If you miss the Open Enrollment window for Medicare supplement, don’t panic. You can still get coverage, but you may owe a late enrollment fee.
The timing of your enrollment for supplemental Medicare (or Medigap) insurance can significantly influence both the options available and access to coverage.
The timing might also affect your coverage rates and whether Medigap insurance can ask you for more payments, or decline to cover you altogether due to preexisting conditions.
Late enrollment often results in a penalty fee and the risk of potential loss of coverage, so it is important to get registered while you still can.
Late Enrollment Penalties
|Part A||A 10% increase might occur for premium payments of Part A.|
|Part B||For every 12 months without enrollment, the penalty is 10% on top of your regular premium.|
|Part C||No penalty or fee.|
|Part D||If you don’t meet all four of the above requirements over a 24 month period, you will have to pay a penalty of approximately $11 per month, so long as you have Medicare Part D coverage.|
Why is there a late enrollment penalty for Medicare?
Late fees are charged in order to ensure the healthcare system gets consistent funding. The healthcare system relies on healthy individuals to make payments to balance the costs incurred by unhealthy people.
After the initial enrollment period of 63 days, failure to enroll for any of the following plans may incur late enrollment penalties:
- Advantage plan (Part C) Medicare.
- Prescription drug coverage in Part C.
- Prescription drug coverage offered in another Medicare plan.
- Prescription drug coverage from another credible source.
How much is the Medicare late enrollment penalty?
Late enrollment cost largely depend on how long you went without Part D or creditable prescription drug coverage. The company calculates the penalties by multiplying the national base beneficiary premium ($44.19 in 2020 and $43.74 in 2021), by the number of months you went without Part D (or commendable coverage). The monthly premium is then rounded off to the nearest 10 cents and added to the Part D premium.
The penalty may increase each year with the national beneficiary premium.
How can I avoid paying the Medicare late enrollment penalty?
Enrolling for a Medicare plan when you are eligible means you do not have to pay the Medicare Part D late enrollment penalty, even though you have never had a prescription drug plan before.
Keep a record of your creditable coverage history and inform your plan provider about it if they seem unsure. To avoid the penalties, always complete the form and submit it before the deadline.