medicare penalty Archives

Congress Considering Bill To Eliminate Gaps In Coverage

If you are turning 65 soon you might be looking for information on your Medicare eligibility, and what exactly having Medicare means. Medicare provides insurance to seniors under plans known as Parts A and B. Part A is hospital insurance, and Part B is medical insurance. While Part A is free, Part B is only covered up to 80% by Medicare, leaving you to pay for the other 20%. Unfortunately, some people are unaware that they must sign up for Part B within a certain timeframe, and can face a Medicare penalty.

white bell insude of a blue circle. — *In order for Medicare beneficiaries to avoid a penalty, Congress will begin notifying them to sign up before they turn 65.*

Currently Medicare does not notify you when it is time to sign up and it is up to you to be aware of the standard enrollment periods. If you do not sign up for Medicare Part B within the specified enrollment period, then you will face a life-long penalty. Luckily, in order to help people avoid this penalty, Congress is considering making revisions to a bill called the BENES Act.

The Medicare Penalty

Medicare Part A normally kicks in when you turn 65 on its own, there is no action required from you. You can enroll in Part B three months before you turn 65, the month you turn 65, and three months after the month you turn 65. While it is mandatory to enroll into Medicare Part A when you turn 65, you do have the option to opt out and put off your enrollment into Part B. Generally this will cause a penalty to be applied to your future Medicare rates unless you qualify for a special enrollment period.

The qualifications for a special enrollment period are:

You have coverage by a group health plan through you or your spouse’s current employment.
During the 8 months following the month your group health plan coverage ends, or when the employment ends (whichever is first).

If you do not qualify for a special enrollment period, then you will only be able to join during The General Enrollment Period, or GEP.

The GEP, which falls between January 1 and March 31 of every year, is the period of time when you can enroll in Medicare Part B for the first time. Coverage will then begin the following July. However, if you skipped the initial enrollment period when you turned 65 and waited for a GEP, you will be at risk of facing a penalty.

dollar bills piled on top of each other. — *If you miss the opportunity to sign up for Part B when you are eligible, you will face a 20% penalty for every year you did not sign up.*

When you do decide to finally sign up for Medicare Part B, you will then have to pay an additional 10% on top of your monthly premiums. For every full 12-month period (calendar year) that you were eligible for Part B, but did not enroll in it, you will pay a 10% penalty for as long as you have Part B. For example, if you opt out of signing up for Part B benefits for two years, then you will face a 20% penalty fee added onto your monthly Part B premiums forever.

The Problem

Unfortunately, some seniors mistakenly assume they can skip Part B because they have a former employer’s insurance through the ACA, or for other reasons. This leads to the beneficiaries facing a monthly Part B penalty for the rest of their lives. According to research, in 2018, about 760,000 people were paying a late penalty onto their monthly Part B premium, increasing their costs an average of nearly 30%. Congress thankfully is stepping in to try and end the Medicare penalty by notifying the beneficiaries before they turn 65.

Congress’ Approach

Congress hopes to revise the Beneficiary Enrollment Notification and Eligibility Simplification (BENES) Act, so that Medicare & Medicaid Services are required to notify people before their 65th birthday about their Medicare eligibility. Currently, the government only contacts people who are receiving Social Security benefits to notify them when it is time to sign up for Medicare.

The hope is that this would lead to beneficiaries avoiding the Part B penalty when they do not sign up for 12 or more months after they become eligible.

If passed, the revision would be the first one in five decades. This would move the GEP (January through March) window to the fall, which would coincide with the enrollment period for drug coverage and Medicare Advantage. It would also do away with the July effective date, and move it to January.

Medicare Isn’t Mandatory, But There Is A Penalty

Medicare normally kicks in when you turn 65. You can enroll 3 months before you turn 65, the month you turn 65, and three months after the month you turn 65. While it is mandatory to enroll when you turn 65, you do have the option to opt out and push your enrollment into the program. However, when you do this, you are at risk of facing a penalty.

caucasian hand holding a bubble with a stethescope in it — *There are some ways to avoid the Medicare penatly, such as if you have employer’s health insurance.*

Having Coverage

If you are still employed, or have coverage, then you can opt out of signing up for Medicare. As long as your employer has 20 or more employees, then you can hold off on Medicare, and will not have to worry about the penalty. You can still sign up for Medicare Part A. It does not cost you anything and will cover hospital visits, and can act as a secondary insurance to your employer’s insurance.

Collecting Social Security

If you are collecting Social Security, then you will automatically be enrolled into Medicare Parts A and B. You have the option to cancel or opt out of Part B if you have coverage through an employer. However, if you opt out, then you will face a penalty. Medicare Part B covers doctors’ services, outpatient care, and medical equipment.

The Penalty

Opting out of Medicare Part B without a valid reason, such as being on an employer’s insurance, then you will pay a penalty fee. When you decide to finally sign up for Medicare Part B, then you will have to pay 10% to your monthly premiums. This penalty can remain as part of your monthly premiums for a long time.

Every full 12-month period (year) that you could’ve had Part B, but did not take it, you will pay a 10% penalty for as long as you have Part B. For example, if you opt out of signing up for Part B benefits for 2 years, then you will face a 20% penalty fee added onto your monthly Part B premiums forever. If you opt out for 4 years, then you will face a 40% penalty, as so forth.

caucasian hands holding open an empty wallet — *The Medicare penalty you will face is 10% for every year you opted out of Medicare.*

When You Are Safe From Penalties

If you miss your enrollment date, you have a General Enrollment Period, GEP, in which you can sign up if you missed signing up when you were eligible. It is a make-up time for Medicare enrollment and us January 1-March 31 every year. If fewer than 12 months have elapsed, then you will not pay a penalty fee. Other situations you can avoid the penalties are:

If you have Medicaid and Medicare. The state pays the Part B premiums.
If you qualify for assistance from your state in paying Medicare costs under a Medicare Savings Program.

It is not mandatory to sign up for Medicare when you turn 65, depending on your situation. If you do not sign up when you are supposed to, then you will be penalized, unless you have employer coverage or are in the aforementioned situations. It is best to go over your situation and make sure you are making the best decision. Talk to a Medicare agent beforehand so that you are aware of all of your options, and how you can avoid any extra fees.

EZ.Insure can help you with these kinds of situations. We offer specialized Medicare agents within your area that can go over all of your options and make sure you are in the best situation. If you would like to speak to an agent, call 888-753-7207 or email us at replies@ez.insure. Or if you would like an instant quote, enter your zip code in the bar above. Our services are free, because our goal is to help you, and make sure you are taken care of.