Avoid Medicare Penalties

This is a huge area of confusion and anxiety for people approaching Medicare. Most seniors don’t really understand the penalties—they just know they’ve heard they can be “penalized for life,” which creates fear. There are common misunderstandings about a Medicare LEP, late enrollment penalty, which is an amount that is added to your monthly premium.  The amount of the penalty is determined by the length of time you were not enrolled and were supposed to be. Medicare penalties aren’t just a one-time fee.  They are usually charged for as long as you have that type of coverage (for most people, that’s a lifetime penalty).

• Part A: Rare, but possible. If you don’t qualify for free Part A, late enrollment can lead to penalties.

• Part B: Delay signing up, and you might pay an extra 10% for each 12-month period you were eligible but not enrolled.

• Part D: Skip drug coverage for 63+ days without having creditable coverage? You’ll face a penalty, 1% for each month you were eligible but not enrolled, added to your monthly premium.

  
  

YOU CAN AVOID PENALTIES WHEN YOU:

-Sign up during your Initial Enrollment Period (IEP)

Your 7-month window around turning 65 (3 months before your birthday month, your birthday month, and up to 3 months after your birthday month) is your chance to get in without penalties.

-Maintain creditable coverage

Still working at 65? No problem. Many people keep their employer coverage past 65. That’s fine if it’s creditable coverage, meaning that it's health insurance or prescription drug coverage that meets or exceeds the level of benefits provided by Medicare like employer plans or union coverage.

If you maintain creditable coverage, you do not have to enroll in Medicare.

You may voluntarily enroll in Part A only.  If you, or your spouse, worked for 10 years (40 quarters) it’s free.  This gets you in system with an assigned Medicare number. You can delay enrolling Part B while you’re covered, which delays paying for the Part B premium.  You can then enroll in Medicare when that work coverage ends (retirement) with a Special Enrollment Period (SEP).  You will need a CMS-L564 form, signed by your employer, to verify your creditable health insurance coverage from age 65 until you retire so that all late penalties are waved.  Find this form on SSA.gov. 

Important Note: COBRA DOES NOT COUNT AS CREDITABLE COVERAGE! If you decide to enroll in COBRA when you retire instead of enrolling in Medicare, penalties will accumulate during this time.

Important Note for Veterans: While VA prescription drug coverage is usually considered creditable coverage for Part D, VA MEDICAL BENEFITS GENERALLY ARE NOT CONSIDERED CREDITABLE COVERAGE FOR MEDICARE PART B.

-Review your coverage every year

Plans can change or terminate. Oct 15–Dec 7 is your chance to switch and avoid getting stuck or not having coverage.  Read your annual renewal (ANOC) carefully.

-Work with a Medicare broker

Working with a broker who knows the local options ensures that you don’t miss deadlines, helps compare plans, and keeps you penalty-free.  Don’t guess at Medicare

Call Diane Andree at 631-337-3625 or visit www.ABCMPB.com 

Avoid Medicare Penalties