For most people turning 65, Medicare enrollment occurs in the seven-month Initial Enrollment Period (IEP) which is the three months before your birth month, the month you turn 65, and the three following months. What happens if you missed your IEP? It’s important to know your options in order to minimize late penalties and possible gaps in coverage.
General Enrollment Period
If you didn’t enroll in Medicare when you first were eligible you cannot use the fall open enrollment period to sign up. Instead, you will need to sign up during the Medicare General Enrollment period which runs from January 1 to March 31. If you enroll during this period, your coverage will take effect July 1st.
You may be responsible for paying late enrollment fees. This is the case whether you choose Original Medicare (Parts A and B) or sign up for an Advantage Plan (Part C). Part D prescription coverage is also subject to late penalties.
Do You Qualify for a Special Enrollment Period?
A Special Enrollment Period (SEP) happens when you delay Original Medicare enrollment when you were first eligible. There are several reasons why you could qualify for a Special Enrollment Period. The most common reason for delaying Original Medicare coverage is because you have employer coverage in place at the time you turned 65. If you or your spouse have qualifying group insurance at a company with 20 or more employees, you can delay enrolling without a penalty.
If your employer coverage is terminated, you will receive a Special Enrollment Period to enroll in Original Medicare. If you qualify, your SEP will last 8 months from the termination date of your employer coverage.
Once you have enrolled in Original Medicare, you will have a 63-day SEP to enroll in a Medicare Part D plan. It’s important to enroll in drug coverage once you lose employer sponsored benefits to avoid paying the Medicare Part D late enrollment penalty.
One important note, Medicare does not consider COBRA coverage or retired health plans to be active employer coverage. If you did not enroll in Medicare when you turned 65 because you were covered by COBRA insurance or a retiree health insurance plan, you will not be granted a Special Enrollment Period. You may be subject to late enrollment penalties when you do sign up for Medicare.
Enrollment Periods for Medicare Supplement Plans
The Medicare Supplement Open Enrollment begins the 1st day of the month your Medicare Part B becomes effective. This is a six-month enrollment period that allows you to enroll in a Supplemental plan (known as Medigap). For anyone signing up for Original Medicare, a Medigap plan covers costs that Part A and Part B do not, reducing your out-of-pocket expenses.
What are the Late Enrollment Penalties?
The longer you wait to sign up, the more significant the penalties are. They continue to increase the longer you delay enrollment.
If you didn’t get Part B when you’re first eligible, your monthly premium may go up 10% for each 12-month period you could have had Part B but didn’t sign up. This penalty remains in place for as long as you have Part B, and it continues to increase the longer you go without Part B coverage.
The Part D late enrollment penalty is calculated by multiplying 1% of the “national base beneficiary premium” ($33.37 in 2022) times the number of full, uncovered months you didn’t have Part D or creditable coverage. The monthly premium is rounded to the nearest $.10 and added to your monthly Part D premium. The national base beneficiary premium may change each year, so your penalty amount may also change each year.
What Happens if You Have a Gap in Coverage?
If you face a gap with no health insurance coverage until you are able to enroll, you can check into insurance plans through the Texas Health Insurance Marketplace where you can look for short term affordable coverage.
Delays Can be Costly
The late penalties can add up if you don’t take action. If you missed your Initial Enrollment Period and need help with next steps, contact us. Our experienced and knowledgeable team can give you the guidance you need.