If you will become age-eligible for Medicare in 2011, you may be tempted to let your Medicare enrollment slip. Perhaps you’re still employed or you have health care coverage through your spouse. Regardless of the reason, if you don’t enroll in Medicare within three months of your 65th birthday, you could end up paying a premium penalty for the rest of your life, based on when you finally enroll in the plan.
When you become age-eligible for Medicare, you have a “special enrollment period” during which you can enroll in Medicare for the first time. The special enrollment period begins three months before your 65th birthday and ends three months after your birthday.
If you don’t enroll in Medicare during the special enrollment period, you’ll be paying a permanent penalty in the form of increased monthly premiums on Medicare coverage. The penalties can vary, and they apply to all Medicare coverages for which you pay premiums. In other words, the penalty will apply to Medicare Part B, Medicare Part C and Medicare Part D premiums.
This is especially important to understand for Medicare Part D coverage. Medicare Part D coverage is optional. If you opt out for a year or two, even if you enrolled in Medicare Part A and Part B plans, you’ll still pay the premium penalty for your prescription drug coverage when you enroll in a Part D plan.
To avoid the premium penalty, many Medicare-eligible beneficiaries enroll in the lowest cost plans possible when they first become eligible. This strategy may have you spending some additional cash up front, but it will prevent you from paying potentially large non-enrollment penalties later.
One other caveat: your eligibility to enroll in Medicare Supplemental Insurance plans begins when you first become eligible for Medicare. If you choose not to enroll in Medicare at that time, you may forfeit your opportunity to enroll in a supplemental insurance plan later. If you eventually want traditional Medicare Part A and Part B coverage, examine the Medicare Supplemental Insurance plans carefully during your special enrollment period.