Medicare Penalties: How to Avoid Them

​Did you know Medicare has potential penalties? It’s true. It’s possible that you could pay penalties on your Medicare premiums when you file. Fortunately, though, you can avoid these penalties if you file for coverage by the right deadlines.
 
Generally, you’re eligible for Medicare at age 65. However, there are certain windows in which you must apply. For example, you can initially apply for Medicare parts A and B during a 7-month period that starts three months before your 65th birthday and ends three months after. You can also file for coverage during the General Enrollment Period that occurs during the first three months of every year.1
 
If you don’t file for coverage during those periods, you may face a penalty. The penalties vary based on the specific part of Medicare:

Part A

​Most people are automatically enrolled in Medicare Part A. It’s funded by your FICA taxes, so Part A generally has no premium. That’s not true for everyone though. Individuals who haven’t earned enough Medicare credits to automatically qualify must purchase Part A. If you’re in that group and fail to do so by the enrollment deadline, you may face a penalty.
 
For Part A, the penalty is 10% for twice the number of years you go without coverage.  For example, assume you delay filing for two years. You may have to pay a 10% penalty for four years.2

Part B

​The penalty for not filing for Part B is 10% for every 12-month period you went without coverage. For example, assume you file for Part B two years after you are initially eligible. You would pay a 20% penalty - 10% for each 12-month period that you missed.3
 
It’s important to note that these penalties are permanent. You’ll pay the penalty as long as you pay premiums for Part B. As you can imagine, those penalties could be costly over the course of your retirement.

Part D 

Part D is Medicare’s prescription drug coverage. You could face a penalty on your Part D premium if you go at least 63 continuous days without prescription drug coverage from the time you are first eligible. You can avoid this penalty by having one of the following:

• Medicare Part D
• A Medicare Advantage plan that includes prescription drug coverage
• Some other qualified prescription drug plan, like employer-based coverage

 
As you can see, it can be costly to miss a Medicare deadline. A Medicare strategy can help you file on time and find the right coverage options for your needs. Contact us today at Marshall Life and Financial Solutions, Inc. We can help you develop and implement the right Medicare strategy for you.
 
1https://www.medicare.gov/sign-up-change-plans/how-do-i-get-parts-a-b/part-a-part-b-sign-up-periods
2https://www.medicare.gov/your-medicare-costs/part-a-costs/part-a-late-enrollment-penalty
3https://www.medicare.gov/your-medicare-costs/part-b-costs/part-b-late-enrollment-penalty
 
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