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Understanding the Medicare Late Enrollment Penalty

If you don’t enroll in Medicare when you first become eligible at age 65, you may end up paying a Late Enrollment Penalty, which will raise your Medicare premium for the rest of your life. That penalty can apply to all parts of Medicare on which you pay a premium, which is predominantly Medicare Part B (which is for outpatient medical services) and Part D which is prescription drug coverage. The penalty can also apply to Medicare Part A (inpatient hospitalization coverage) unless Part A is free to you, which it is for anyone also eligible for Social Security. The key thing to remember is this: Your Medicare Initial Enrollment Period (IEP) starts 3 months before the month in which you turn 65 and ends 3 months after the month you turn 65 and, unless you have other “creditable” healthcare coverage, you’ll suffer a Late Enrollment Penalty for enrolling outside of your IEP. But if you have other “creditable” coverage (for example from an employer) you can defer enrolling in Medicare until your employer coverage ends, at which time you’ll enter an 8 month Special Enrollment Period during which you can enroll in Medicare without penalty. “Creditable” coverage is a group plan with at least 20 participants. This Yahoo! article by Vance Cariaga explains everything you need to know about how the Medicare Late Enrollment Penalty works, however it stops short of explaining how to avoid the penalty, which is explained above. Click here to read the Yahoo! article.

Also, if you’re unsure about your enrollment options under Medicare or have questions about your Social Security benefit entitlements, note that the AMAC Foundation provides an independent free-to-the-public Social Security Advisory service to help Americans navigate the complexities of these programs. Learn more about it here…

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