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Medicare Late Enrollment Penalties 2021 (Examples)

See how your monthly premiums are affected by late enrollment penalties.

If you’re looking to enroll in Medicare Part A, Part B, and/or Part D, but have missed your Initial Enrollment Period (Part A and B) or have gone too long without creditable drug coverage (Part D), you may find yourself subject to a late enrollment penalty.


Typically, late enrollment penalties result in an increase in amount to your monthly premium. Here, we’ll cover the scenarios in which late enrollment penalties apply, as well as how those penalties affect your monthly premium costs.


We’ll also provide you with examples of late enrollment penalties for Medicare Part A, Part B, and Part D.



Medicare Part A Late Enrollment Penalty



What Is the Medicare Part A Late Enrollment Penalty?


The late enrollment penalty for Medicare Part A is a 10% increase applied to the beneficiary’s Part A monthly premium cost. The duration of this penalty is specific to the Part A beneficiary.


Generally, the penalty is applied for twice the number of years that the beneficiary was eligible to enroll in Part A but did not do so.



Who Is Affected by the Part A Late Enrollment Penalty?


The Part A late enrollment penalty only applies to individuals that meet the following 3 criteria:

  • You do not qualify for premium-free Part A coverage.

  • You waited until after your Initial Enrollment Period to enroll in Part A.

  • You do not qualify for a Special Enrollment Period.*


*When you qualify for a Special Enrollment Period, you can enroll in Medicare outside of your Initial Enrollment Period without penalty. Check for qualifying special circumstances.



How Does a Late Penalty Affect My Part A Premium?


If you’re an individual that does not qualify for premium-free Part A but would like to purchase Part A coverage, you’ll want to purchase coverage during your Initial Enrollment Period.


If you wait until after this period to enroll in Part A, you may be subject to a late penalty that increases your standard monthly premium amount by 10%.


How long you end up having to pay this late penalty will depend on how long you waited to enroll. This higher premium amount due to late penalty will be applied for twice the amount of years that you did not sign up for Part A once eligible.



Part A Late Enrollment Penalty Example 1:


So, for example, say that you’ve been eligible to purchase Medicare Part A for the past 2 years but haven’t yet done so.


When you enroll in Part A, you’ll have to pay the 10% higher premium for 4 years. 4 years is twice the amount of years (2 years) that you did not sign up for Part A once you were eligible to do so.



Part A Late Enrollment Penalty Example 2:


Let’s take a look at another example. Say that you’ve been eligible to purchase Medicare Part A for the past 3 years but haven’t yet done so.


When you enroll in Part A, you’ll have to pay the 10% higher premium for 6 years. 6 years is twice the amount of years (3 years) that you did not sign up for Part A once you were eligible to do so.



Medicare Part B Late Enrollment Penalty



What Is the Medicare Part B Late Enrollment Penalty?


The late enrollment penalty for Medicare Part B is a 10% increase to the cost of your Part B monthly premium for each 12-month period you were eligible to enroll but did not.


The Part B late enrollment penalty continues to apply for as long as you have your Part B coverage.



Who Is Affected by the Part B Late Enrollment Penalty?


Every individual that enrolls in Medicare Part B is required to pay a monthly premium for his or her coverage.


If you didn’t sign up for Part B when first eligible (Initial Enrollment Period), then you will likely face a late enrollment penalty that increases the cost of your monthly Part B premium.


Note: Here again, a Special Enrollment Period might apply that allows you to enroll outside of Initial Enrollment without penalty. Check for qualifying special circumstances.



How Does a Late Penalty Affect My Part B Premium?


If you’ve missed enrolling during your Initial Enrollment Period but still wish to purchase Part B coverage, the sooner you enroll the better.


For each full 12-month period that you were eligible to enroll in Part B but did not do so, your Part B premium amount will increase by 10%. Note, however, that it must be a full 12-month span for an increase to take place.



Part B Late Enrollment Penalty Example 1:


So, for example, let’s say that you enrolled in Part B two and a half years late (i.e. 30 months after your Initial Enrollment Period ended). In this case your late enrollment penalty would be a 20% increase to your Part B monthly premium.


The penalty is 20% because there were two full 12-month periods during that span. Even though you waited an additional 6 months beyond the two 12-month periods (30 months in total), you did not reach a third 12-month threshold that would raise your premium amount an additional 10%.



Part B Late Enrollment Penalty Example 2:


Now, let’s say that you enrolled in Part B forty-nine months late (i.e. a little over 4 years). The late enrollment penalty in this case would be a 40% increase to your Part B monthly premium.


The penalty is 40% because there were four full 12-month periods that occurred during that span. Even though you just barely crossed the threshold by a month in the fourth 12-month period, it still adds an additional 10% to your penalty.



How to Check Your Medicare Premium Amount


You also have the ability to get an estimate of what your Part B premium will be through use of Medicare’s Eligibility & Premium Calculator.


The calculator is free to use and the questions should take less than a minute to answer. Once completed, the calculator can provide your eligibility status and an estimation of what your monthly premium will cost.


Even if you know you’re not currently eligible for Medicare, by entering your information, the calculator can give you exact dates for your upcoming Initial Enrollment Period.



Medicare Part D Late Enrollment Penalty



What Is the Medicare Part D Late Enrollment Penalty?


The late enrollment penalty for Medicare Part D is an extra amount added to your Part D monthly premium. Generally, the longer you wait to enroll in Part D past your Initial Enrollment Period, the greater your Part D penalty amount.


The penalty amount is calculated by multiplying 1% of the National Base Beneficiary Premium times the number of months you went without creditable prescription drug coverage. The months used in calculating the penalty must be full months that you went without creditable coverage.


The final penalty amount is always rounded to the nearest $.10 and then added to the cost of your Part D monthly premium.



What Is the National Base Beneficiary Premium for 2021?


The National Base Beneficiary Premium is used in calculating the Medicare Part D late enrollment penalty. Its specific amount can change from year to year. Therefore, it is important to note that your Part D late enrollment penalty can also change in amount from year to year.


For 2021, the National Base Beneficiary Premium is $33.06. This amount has increased from the 2020 amount, which was $32.74.



Who Is Affected by the Medicare Part D Late Enrollment Penalty?


The Part D late enrollment penalty only applies if you’ve gone without prescription drug coverage for a period of 63 days or more once eligible for Medicare.


So, once your Initial Enrollment Period has ended, you’ll be assessed a late enrollment penalty when enrolling in Part D if you’ve gone for a consecutive 63 days or more without one of the following types of coverage:

  • Medicare Prescription Drug Plan (Part D)

  • Medicare Advantage Plan (Part C)

  • Creditable prescription drug coverage



How Does a Late Penalty Affect My Part D Premium?


Once you join a Medicare Part D prescription drug plan, your plan provider will notify you if you’ve been assessed a late penalty. This Part D penalty applies for as long as you have a Medicare prescription drug plan.


The amount of the penalty is determined by how long you went without prescription drug coverage. The late penalty is 1% of the national base beneficiary premium ($33.06) times the number of full months you went without creditable drug coverage.



Part D Late Enrollment Penalty Example 1:


So, let’s take a look at an example of how the Part D late enrollment penalty is applied. Say that your Medicare Initial Enrollment Period came to a close at the end of June in 2018 and you did not join Part D or have any other source of creditable drug coverage.


Instead, you waited until the following year (2019) to join during the Open Enrollment Period. This means that your drug coverage takes effect January 1st of 2020 and results in a Part D late enrollment penalty of $5.89.


Breakdown:

  • 18 months without coverage (July 2018 – December 2019)

  • 1% for each month without coverage (1% x 18 = 18%)

  • 18% times the 2020 national base beneficiary premium of $32.74


Example 1 Continued:


Because the national base beneficiary premium tends to change from year to year, your 2021 Part D late enrollment penalty will change in amount from your 2020 penalty.


Medicare recalculates your penalty using the same count of months without coverage while swapping in the new 2021 national base beneficiary premium of $33.06. So, your Part D late enrollment penalty for 2021 is now $5.95.


Breakdown:

  • 18 months without coverage (July 2018 – December 2019)

  • 1% for each month without coverage (1% x 18 = 18%)

  • 18% times the 2020 national base beneficiary premium of $33.06



Part D Late Enrollment Penalty Example 2:


Let’s take a look at another example. Say that your Initial Enrollment Period came to a close at the end of March in 2018 and you did not join Part D or have any other source of creditable drug coverage.


Instead, you waited to enroll in Part D during the 2020 Open Enrollment Period, meaning that your coverage will take effect on January 1, 2021. In this case, your Part D late enrollment penalty is $10.91.


Breakdown:

  • 33 months without coverage (April 2018 – December 2020)

  • 1% for each month without coverage (1% x 33 = 33%)

  • 33% times the 2021 national base beneficiary premium of $33.06



Extra Help Paying for Medicare


Note that if you’re an individual with limited income and resources, your state may offer to help you pay for Medicare Parts A and B, as well as Medicare Part D prescription drug coverage if you qualify for Extra Help.




Helpful Resources:

Medicare: Part A Late Enrollment Penalty

Medicare: Part B Late Enrollment Penalty

Medicare: Part D Late Enrollment Penalty

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