It’s no secret that the best time to sign up for Medicare is as soon as you become eligible. For those who are already receiving Social Security, you will be automatically enrolled, and your benefits will begin on the first day of the month you turn 65. If you are receiving Social Security Disability, you will also be automatically enrolled in Medicare after your 24th month of receiving SS benefits.
However, for the majority of people, automatic enrollment does not apply, and you will need to self-enroll. The initial enrollment period for Medicare begins three months before you turn 65 and ends three months after your 65th birthday.
If you do not enroll in time, there can be serious financial consequences. For example, for each 12-month period you go without enrolling, your Part B premiums will increase by 10%. This may not seem like much at first, but considering that the average Part B Premium in 2015 is approximately $105 per month, delaying your enrollment can cost you hundreds per year. And the penalties won’t decrease over time, and will be with you for as long as you have Part B coverage.
Late enrollment fees aren’t just limited to Part B coverage, either. Most people receive Medicare Part A for free, but if you are one of the few who pay premiums, those too will increase if you enroll late. The same goes for Part D coverage, with premiums potentially increasing each month you go without enrolling.
The main way you can avoid late enrollment fees is if you qualify for a special enrollment period due to employment. If you are still working past the age of 65 and receiving health benefits from your employer, you will likely qualify for a special enrollment period when you do decide to retire. As long as you enroll during that period, you should not have to face any late enrollment penalties.
Not all insurance coverage qualifies you for a special enrollment period, however. If you are receiving COBRA coverage, or receiving retiree health benefits from an employer, you will still be faced with late enrollment penalties. Only health insurance provided for current employment qualifies.
It’s important to know the rules and regulations when you’re nearing Medicare eligibility. By following them and enrolling as soon as you’re eligible, you can prevent yourself from paying more than you need to for Medicare coverage.