What Happens If I Delay My Medicare Enrollment?

Medicare is technically optional. However, there are consequences if you decide to not enroll in Medicare if you are not covered by a different plan. One consequence is that you may have to pay a late fee if you skip out on coverage in the beginning and decide to enroll later. Read on to learn more about which parts of Medicare are mandatory, which parts are optional, and which parts of Medicare you will have to pay a late fee for if you do not enroll in coverage.

Structure of Medicare

Medicare is made up of four parts: Parts A, B, C, and D. For many who become eligible for Medicare, they will be automatically enrolled in Part A. Part B is technically optional, but you have to sign up for Part B if you want to enroll in a Medicare Advantage Plan, Part C. Part D is also optional. Part B and Part D are similar in that they are optional, but you have to pay a late fee if you decide to skip out on those plans when you are first eligible and decide to enroll later.

Part B Late Fee

The Part B late fee can be steep. It depends on the amount of time you were eligible for Part B but went without coverage. Specifically, the late fee causes your monthly premium to go up by 10% for each year (12-month period) you were eligible for Part B but did not. For example, if you were eligible for Part B in September 2018 but did not sign up until March 2021, your monthly premium would go up by 20%. You have to pay that extra 20% every month that you have Part B.

Part D Late Fee

Not everyone needs Part D. If you already have prescription drug coverage, you do not have to worry about Part D or the late fee. However, if you are eligible for Part D and do not enroll in some type of prescription coverage, you will have to pay a late fee if you decide to enroll in Part D later. This fee sounds small but can add up. It can be calculated by multiplying 1% of the national base beneficiary premium, which is $33.06 in 2021, by the number of full, uncovered months that you were eligible for a Medicare drug plan but didn’t join. You then round the final amount to the nearest $0.10 and add it to your monthly premium. You have to pay this new monthly premium for the rest of the time you’re enrolled in Part D. 

Navigating which Medicare aspects are right for you can be difficult. It can be even more difficult to know which ones you have to sign up for and when. To avoid late fees and other common pitfalls associated with Medicare, contact us at Wise Up Financial today!