No, you never have to enroll in Medicare.
But if you decide to enroll after your Medicare Birthday has passed, then you may suffer some consequences – depending on your circumstances. Each separate part – Part A, Part B, and Part D – all have deadlines and potential penalties, some worse than others!
The Part A Late Enrollment Penalty
Good news! If you or your spouse paid into Medicare for 10 years or 40 quarters, you automatically qualify for prepaid Medicare Part A when you turn 65, no premium needed. So there’s no penalty if you don’t enroll in Part A during your Medicare Birthday. This is the vast majority of Medicare recipients.
BUT – you can get a late enrollment penalty if you could have taken Part A by paying for it when you were first eligible and did not. People falling under this category are those who did not contribute at all or enough to Part A through payroll deductions (like educators or hairdressers, for example), or they are new citizens. The Part A premium is pretty expensive, and the penalties don’t help. Fortunately, they are not permanent penalties, unlike those for Parts B and D.
The Part A penalty is based on whether you need to pay the entire Part A premium (you worked less than 30 quarters), or the reduced premium (30 to 39 quarters). The penalty adds 10% to the premium every month for double the length of time that you delayed signing up. So if you delayed for two years, then you’d pay an extra 10% to your Part A for four years.
Example:
Full Premium Owed: For 2024 the full Part A premium is $505/month; 10% would be $50.50, so $505 + $50.50 = $555.50/month. If you delayed enrollment for a full year, then you’d owe this penalty for two years.
Partial Premium Owed: For 2024 the partial Part A premium is $278/month; 10% would be $27.80, so $278 + 27.80 = $305.80/month. Again, you would owe for however many years you delayed times two!
A Sad Story: Joe thought he didn’t qualify for Medicare when he retired at 65 because he hadn’t paid into the system for the full 40 quarters from work. So he waited for two years until his wife turned 62 to qualify on her work record. But when he went to sign up, he found out he would get late penalties for both Part A AND Part B. Even though he hadn’t paid into the system for 10 years or 40 quarters, he was still entitled to both Part A and Part B at age 65 (his Medicare birthday) by paying for premiums for them. Under the rules, he paid the Part A penalty for four years, but had to pay the Part B late enrollment penalty forever . . . .
A Special Note to Teachers
Certain states are not “covered by Social Security” for educators and certain other professions. For teachers in California and several other states (Nevada, Texas, and Missouri for my other clients), this means you don’t have an automatic Medicare Part A deduction taken from your paycheck. I talked to CalSTRS about this and they said it’s something the individual districts can implement or to talk to your legislator, but they won’t do it for you. So if you don’t want to be slammed for those Part A premiums when you hit age 65, consider talking to your Payroll Department or Teachers’ Union representative about making this payroll deduction a reality. Otherwise, start investing well! (I can also help with 403(b) savings, give me a call.)
The Part B Late Enrollment Penalty
If you don’t sign up for Medicare Part B when you are first eligible, such as the third month after your Medicare Birthmonth or if you leave employer coverage but then dither around for more than eight months (Dude!) you will be charged a permanent Medicare Part B Late Enrollment Penalty for each year you could have had Part B but didn’t. (This does not apply if you had creditable health coverage during the time you did not have Part B.)
The penalty is an extra 10% for every full 12-month period you between your enrollment deadline and the end of the General Enrollment Period (March 31st). If your time without Part B happens to be less than twelve months, then you beat the system – no penalty!
There can be some odd employer benefit situations where they expect Medicare to be the primary payer, so make sure to check with your Human Resources Department prior to blowing off Part B to see how Medicare fits into the health insurance picture.
The Part D Late Enrollment Penalty
Strange But True: You aren’t required to get a Medicare Prescription Drug policy if you don’t need one, but when you DO need one, you will be charged a permanent Part D Late Enrollment Penalty. If you stay on employer coverage past age 65 and it has “creditable” drug coverage, you’re safe if you apply for a plan within 63 days of leaving your employer group plan.
What’s the Penalty? Here comes the math: It’s 1%/month of the National Average Premium (NAP) (in 2024 it’s $32.74) times however many months you’ve gone without prescription drug coverage. So it 1% x # of months x $34.70. For example, two years and three months is 27% x $34.70 = $9.37. Medicare rounds up to the nearest 10 cents, so the number is $9.40. This $9.40 gets added to your monthly prescription drug premium or your MAPD premium, usually deducted from your Social Security check if you roll that way.
But I Don’t Take Drugs! I know, it’s aggravating having to pay for something you don’t even need! But there are really inexpensive drug plans out there – in California there’s a good one in 2024 for the ridiculous price $0.40/month, and it’s helpful if you end up needing a prescription for antibiotics for a sinus infection, for example. This is a national plan, so I could write you for it locally in Texas for $0.50 – you get the picture. (Don’t ask me what this company is doing, we’re all wondering the same thing. Just enjoy it while it lasts!)
Remind Me – What is Creditable Coverage?
“Creditable coverage” is prescription drug coverage that is at least as good or better than what a Part D Medicare prescription drug plan. (Yes, this applies to Part B, too.)
But I HAVE Creditable Coverage!
You can appeal Medicare’s penalty. Download the Part D Late Enrollment Penalty Reconsideration form here. If you had several employers before deciding to go on Medicare Part D, do your best to piece together your former health plans with ID numbers and any letters you may have saved. It could make a difference.
