Question: Medicare is complicated. I just found out there is a penalty if I don’t enroll. What are those penalties?

Answer. This is a follow-up question to last week’s summary of all the Medicare parts. Last week I explained the different components of Medicare, when they started and some of the basic information.

This week I will talk about the penalties if you don’t enroll. As I said last week, it is important to

Remember, that all the different parts that make up the Medicare Benefits offered have different rules. Those rules can impact your situation and the penalties you may have to pay.

Medicare for most American’s begins at age 65. Some are eligible for Medicare earlier than 65 years of age, due to a disability. Medicare Part A is the hospitalization component and for most American’s has no premium. Medicare Part A is free to you as long as you have 10 years (40 quarters) of employment. You can qualify for Medicare Part A under your spouse’s work history. For those with less than 30 quarters, Medicare Part A has a premium of $505 monthly. For those with between 30 and 40 quarters, Medicare Part A has a premium of $278 monthly.

If you don’t sign up for Medicare Part A when initially eligible and you had no insurance at that time, you will have a Late Enrollment Penalty (LEP) for signing later for the coverage. That LEP is 10% for each 12 months you were without insurance. The penalty is paid for twice the number of years you failed to sign up. The opportunity you have each year to sign up for coverage is from January 1st to March 31st each year (right now!).

Medicare Part B is the outpatient coverage and last week we talked about that premium, $174.70 per month. This premium is paid either from your Social Security benefit or through a bill you receive in the mail, if you don’t collect Social Security benefits.

If you don’t sign up for Medicare Part B when you are initially eligible and you were without other insurance coverage from a current employer group, you will have a Late Enrollment Penalty (LEP) of 10% for each twelve months you were without coverage. This LEP lasts for your lifetime for most individuals. The opportunity you have each year to sign up for coverage is from January 1st to March 31st each year (right now!).

With Medicare Part D, the prescription drug benefit, there is not a set premium to enroll in that coverage. It is a rule which requires everyone eligible for Medicare have creditable drug coverage from some source. That source could be an employer plan, a retiree plan or an approved Medicare Part D plan. If when first eligible for Medicare Part A & B, you don’t sign up for a plan to cover your prescription drug, you will have a Late Enrollment Penalty (LEP). That LEP is 1% for each month you are without creditable coverage. The question is 1% of what? The penalty is calculated by the average premium for all Part D plans that year. In 2024 that penalty equals $.487 each month (average premium of $48.72). This penalty can add up quickly. Your opportunity to sign up for Part D if you didn’t when you were first eligible is every year from October 15 to December 7.

The Medicare Advantage Plans we covered last week require that you have Medicare Part A & B, are offered by private Insurance companies. These plans do not have penalties, but the LEP related to Part D (Prescription Drug Coverage) is often added to the individual plan’s premium.

On occasion when I talk with someone who has Medicare and they are being assessed a penalty, they get frustrated and angry about that. They often say, “How was I supposed to know what to do?” or “No one told me what to do!”. Well, if you have Medicare, I will say that each year you get mailed a Medicare & You Handbook, that explains all these rules. You also have an obligation to research the situation and the rules.

In many ways this is a lot like driving a car. You are initially taught what to do (driver safety course and testing), and then it is your responsibility to know the rules. When you cross over the state lines, you are expected to know their rules of the road. Being ignorant of the rules is not an excuse for not following them.

I appreciate you reaching out to learn the rules of Medicare. It takes some time and effort, but the coverage is useful and comprehensive!

Janell Sluga is a Geriatric Care Manager helping seniors in our community access services and insurance. To reach her, please email editorial@post-journal.com.