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Column-Delaying Medicare sign-up can be a costly lifetime mistake

2024.02.08 07:14

© Reuters. FILE PHOTO: A girl watches the sundown over the Pacific Ocean alongside Highway 1 close to Half Moon Bay, California, U.S., January 24, 2023. REUTERS/Matt Mills McKnight/File Photo

By Mark Miller

(Reuters) – Marian Leonard filed for Social Security when she turned 65 years previous. She didn’t join Medicare on the similar time, as a result of she couldn’t afford to pay the month-to-month premiums. But that was a costly mistake that serves as a warning to anybody navigating the transition to retirement.

Leonard signed up for Medicare 4 years later – solely to study that the delay would price her dearly. Leonard would be paying about 40% extra in premiums for Part B (outpatient providers) as a result of she didn’t enroll at age 65. What’s extra, she would be paying this penalty for the remainder of her life.

“I’m being penalized for having been too poor to afford Medicare,” mentioned Leonard, who lives in jap Pennsylvania.

Here is what Leonard didn’t know: Medicare requires that almost all staff join this system throughout a seven-month Initial Enrollment Period (IEP) that features the three months earlier than, the month of, and the three months following their sixty fifth birthday. If you’re already receiving Social Security at that time, you’ll be signed up for Medicare Part A (hospitalization) and Part B (outpatient providers) robotically.

But everybody else must pay cautious consideration to the enrollment guidelines. Missing your IEP can set off late-enrollment penalties levied within the type of greater premiums that proceed for all times.

There actually is just one necessary exception to the enrollment mandate. You can postpone enrollment in case you are nonetheless working past age 65 and have insurance coverage by means of your employer, or in case you obtain insurance coverage by means of your partner’s employer. (One exception to that exception: in case you work for an employer with 20 or fewer staff, you can proceed with that protection, however Medicare turns into your major supply of insurance coverage at age 65, and it’s best to enroll throughout your IEP). 

The penalties have been included within the 1965 laws that created Medicare. The thought was to stop so-called antagonistic choice, which happens when solely the individuals who suppose they want advantages enroll in an insurance coverage program. That can drive up this system’s prices, so you will need to enroll most eligible individuals once they attain age 65.

The late enrollment premium penalty for Part B is the same as 10% of the usual Part B premium for every 12 months of delay. Since it’s a lifetime penalty, it should develop into bigger in greenback quantities over time, since it’s levied as a proportion of the usual Part B premium. That can saddle you with 1000’s of {dollars} of additional bills over the course of retirement. 

Leonard made the choice to postpone Medicare enrollment in 2019. She had simply relocated to the U.S. following a four-year stint in Germany for her husband’s work. He deliberate to cease engaged on their return to work on a fixer-upper home that they bought in rural Pennsylvania; they’d stay on financial savings and her Social Security. (Her husband was too younger to assert advantages.) Her Social Security profit was simply $1,200, and she or he didn’t really feel she may afford the extra Medicare premium – $135.50 monthly that 12 months.

“I went onto the Social Security website and filled out the form – I indicated that I didn’t want to take Medicare Part B, and didn’t bother to read any further,” she recollects.

Her monetary circumstances modified final 12 months after her husband handed away. At that time, she began amassing a Social Security survivor profit, and her Social Security profit elevated considerably. As a consequence, she felt she may now deal with paying for Medicare. She signed up at her native Social Security workplace – and that’s when she realized in regards to the penalty.

This 12 months, she is paying $245.30 monthly for Part B – a whopping $70.60 surcharge over the usual premium of $174.70. “In what world does it make sense to penalize somebody who is already struggling to survive for no other reason than they were too poor to afford insurance sooner?” she mentioned.


Seniors with very low earnings and property might be capable of get assist paying their premiums from federal applications. Unfortunately, Leonard’s monetary state of affairs places that assist out of attain as a result of a small retirement nest egg and her Social Security earnings.

The Medicare Savings Program pays Part B applications for enrollees who qualify. The program is accessible in each state, and it’s administered by state Medicaid businesses; every state has totally different guidelines for counting earnings and property to find out in case you qualify. The applications typically are underutilized due to a lack of know-how, and the complexity of software procedures. 

Help with prescription drug prices (Part D) is accessible by means of the Extra Help program. This federal program can assist low-income seniors with premiums, deductibles and cost-sharing in Part D prescription drug plans. Access to the subsidy was expanded below the Inflation Reduction Act.


Part of the issue is the complexity of the enrollment guidelines. But we additionally want higher info and warnings to assist individuals keep away from these penalties.

Social Security gives warnings in regards to the Medicare late enrollment penalties in numerous on-line statements and truth sheets. But client advocates have been pushing for laws that might require Social Security to ship a notification – both by mail or e mail – to staff at ages 60 and 65 to warn them in regards to the penalties.

That is a common sense thought that might assist individuals higher navigate the Medicare maze.  

The opinions expressed listed here are these of the creator, a columnist for Reuters.

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