.
Some people choose to defer enrollment in Medicare Part B — such as beneficiaries who are still working and covered by an employer’s group plan. This is an example of a situation that could qualify you for a special enrollment period for Part B, and you might not have to pay the late-enrollment penalty.
Medicare prescription drug coverage (Medicare Part D) is optional. If you decide to get this coverage:
For example, suppose you signed up for a Medicare Part D Prescription Drug Plan in 2019, eight months after your IEP ended. One percent of $33.19 is $0.33 x 8 months = about $2.64. So, about $2.64 would be added to your monthly Medicare Part D premium.
The “national base beneficiary premium” may go up each year, so the penalty amount may also go up every year. In addition to your premium each month, you may have to pay this penalty for as long as you have a Medicare Prescription Drug Plan.
For more about late-enrollment penalties and other Medicare enrollment information, see When to Apply for Medicare – Late Enrollment Penalties.
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