This past holiday season, I was in line at the airport counter, waiting to check a bag for my flight to visit family and friends. The gentleman in front of me got frustrated when the customer agent said he had to pay more to check a bag because he hadn’t paid for it online beforehand. I could relate to his irritation because I’d had a similar experience years ago. But on this day, I was late for my plane and hoped the situation would be resolved soon. After talking to a manager and reviewing the terms of the ticket purchase, the man paid the extra fee. The rest of us in line sighed a quiet relief as the clock ticked down to our departure times.
The gentleman’s reaction reminded me of a Medicare beneficiary I encountered a while back. When he was first eligible, he decided not to enroll in Medicare Part B, which helps pay for doctor fees, outpatient treatment and preventive care services. He was in good health when he declined his Part B benefits. He rarely saw a doctor, didn’t take prescription drugs and had never been admitted to a hospital. Part B carries a monthly premium (about $109 for most people in 2017), and the man didn’t think he should pay for something he didn’t need.
Several years later, however, his health declined and he wanted Part B. He signed up in March, but learned that his coverage wouldn’t start until July. And, since he had waited five years to enroll after he was initially eligible (and didn’t have job-based insurance at the time), he learned that he would have to pay a late penalty equal to 50 percent of his monthly premium.
He was very surprised, to say the least. He reached out to Medicare to reduce the penalty. Unfortunately, there wasn’t anything we could do to help him. When the beneficiary turned down Part B five years earlier, he had signed a document that explained the penalty and the potential for higher costs. He now must pay this surcharge on his Part B premium for as long as he has Part B.
Why does Medicare have such penalties?
Like private insurance, Medicare spreads its costs across a “pool” of insured people that includes those who are healthy as well as those with medical problems. Late-enrollment penalties are meant to ensure that people join the risk pool when they are healthy, not just when they get sick. Thus, premiums paid by healthy people help offset the costs of those with illnesses, keeping the program’s overall expenses as low as possible for everyone.
Late-enrollment penalties can add up. Your Part B premium may go up 10 percent for each full 12-month period that you could have had Part B, but didn’t sign up for it. (You don’t usually pay a late penalty if you defer Part B while you are covered by employer insurance.)
So, please remember: If you don’t sign up for Part B when you’re first eligible, you may have to pay the late penalty for as long as you have Part B.
Late penalties also apply to Medicare Part A, which covers hospitalization. Although the vast majority of people with Medicare do not pay for Part A, those who do must sign up when they are first eligible or face a potential penalty.
You can also be penalized for late enrollment in Medicare Part D, which helps pay for prescription drugs. The way it is calculated is more complicated than Part B, but this penalty can add up, too. For details, see the 2017 Medicare & You handbook, which was mailed to every person with Medicare last fall. It’s also online at https://www.medicare.gov/pubs/pdf/10050-Medicare-and-You.pdf.
Or, call us, toll-free, any time of the day or night, at 1-800-MEDICARE (1-800-633-4227).