Medicare Part B: Penalties for Late Enrollment

Jun 2, 2011
Richard Walloch

Stethoscope - jasleen_kaur's photostream

To start receiving Medicare Part B benefits as early as possible, you must enroll while you are still 64. You should be aware of other provisions in Part B'

An unpleasant surprise may await you, if you delay signing up for Medicare Part B until you are 65. This portion of Medicare helps cover the costs of doctor visits and some other outpatient services for many seniors living in the United States.

Enroll in Part B When You're 64?

If you are not covered by an employer-sponsored group health care plan, it may be best to enroll in Medicare Part B while you're still 64. A delay on the date you can start receiving Part B benefits is imposed unless you sign up in one of the three months preceding the month that contains your 65th birthday. If you were born on the fourth of July, for example, you would need to enroll in the months of April, May, or June while you are still 64. If you enrolled in one of these months, your benefits would start on the first day of the month that contains your 65th birthday.

If you enroll during the month that contains your 65th birthday, the benefits would start on the first day of the following month. This one-month delay is imposed even if you signed up before your actual birthday.

These rules are detailed in Social Security's Electronic Booklet “Medicare”, but are omitted from many of the popular articles about Part B.

Penalties For Signing Up Late

You can sign up in any of the 3 months following your 65th birthday, but there is a more significant delay receiving benefits. If you are one month late, a two month delay will be imposed. If you are two or three months late, a three month delay will be tacked on.

If you miss the enrollment window surrounding your 65th birthday, there are even greater penalties. The Part B premium likely will be increased by 10% for every year you were eligible but failed to sign up. You can sign up for Part B between January 1 and March 31 of any year, but you cannot draw on the benefits until July 1 of that year.

Sixty-Four and Employed?

If you are employed and covered by an employer-sponsored group health plan, you may not wish to enroll in Medicare Part B as you turn 65. You can enroll in Part B, without penalty, anytime you are still employed and covered by your employer's health plan. Once you are either no longer employed or do not have health insurance, you generally have an 8 month period in which to enroll in Part B, without any penalty.

Beware of Medicare Part B's Fine Print

However, a couple of stipulations in the fine print may catch you off guard. The 8-month period for penalty-free enrollment begins on the date you become unemployed or the date you lose your insurance coverage, whichever comes first. So if your employer provides group health insurance for a year after you leave the company, you may mistakenly think that you have a year to sign up for Part B. If you waited that full year, you may face an increase in premiums and a delay of up to 15 months for your benefits to begin.

There is another catch. The 8-month penalty-free enrollment period following the loss of employment is disallowed if you are laid off or quit in the 7 months surrounding your 65th birthday. If your employer is not providing insurance in the months immediately following your lay off, you may want to choose COBRA to bridge the gap. The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows terminated employees to extend their health insurance coverage by paying a sometimes substantial premium.

Conclusions

Read the fine print surrounding enrollment in Part B Medicare. Unless you have employer-sponsored group health insurance, you probably should enroll in the months preceding your 65th birthday. If you have health insurance but are laid off in the months immediately after you turn 65, you may need to continue that coverage, possibly through COBRA, until Part B benefits kick in.

This article provides general information and does not recommend any particular action as appropriate for a given individual. Seniors should contact their Social Security Office for advice tailored to their particular circumstances.

Sources:

Medicare SSA Publication No. 05-10043, June 2011 ICN 46000. (See Section “When does my enrollment in Part B become effective?)
Health Plans & Benefit Continuation of Health Coverage - COBRA, United States Department of Labor.
Photo by Jasleen Kaur, under the Creative Commons License. Jasleen Kaur does not necessarily support the views expressed in this article.

Disclaimer: The information contained in this article is for educational purposes only and should not be used for diagnosis or to guide treatment without the opinion of a health professional. Any reader who is concerned about his or her health should contact a doctor for advice.