How to Calculate the Late Penalty for Medicare Enrollment

Medicare late enrollment penalties are based on how long you go without coverage.

Most Americans enroll in Medicare when they reach age 65. Medicare Part A, which covers hospital expenses, is free for most people who have worked for at least 10 years in Medicare-eligible employment. However, most people pay a monthly premium for Medicare Part B, medical insurance that covers physician visits and preventive care, and Medicare Part D, prescription drug coverage. Unless you have equivalent health insurance, such as that offered by an employer, you are required to enroll in Medicare when you are eligible, or face penalties for late enrollment. Those penalties are calculated using a specific formula.

Things You'll Need

• Calculator

Instructions

Medicare Part B Penalties

1. Determine your base Medicare premium. For anyone enrolling in Medicare after January 1, 2011, the base premium is $115.40 per month.

2. Calculate how many months you have declined Medicare coverage since you were eligible. You have up to four months after your 65th birthday to enroll; for example, if you turn 65 on March 15, you have until July 15 to enroll, and your penalty period begins on July 16.

3. Divide your Medicare monthly premium by 10 to calculate the penalty for each 12-month period you went without Medicare. For those enrolling after January 2011, the penalty is $11.54 if you went 12 months without Medicare; for 24 months the penalty is $23.08, and so on.

4. Add the penalty amount to your monthly Medicare Part B premium. This will be your monthly cost for as long as you have Medicare. For example, if you enroll in Medicare in 2011, and declined coverage for 24 months, your monthly premium will be $138.48 instead of $115.40.

Medicare Part D Penalties

1. Calculate 1 percent of the "national base beneficiary premium" for Medicare Part D plans. As of 2011, that premium is $32.34 per month.

2. Multiply that number by the number of full months that you were eligible for Part D coverage but did not enroll. Your Medicare Part D enrollment period is the same as your Medicare Part B period.

3. Round that number to the nearest 10 cents. Add that amount to your monthly Medicare Part D premium.

Tips & Warnings

• Late enrollment penalties are only assessed for each full 12-month period that you are not enrolled in Medicare Part B or D.

• If you earn more than $85,000 per year as an individual, or $170,000 per year as a couple, then your initial Medicare premium may be higher, and is determined by your actual income.

• If you owe a penalty for Medicare Part D, your plan will notify you and add the amount to your bill.

• If you do not enroll in Medicare during your initial eligibility period, you have to wait until the next general enrollment period to enroll. General enrollment periods are generally from January through March each year.

• Base Medicare premiums can change each year. Confirm the current premium before calculating your penalty.

References

• Medicare: What If I'm Over 65 and Didn't Enroll in Part B During My Initial Enrollment Period?
• "Medicare & You"; Centers for Medicare and Medicaid Services; 2010