What if I’m late to enroll in Medicare? Are there penalties?

A grandma reads a book to her grandson while sitting in an arm chair.

Moving into retirement can be a challenging, confusing period. Life as you know it is changing, and not just between the hours of 9 and 5.

You're making decisions about how to spend your time: Should I travel? Volunteer? Work part-time? Care for the grandkids? Enjoy an unscheduled life?

Before you fully embrace your freedom, take a look at some vital basics which will ensure long-term security—like Medicare enrollment.

Do I have to sign up for Medicare when I turn 65?

The shortest answer? It depends. The timing of your sign-up can have an impact on the type of plan you choose, if you need to continue working, and when you can actually retire, if you haven't already done so by 65.

Do I pay a penalty if I don't enroll in Medicare?

If you don't enroll in Medicare when you're eligible, various penalties may be assessed, based on timing and what plans you choose.

  • If you’re eligible for premium-free Part A, you usually don't pay monthly premiums for Medicare Part A (hospital insurance). Eligibility is based on your/a spouse paying Medicare taxes for at least 10 years while working.
  • If you’re not eligible for premium-free Part A, your monthly premium may increase by 10% if you don’t purchase it when you are first eligible.1

There are conditions for Medicare Part B late enrollment penalty exceptions. This includes those who are still working and have primary healthcare insurance through their employers. “The late enrollment penalty takes the standard premium amount and increases it by 10% for each full 12-month period that you could have had Part B, but didn’t.”2

"Medicare calculates the [Part D] penalty by multiplying 1% of the ‘national base beneficiary premium’ ($35.63 in 2017) times the number of full, uncovered months you didn't have Part D or creditable coverage. The monthly premium is rounded to the nearest $0.10 and added to your monthly Part D premium.”3

In the case of all Medicare parts/plans, there are exceptions to the penalties for not signing up for Medicare. Educate yourself on what coverage you may still have from an employer to best determine when to sign up.

Late retirees and Medicare

Maybe you're delaying retirement well past the day you celebrate your 65th birthday, but at the end of the day, if you want Medicare to support healthcare expenses throughout your retirement, be aware of your options.

Remember, if eligible, you can sign up when you're about to turn 65, and you may not always incur a penalty if you don't sign up on time. Know your Medicare rights and options (including Special Enrollment Periods, or SEPs, for Medicare Parts A and B), and weigh the impact a late enrollment may have on your retirement budget and lifestyle preferences.

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