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. This may apply if you are currently covered under an employer group health plan, as well as other potential scenarios.
You can check for other qualifying special circumstances here.
So, in other words, if you qualify for premium-free Medicare Part A, as the vast majority of Medicare enrollees do, then you do not have to worry about a late enrollment penalty (as you will have no Part A monthly premium to apply it to).
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 will want to purchase coverage when first becoming eligible for Medicare.
The period in which you’re first eligible to enroll in Medicare is known as your Initial Enrollment Period.
This period begins 3 months prior to your 65th birthday month, includes your birthday month, then extends for an additional 3 months after.
If you wait until this period is over to enroll in Part A, you may be subject to a late penalty that would increase 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 have been eligible to purchase Medicare Part A for the past 2 years but have not yet done so.
When you enroll in Part A, you will 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 have been eligible to purchase Medicare Part A for the past 3 years but have not yet done so.
When you enroll in Part A, you will 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.
Remember: As mentioned above, if you meet the Medicare-defined special circumstances you may be allowed to sign up during a Special Enrollment Period and therefore avoid paying the Part A late enrollment penalty.
Additionally, if you are 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 prescription drug coverage if you qualify for Extra Help.
Up Next: Medicare Part A Comprehensive Guide
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