Q:

How is the late penalty for Medicare enrollment calculated?

A:

Quick Answer

The late penalty for Medicare Part B enrollment is calculated as a percentage of the monthly premium. The penalty for late enrollment in Part D depends on how long an individual went without coverage.

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Full Answer

Those who do not enroll in Part B as soon as they are eligible, or if they drop Part B and then sign up for it later, may have to pay a late penalty for as long as they have Medicare. Their monthly premium for Part B might increase as much as 10 percent for each full year that they could have had Medicare Part B but failed to sign up for it. Nevertheless, they do not have to pay a late penalty if they meet certain conditions that allow them to enroll during a special enrollment period.

By multiplying 1 percent of the national base beneficiary premium by the number of full, uncovered months individuals were eligible but did not sign up for a creditable prescription drug coverage, one can calculate the cost of the late enrollment penalty. The final figure is rounded to the nearest 10 cents and added to the individual’s monthly premium. The national base beneficiary premium usually changes annually, so the penalty amount might also change each year.

After joining a Medicare drug plan, individuals can find out whether they owe a penalty and what their premium is. The penalty is waived once they reach 65 if they had to pay this penalty before they turned 65.

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