It’s time for another Medicare enrollment period. I know! From October into December, we were bombarded with what seems like a never-ending stream of Medicare commercials. But there are four enrollment periods.
There’s the Initial Enrollment Period (IEP) which happens once. It’s a seven-month window that runs 3 months before you turn 65, the month you turn 65, and 3 months after the month you turn 65.
There’s the Annual Enrollment Period (AEP), sometimes referred to as Open Enrollment. It runs October 15-December 7 every year. This is the time you can make changes to your coverage. For example:
- Switch from Original Medicare to a Medicare Advantage plan or vice versa.
- Switch from a Medicare Advantage plan with drug coverage to one with out or vice versa.
- Join or drop a Medicare Prescription Drug plan (Part D).
- Update your coverage by switching to a new plan from your current insurer or switching to a new insurer.
There’s the Special Enrollment Period (SEP). This is the time you can enroll in Medicare or make changes to your current Medicare arrangements when certain circumstances occur:
- The health insurance you have from an employer plan ends.
- You move out of your plan’s service
- You move back to the U.S. after living abroad.
- You move into or out of a skilled nursing facility, psychiatric facility, rehab hospital or long-term care facility.
And then, there’s the General Enrollment Period (GEP), which occurs every year from January 1-March 31 for people who are eligible for Medicare but not enrolled in Medicare Part A and Part B.
For example, someone who is still employed past their 65th birthday and gets their health insurance through their employer or an actively working spouse’s employer can delay signing up for Medicare until they are no longer covered by the employer health plan. Then, that person can sign up for Medicare, without penalty, during their Special Enrollment Period (SEP). If they miss the SEP, they can still sign up for Medicare during the next General Enrollment Period, but a late enrollment penalty may be accessed.
Or, if someone should have signed up for Medicare during their Initial Enrollment Period (IEP) because they didn’t have qualified health coverage but did not, they can enroll in Medicare Parts A and B during the General Enrollment Period. However, a late enrollment penalty is almost certain.
Penalties work like this.
Part B Medicare Penalty is 10% for each 12-month period you could have been enrolled in Part B but were not.
If you waited 2 full years (24 months) to sign up for Part B and didn’t qualify for a Special Enrollment Period, you’ll have to pay a 20% late enrollment penalty (10% for each full 12-month period that you could have been signed up), plus the standard Part B monthly premium of $174.70 in 2024. This penalty lasts for as long as you have Part B coverage.
$174.70 (2024 Part B standard premium)
+$34.94 (late enrollment penalty)
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$209.64 (The amount is rounded to the nearest $.10 and includes the late enrollment penalty.)
Part D Medicare Penalty is 1% per month for each month you could have had Part D coverage but didn’t. The penalty is determined using the national base beneficiary premium, which changes every year.
If you enrolled in Part D Prescription drug coverage 14 months after you were eligible for Medicare Part D and if you did not have creditable drug coverage, there will be a 14% late enrollment penalty in addition to the monthly Part D premium.
$34.70 (2024 national base beneficiary premium)
$ 4.90 ($34.70 X 0.14 (14% penalty)
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$39.60 (The amount is rounded to the nearest $.10 and includes the late enrollment penalty.)
Disclaimer
This information is presented for informational purposes only and does not constitute an offer to sell, or the solicitation of an offer to buy any investment products. None of the information herein constitutes an investment recommendation, investment advice or an investment outlook. The opinions and conclusions contained in this report are those of the individual expressing those opinions. This information is non-tailored, non-specific information presented without regard for individual investment preferences or risk parameters. Some investments are not suitable for all investors, all investments entail risk and there can be no assurance that any investment strategy will be successful. This information is based on sources believed to be reliable and Alhambra is not responsible for errors, inaccuracies, or omissions of information. For more information contact Alhambra Investment Partners at 1-888-777-0970 or email us at [email protected].
