As you approach your 65th birthday, you’ll probably start receiving alerts about signing up for Medicare. You’ll be presented with several decisions to make and quite a bit of information you never thought you needed to know. And some of that information may be unexpected.
For example, you might be surprised to hear there are seniors who have to pay a premium for coverage. But what may surprise you more is the penalties you’ll incur if you miss your enrollment period. With many citing misconceptions about costs, coverage and enrollment periods, it’s understandable that 70% of seniors say they wish they had known more about Medicare before they became eligible. You don’t want to be caught off guard by the enrollment requirements and potential penalties, so take the time to learn about Medicare Part A now!.
What is Medicare Part A?
Medicare is broken into three parts. Parts A and B are considered Original Medicare. Part A refers to the hospital benefits portion and covers in-patient stays, hospice and long-term care facilities. Most beneficiaries qualify for premium-free Part A Medicare but some may be required to pay a premium. Regardless of payment status, you still need to know about the enrollment period for Part A and what happens if you miss your enrollment window.
Part A requirements
When you become eligible for Medicare, you have a seven-month enrollment period to sign up for Part A. This period begins three months before the month you turn 65, includes your birth month, and continues for three months after. So if you turn 65 in April, your enrollment period would be from January 1 to July 31.
If you’re already 65 and receiving Social Security benefits, you should have automatically been enrolled in Part A and B and received your Medicare card in the mail. If you haven’t started receiving Social Security, you’ll have to sign up on your own during your enrollment period.
To qualify for premium-free Part A coverage, you or your spouse must have paid Medicare taxes for 40 calendar quarters (or ten years). The majority of seniors fall into this category.
But if you’ve paid for fewer than 40 calendar quarters, you’ll have to pay a monthly premium. In 2021, if you have less than 30 credits your premium will be $471 each month, and if you have between 30 and 39 credits the cost is $259 each month.
What is the penalty for late enrollment?
The Part A late enrollment penalty only applies to those who don’t qualify for premium-free coverage. If this is the case for you, then you won’t be charged a penalty, even if you sign up late.
For others, the penalty adds an additional 10% to your premium costs, and you’ll have to pay this for twice the amount of time that you delayed signing up. So if you delayed enrolling for 18 months, you’ll pay the penalty for three years.
- If you or your spouse is currently employed and receiving health benefits when you turn 65, you can defer your enrollment until that employment ends. By this time, if you still haven’t accumulated 40 credits, you won’t be charged a penalty if you sign up within the eight-month special enrollment period. If you do have 40 credits by this time, you qualify for premium-free Part A with no penalties.
- Those who currently qualify for and receive Medicaid do not pay Part A premiums.
- Some people who have a disability, have been diagnosed with end-stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS) don’t have to pay Part A premiums.
- Some states offer assistance through a Medicare Savings Program to those who can’t afford to pay their Part A premium.
What happens if I miss the deadline?
If you miss your enrollment period, the best course of action is to sign up as soon as possible. Definitely don’t delay any longer! The length of time you’ll have to pay the penalty only increases the longer you wait.
If you feel you shouldn’t be charged the penalty, or if you can’t afford the additional costs, contact our team at My Senior Insurance Quotes. We’ll work with you to find the best plan for your needs.
image credit: shutterstock/Arne Beruldsen