Q: Why Is There a Medicare Part B Late Enrollment Penalty?
Asked by Anonymous on September 29, 2017
And what happens if I don’t enroll into Medicare Part B when I turn 65?
Unfortunately, there is a Medicare Part B late enrollment penalty.
Medicare rules require you to enroll in Medicare Part B during your Initial Enrollment Period to avoid paying a late enrollment penalty that will be added to your Medicare Part B premiums. (As a reminder, unlike Medicare Part A, Medicare Part B isn’t free. You must pay for it out of your own pocket, or have it deducted from your monthly social security check.)
The Late Enrollment Penalty: The Medicare Part B late-payment penalty amounts to an increase of 10 percent for each 12-month period that you were late enrolling in Medicare Part B. For example, if you were eligible when you turned 65, but didn’t enroll until you turned 67, you will be charged 20 percent more in Medicare Part B premiums as everyone else, for as long as you have Medicare Part B. This penalty doesn’t go away, which is why you need to do everything you can to avoid it.
While government in general does have a lot of rules and regulations for little to no reason, I get the purpose of this penalty. The Medicare Part B late enrollment penalty is in place to help guide Medicare seniors to enroll in Part B at the right time.
Why Medicare Charges This Penalty: From an actuarial standpoint (the people who work for insurance companies and crunch the numbers), the older you are, the more you’ll need medical services. From Medicare’s perspective, they want you to enroll in Medicare as soon as you become eligible. It helps prevent Medicare seniors from waiting until they need a lot of medical services before they enroll. The technical insurance term is that they are trying to prevent “adverse selection”.
It’s best to avoid the Part B penalty altogether by not enrolling late into Part B. You can read more about the Medicare Part B late enrollment penalty on Medicare.gov.
Taking the Next Steps
Looking to offset some of your Medicare costs? Consider adding a Medicare Supplement plan to your coverage. Search our database of Medicare Supplement plans to find the right plan for each of you.