Importance of Timely Enrollment in Medicare When Eligible
Medicare offers excellent benefits for enrollees, but that enrollment is not something that happens automatically once you meet criteria for eligibility. If you are unfamiliar with how Medicare works, you may not realize that there is a limited time period when you can enroll without a financial penalty. For most people, this Initial Enrollment Period (IEP) stretches from three months prior to the month of your 65th birthday to the third month after it. If you fail to enroll during the Initial Enrollment Period, you may have to late penalties; these penalties may increase the longer you wait to enroll, and some may last the remainder of your life.
What Is Medicare?
Medicare is a health insurance program that covers the following groups of people:
- People 65 years of age or older
- Younger people with disabilities
- People with permanent kidney failure who require dialysis or a kidney transplant
Every U.S. citizen over the age of 65 is entitled to Medicare coverage, but only those who have paid into the system through Medicare insurance paycheck deductions qualify for premium-free benefits.
There are various programs within Medicare:
- Medicare Part A—this type of insurance covers hospital stays, nursing facility care, hospice care, and some home health services.
- Medicare Part B—this insurance covers doctor’s visits, medical supplies, and preventive care.
- Medicare Part D—may cover some prescription drugs including recommended vaccines.
Established under Medicare Part C, Medicare Advantage is unlike original Medicare which is administered through the federal government. Instead, Medicare Advantage is offered through private insurance companies, although it is funded by Medicare. These Medicare Advantage plans must include coverage of the same services as Medicare Parts A and B (and usually part D as well). In many cases, Medicare Advantage plans also include coverage for services not covered by traditional Medicare including vision, dental and hearing.
Why Is There an Initial Enrollment Period?
On the surface, it may seem unfair that there is an Initial Enrollment Period in which you must sign up for Medicare, but there is an important justification for it. The Initial Enrollment Period helps ensure that eligible enrollees don’t wait to sign up and start paying into the Medicare system until they become ill. Like all other forms of insurance, for Medicare to operate as intended, it must have enrollees paying into the system in anticipation of the moment when they need coverage of medical services. Otherwise, people wouldn’t pay premiums until a time when they needed medical care, and Medicare would be saddled with heavy expenditures without sufficient income.
You should also keep in mind that people who are receiving Social Security or Railroad Retirement benefits at the time they turn 65 will be automatically enrolled in Medicare Parts A and B. Once you are enrolled automatically, then the cost of your premium for Medicare Part B will be deducted from your benefits check. (Most people who qualify for Social Security pay no premiums for Medicare Part A).
What Are the Penalties for Missing the Initial Enrollment Period?
If you fail to enroll in Medicare during the Initial Enrollment Period, then you may be charged a monthly late fee—possibly for the rest of your life. If you want to enroll in Medicare Part A after the Initial Enrollment Period and you do not qualify for $0 premiums, then your monthly premium may increase by 10 percent. This penalty will be assessed for twice the number of years that you were late to enrolling.
The fine for enrolling in Medicare Part B is even steeper. For every year that you are late to enrolling, your monthly Part B premium will go up by 10 percent. So, if you wait five years to enroll, then you will be charged an additional 50 percent of your premium monthly for as long as you are enrolled.
Medicare Part D covers prescription drugs. If you have comparable drug coverage or qualify for Medicare Part D Extra Help, then you will not be charged a late penalty for enrolling late. If, however, you do not are eligible for these exemptions, then you may be charged 1 percent of your Part D premium for every month that you delay. Your Part D premium may also be adjusted if your income is too high.
You may be able to avoid paying a late fee if you enroll during a Special Enrollment Period. A Special Enrollment Period isn’t a specific period on the calendar, rather it is an allotted amount of time following an important life change. Here are some Special Enrollment Periods you should be aware of:
- You stop working—if you are still working and have group health insurance through your job, then you probably won’t be penalized for not enrolling in Medicare. However, once you stop working or lose health coverage, you have an 8-month window to enroll in Medicare without a penalty.
- You move to a new area—if your Medicare Advantage plan is not available in your new residence, then you have 2 months to switch to a new MA plan or re-enroll in Original Medicare.
- You return to the U.S.—if you have been living abroad and return to the U.S. to take up residence, then you may enroll in a Medicare Advantage plan within 2 months following the month of your return.
- You move into or out of a residential nursing facility—as long as you live in a nursing home and the 2 months following the month you move out, you can join or switch to another Medicare Advantage plan. You may also enroll in Original Medicare or Medicare Part D if you are on a Medicare Advantage plan.
- You are released from prison—if you maintained your Medicare Part A and B coverage while incarcerated, you have 2 full months following the month of your release to enroll in a Medicare Advantage plan.
- You lose Medicaid coverage—after you lose Medicaid eligibility or once you are notified of your lost eligibility—whichever is later—you have 3 full months to join Original Medicare or a Medicare Advantage plan.
Article written by: Dr. Robert Moghim – CEO/Founder Colorado Pain Care
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