Just one trip to the doctor can cost thousands, which is why most U.S. adults rely heavily on health insurance. According to the Congressional Research Service (CRS), 90.8 percent of people in the country had some type of health insurance in 2019. But even with this coverage, a number of mistakes can add up to more cost on your end, like not checking your medical bill for billing errors or accidentally going to an out-of-network provider. Now, experts are warning about one costly mistake with Medicare you’ll want to be sure to avoid. Read on to learn more about this all-too-common error.
People across the country are eligible to be insured under Medicare once they’re 65 years old. According to the health insurance program, you have a seven-month initial enrollment period to sign up that begins three months before the month you turn 65 and ends three months after—unless you qualify for a special enrollment period. During this time, there are two basic parts people typically have to sign up for: Part A, which is hospital coverage, and Part B, which is outpatient care coverage.
“Medicare is for people age 65 and older and those who have special conditions or disability,” the program states. “If you’re a U.S. citizen or you meet the lawful presence and residency requirements, the Initial Enrollment Period (IEP) is your first chance to sign up for Medicare.”
Danielle Roberts, co-founder of insurance firm Boomer Benefits, told CNBC that missing this enrollment deadline is one of the most expensive Medicare mistakes people can make. According to Medicare, missing the IEP means that you have to pay a late enrollment penalty on top of your normal premium. The standard premium for Part A may cost you anywhere from $259 to up to $471 each month, and Part B’s standard premium amount is $148.50, but it may be higher depending on your income.
The late penalty for Part A is a monthly premium increase by up to 10 percent, and you’ll have to pay the higher premium for twice the number of years you didn’t sign up. So if you waited two years to sign up for Medicare when you were eligible, you’ll pay a higher premium for four years. For Part B, this penalty may last a lifetime. Your monthly premium could go up 10 percent for each 12-month period you were eligible for Part B but not signed up.
“In most cases, you’ll have to pay this penalty each time you pay your premiums, for as long as you have Part B. And, the penalty increases the longer you go without Part B coverage,” the program states.
If you miss the IEP that ends three months after your 65th birthday, you may also have to wait to sign up. Medicare allows late sign-ups during the general enrollment period, which only occurs between Jan. 1 and March 31 each year. But when you sign up during this period, your health insurance won’t immediately start. After paying your premiums, your coverage begins July 1, so if you run into any health issues during this gap in your coverage, you could be responsible for paying even more money.
There are always exceptions to the rules, however. Once your IEP ends, you may be able to sign up for Medicare during a special enrollment period, and “usually, you don’t pay a late enrollment penalty if you sign up during a special enrollment period,” the program states. If you or your spouse are working and covered by a group health plan through your employer or union, you are eligible to sign up for Part A and Part B at any time—not just during the seven-month period. This also guarantees you a longer eight-month sign-up period that starts either the month after your employment ends or the month after your group health plan insurance ends, depending on which occurs first.