Turning 65 brings important Medicare decisions, and one of the biggest is whether to enroll in Medicare Part B right away. Part B helps cover doctor visits, outpatient care, preventive services, durable medical equipment, and other medical services.
If you delay Part B when you should have enrolled, you may face a late enrollment penalty. This penalty can increase your monthly Part B premium, often for as long as you have Part B. Understanding the rules before your enrollment window closes can help you make a more confident choice.
What is the Medicare Part B late enrollment penalty?
The Part B late enrollment penalty is an added amount to your monthly Part B premium. It may apply if you did not sign up for Part B when you were first eligible and did not have coverage that allowed you to delay enrollment.
In general, the penalty is 10% of the standard Part B premium for each full 12-month period you could have had Part B but did not enroll. For example, a person who delayed Part B for two full years without qualifying coverage may pay a penalty equal to 20% of the standard premium.
The actual extra amount can change from year to year because the standard Part B premium can change. The penalty generally continues for as long as you have Part B, not just for a short period.
When do you first get the chance to enroll in Part B?
Most people first become eligible for Medicare at age 65. Your first chance to enroll is called your Initial Enrollment Period. It lasts seven months:
- The three months before the month you turn 65
- The month you turn 65
- The three months after the month you turn 65
For many people, enrolling in Part B during this period helps avoid a gap in coverage and a future penalty. However, some people can safely delay Part B because they are still working and have qualifying employer health coverage.
Can you delay Part B if you are still working?
You may be able to delay Part B without a penalty if you or your spouse is actively working and you have health coverage through that current employment. This is often called employer group health coverage.
Not every type of coverage lets you delay Part B safely. Whether you should enroll can depend on the size of the employer, how the plan works with Medicare, and whether the coverage is based on current active employment.
Generally, coverage from an employer with 20 or more employees may allow a person turning 65 to delay Part B. But it is wise to confirm this with the employer benefits office and the health plan. Small-employer coverage may work differently, and Medicare may need to pay first.
If you plan to keep working after 65, ask the benefits administrator these questions:
- Is my coverage based on current active employment?
- How many employees does the company have?
- Will the group plan remain primary or secondary after I become eligible for Medicare?
- Do I need Medicare Part A, Part B, or both?
- Can I delay Part B without a coverage gap or penalty?
What coverage does not usually protect you from a Part B penalty?
Some types of health coverage may not allow you to delay Part B without risk. These can include COBRA continuation coverage, retiree health coverage, marketplace coverage, Veterans Affairs health benefits, and coverage that is not tied to current employment.
These benefits can still be valuable, but they do not always count as qualifying coverage for a Part B Special Enrollment Period. For example, COBRA may continue after you leave a job, but waiting until COBRA ends to enroll in Part B can lead to a late enrollment penalty or a gap in coverage.
Rules can vary based on your situation, so it is important to check before you turn down or postpone Part B.
What is the Special Enrollment Period for Part B?
If you delayed Part B while covered by a current employer group plan, you may qualify for a Special Enrollment Period when the job or health coverage ends.
In general, this enrollment period lasts for eight months after the employment ends or the group health coverage ends, whichever happens first. You do not need to wait for COBRA coverage to end. In fact, waiting can create problems.
Enrolling promptly after active employer coverage ends may help you avoid a penalty and reduce the chance of a gap in outpatient coverage. You may need forms from your employer to show that you had qualifying coverage, so it can help to request them before your last day of work.
What if you missed your Part B enrollment window?
If you missed your Initial Enrollment Period and do not qualify for a Special Enrollment Period, you may need to wait for the General Enrollment Period. This period generally runs from January 1 through March 31 each year.
Coverage can begin after you enroll, but the timing may depend on when you submit your application. You may also owe the Part B late enrollment penalty if you went without qualifying coverage.
There can be exceptions in limited situations, including certain errors by a federal employee or health plan. If you believe you received incorrect information that caused you to delay enrollment, consider contacting Social Security or Medicare for guidance about your options.
How can you avoid a Part B penalty?
The simplest way to avoid a Part B late enrollment penalty is to enroll when you first become eligible unless you have confirmed that you can delay safely. Keep records of your employer coverage, including dates of active employment and health plan enrollment.
Before you make a decision, consider your medical needs, your current health plan, who pays first, prescription coverage, and whether you expect to retire soon. Medicare choices can affect more than one part of your coverage.
If you are approaching 65, still working, or worried that you may have missed an enrollment deadline, Eric can help you understand how Medicare Supplement coverage may fit after you enroll in Original Medicare. Reach out to Eric for free, no-pressure help reviewing your Medicare timing and coverage options.