Medicare is littered with a few late enrollment penalties. While the Medicare Part B penalty may not be the most common one we see, it’s still important for you to know how much it is and how to avoid it.
When Do Medicare Penalties Occur?
You can wind up with a Medicare penalty if you delay your Medicare enrollment past the age of 65 without having creditable coverage in place. Penalties may be incurred for Parts A, B, and D. Part A penalties are uncommon as most of us enjoy premium-free Part A. Part D penalties are the most common, as many people assume they don’t need to enroll in a Part D plan if they aren’t taking medications. But today, we’re taking a closer look at the Part B penalty.
As we mentioned, the only way you can postpone Medicare enrollment past age 65 is if you have other creditable coverage. What is “creditable” coverage? Creditable coverage offers as much coverage as Parts A and B of Original Medicare. In nearly all cases, this comes in the form of an employer-sponsored group health plan.
Large employers – those with at least 20 employees – do offer creditable coverage. Smaller employers – those with less than 20 employees – may offer great coverage, but it does not mean that coverage is creditable. In either scenario, it is best practice to ensure your plan is creditable if you wish to delay Medicare. You can do so by checking with your HR team or by calling the insurance carrier directly.
Why would you want to wait to enroll in Medicare? We’re seeing more and more people continue their employment past the age of 65. Those who have employer coverage, especially when the employer helps pay for that coverage, often find that it’s more cost-effective than switching to Medicare. When you decide to retire or lose that coverage, you’ll be allowed to enroll in Medicare without incurring any penalties.
How to Calculate the Medicare Part B Penalty
The Medicare Part B penalty applies to beneficiaries who postpone their Part B enrollment (without creditable coverage) for 12 months or more.
The Part B penalty amounts to an additional 10% of your monthly premium for each of the 12-month periods you didn’t enroll in Part B and did not have creditable coverage. In 2024, the Part B premium is $174.70. With the penalty, it is $192.17 per month if you just missed one 12-month period.
What makes this all worse is that the Part B penalty stays with you for life (or as long as you are enrolled in Part B). So, if you are delaying coverage because you have other insurance, please make sure it’s creditable!
Don’t Miss Your Medicare Enrollment Periods
It’s easy to accidentally miss a Medicare enrollment period. Whether it’s your very first one or the enrollment windows that happen throughout the year, it’s a lot to keep track of. This is just one reason that it’s so important to work with a trusted Medicare advisor. Our team at Carolina Senior Benefits will help you create a custom enrollment timeline. We’ll educate you on your Medicare options, help you choose your plan, and then update you throughout the year as changes occur.
There is no cost to work with our team. Call today to schedule your consultation!
