Medicare late enrollment penalties

There is no mandatory enrollment requirement for Medicare. However, should you later decide you want Medicare, you would be charged Medicare’s late enrollment penalties when you later enrolled. They will equal 10 percent of your Part B premiums for each year you are late, and 1 percent of the national average Part D premium (now about $35 a month) for each month you are late. These penalties will last the rest of your life.

However, if your income was small enough, you might qualify for Medicaid, in which case it would help pay your Medicare premiums and most likely waive late-enrollment penalties. Medicaid qualifications are based on state rules where you live.

Without the penalties, healthy people wouldn’t get Medicare when they turned 65 but would simply wait until they needed care to enroll. If only sick people had Medicare, the rates for them would be much, much higher. The program needs everyone to enroll to be affordable. Even at that, Part B premiums for most people cover only 25 percent of the cost of care and taxpayers pay the other 75 percent.

Part D and penalties

The issues here are not whether you must get Part D but whether you will face lifetime late-enrollment penalties if you don’t get it soon after turning 65, and later decide you need it.

If you now have prescription drug coverage, and it’s considered comparable to a Medicare Part D drug plan (“credible” is the term that’s used) you can keep that coverage and will not be hit with late-enrollment penalties should you late enroll in a Part D plan.

If you do not have credible coverage, you would face late-enrollment penalties, even if you still have employer coverage and otherwise don’t need to get Medicare. They are 1 percent of the average monthly Part D premium (now about $35) for each month you are late in enrolling.

If you have credible coverage and later lose or drop it, you would need to get a Part D plan within 63 days or trigger a penalty.