Most Medicare participants sign up for Medicare the month they turn 65, and about 20 percent are enrolled earlier because of a disability. Part A, hospitalization insurance, is premium free, but Part B, which covers doctor's services and other medical services, carries a monthly premium. If you enroll in Part B outside the normal time frame for doing so, you may incur financial and coverage penalties.
Initial Enrollment Period
If you receive Railroad Retirement Board or Social Security retirement or disability benefits before you turn 65, you’ll be automatically enrolled in Medicare Parts A and B the first of the month you turn 65. You’ll get your red, white and blue Medicare card in the mail about three months beforehand. If you’re not receiving benefit payments from those agencies, you won’t be automatically enrolled and must take care of it yourself.
If you must enroll manually, you have a seven-month initial enrollment period during which you should enroll in Medicare. This period consists of the three months before the month you turn 65, that month, and the three months following.
Alternate Medical Coverage
If you’re actively working and are covered by employer- or union-provided health insurance, you generally are able to opt out of Part B coverage for as long as that coverage remains in effect. You won’t be penalized for delaying your Part B coverage for this reason, but you should discuss the matter both with a benefits specialist at work and with a specialist at Social Security, who will want to talk to you if you opt out of Part B coverage. If you have this alternate medical coverage, you’ll be entitled to a special enrollment period, or SEP, of eight months following the date you lose that employer-provided coverage.
Late Enrollment Penalties
Late enrollment penalties are assessed if you enroll in Part B after the initial enrollment period or after the end of any SEP.
If it is determined that you enrolled late in Part B, you’ll generally be required to pay a penalty of 10 percent of the monthly Part B premium every month. For most participants, that premium in 2015 is $104.90, and the 10 percent penalty would be $10.49, for a total payment of $115.39 monthly. If the Part B premium changes, the penalty will also change to 10 percent of the new premium.
If you do not enroll in Part B during your IEP or any SEP you’re entitled to, you must wait until the general enrollment period, which runs from Jan. 1 until March 31 of each year. If you enroll during this GEP, your coverage will start the following July 1. In addition, if you enroll during your IEP, but during or after the month you turn 65, there’ll be a 1, 2 or 3 month delay after the date you enroll before coverage becomes active. If you enroll in Part B before the month you turn 65, your coverage will begin the first of the month you turn 65.