Late Enrollers In Medicare Face A Hefty Penalty
Each year, thousands of Americans turning age 65 make a critical, lifelong mistake that can cost them hundreds or thousands of dollars in additional Medicare premiums, advocates for senior citizens say. The Medicare Act requires residents sign up for the federal health insurance program within three months before or three months after turning 65 years old, unless they or their spouse have a job that provides health and/or prescription insurance coverage or they qualify for certain other limited exceptions. The problem, advocates say, is many people are unaware of the requirement. If they miss the deadline, they face stiff late enrollment penalties that last their lifetimes for each year without coverage. “People I talk to just didn’t understand and didn’t know they had to take affirmative steps to enroll,” said Leslie Fried, senior director of the Center for Benefits Access at the National Council on Aging, a nonprofit organization based in Arlington, Virginia. Nationwide, more than 700,000 people, including 26,000 in Pennsylvania, paid late enrollment penalties in 2016, the latest figures available. That can dramatically affect their finances. “Medicare beneficiaries are generally on a fixed income,” Fried said. “They end up paying a penalty for the rest of their lives. It may be a penalty they can’t afford.” Medicare is broken into three main parts: Part A covers hospitalizations; Part B covers doctors visits and medical tests; and Part D, which is sold by private insurance companies, covers prescriptions. Late enrollment penalties apply to all three parts, but the Part B and Part D penalties affect most people. There is no cost to enrollees for Part A, but they pay monthly premiums for Part B, which is $134 this year, and Part D, which averaged at $35.02 this year. For Part B, the penalty is 10 percent of the Medicare premium for each 12-month period without coverage. That can add up to a hefty bill. For example, if someone turned 65 in 2015, but did not sign up until this year, at 68, the penalty would be 10 percent of the Part B premium for three years, or 30 percent. That is a lifetime monthly penalty of $40.20 on top of the regular monthly premium, which varies annually. The Part D penalty is 1 percent of the national average premium for each month a person went without coverage. Someone who signed up 36 months late would pay a 36 percent penalty for life. The cost would vary depending on the average premium in each year. Terri Lynn Flowers, Lackawanna County’s coordinator for APPRISE, a program that provides free Medicare counseling, said many people get hit with the penalty because they don’t understand the law. Matilda Gavalis, of Union Dale, is among them. She recently sought help from APPRISE in signing up for Medicare Part D prescription coverage. She learned she must pay a $44 monthly penalty on top of the Part D premium because she did not sign up when she was first eligible. Gavalis said she and her husband, who died in 2013, signed up for Medicare Part A and B when they were first eligible. He opted not to sign up either of them for prescription coverage at that time because they had no need for it since they were both very healthy and took no medications. She had no idea she would face a penalty. “No one said if you don’t sign up now you are going to pay a penalty and it’s going to go up every year,” Gavalis said. “I’m sure if he realized the consequences ... he would have signed up even though we didn’t need it.” Fried said Gavalis’s situation is common because the government is not telling people they have to enroll. People receiving Social Security benefits are enrolled automatically. Fried said people often question why Medicare imposes the penalty. Virtually everyone signs up for Part A because it has no premium. Because Medicare Parts B and D do have premiums, people who are healthy might decline the coverage. That harms the risk pool because only sick people would take the coverage. “If we only let people sign up for health insurance when they’re sick, that skews the risk pool,” Fried said. “It’s like allowing someone to buy fire insurance when their house is on fire.” Fried said she understands the need for penalties, but the government needs to do more to educate people about the requirements. “There should be a requirement that the Social Security Administration, which has the data, send out a notice to everyone who turns 65 that now is the time to enroll in Medicare,” she said. U.S. Sen. Bob Casey agrees. In January, he introduced legislation, the Medicare Beneficiary Enrollment Notification and Eligibility Simplification Act, which would require the government send information to people before they turn 65 that explains when to sign up for Medicare and what can happen if they delay. The bill was referred to the Senate’s finance committee and is still pending. In an email, Casey said he continues to work to build support for the bill. “As 10,000 Baby Boomers turn 65 each day, we have a sacred responsibility to ensure seniors are prepared to make the most of their earned Medicare benefits,” Casey said. Contact the writer: firstname.lastname@example.org; 570-348-9137; @tmbeseckerTT on Twitter The federal Medicare Act requires most Americans to apply for Medicare coverage within a six-moth period — three months before and three months after their 65th birthday. Those who fail to do so face late enrollment penalties. Many people qualify for a special enrollment period that allows them to delay enrollment without paying a penalty. The most common exemption is for people who continue to work past age 65 and have health care coverage through their jobs or unions, or through their spouse’s job. They can delay enrollment until they no longer work or have insurance coverage. Others exempt include military retirees and international volunteers. Those who miss the initial enrollment when they turn 65 can still sign up for Medicare Parts A and B between Jan. 1 and March 31 each year. Coverage would begin on July 1 of the same year. For information on enrollment penalties and exemptions, visit Medicare’s website at Medicare.gov. The National Council on Aging also provides information through the “My Medicare Matters” section of its website, mymedicarematters.org.