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Putting off Part B Enrollment Can Be a Mistake

Those approaching age 65 and getting ready to enroll in Medicare get all kinds of “good” advice about Medicare. Sometimes that good advice can turn bad. Here’s a mishap waiting to happen. 

I will turn 65 in a few months. I am retired and have health care through my union.  My friend said I should enroll in Medicare Part A and that‘s what I’m going to do.  It’s free and might pay some of the costs my union plan doesn’t cover. And I don’t have to pay the Part B premium, a big cost savings.

This retired union worker better put some of that money he’ll be saving into a “penalty” account. If he enrolls in Part A only, the clock starts ticking on the Part B Late Enrollment Penalty. That’s because insurance provided by a union after retirement is not considered creditable coverage for Part B. In other words, one cannot substitute a union plan for Part B.

If this man delays enrollment in Part B for a full 12 months, he will face a Medicare penalty of 10% of the standard Part B premium added to his monthly Part B bill for the rest of his Medicare life. The penalty in 2018 is an additional $13.40 every month for new beneficiaries or those subject to paying more for Medicare. 

The only creditable coverage for Part B purposes is an employer group health plan related to the current employment of the Medicare beneficiary or his or her spouse with a large employer (20 or more employees) or union. That means any individual who has retiree (through a former employer or union), individual, veteran, or COBRA coverage must enroll in both Parts A and B.  

Another mishap: There's a good chance that a person who is late enrolling in Part B enrollment also is facing a late enrollment penalty for Part D, prescription drug coverage. Like with Part B, the Part D penalty changes every year and follows the beneficiary for life. In 2018, the penalty is an additional $.035 for every month enrollment was delayed. For example, ten months late would result in an additional $3.50 on top of the drug plan premium. 

Last updated: 05-23-2018