Avoid Medicare Late Enrollment Penalties

If you work for a small company (fewer than 20 employees) and do not enroll in Medicare when you turn 65, you could face significant penalties and coverage gaps.

Penalties for Not Enrolling in Medicare at 65

Medicare Part B Late Enrollment Penalty

• If you do not sign up for Medicare Part B when first eligible and do not have other qualifying coverage, you will pay a penalty of 10% of the standard Part B premium for each full 12-month period you delay enrollment.
  

• This penalty is added to your monthly premium for as long as you have Part B—potentially for life.

• For example, if you wait two years to enroll, your penalty will be 20% of the standard premium, every month, for life.

Medicare Part A Late Enrollment Penalty

• Most people do not pay a premium for Part A, so this penalty does not apply to most. However, if you must buy Part A and delay enrollment, your premium increases by 10% for twice the number of years you delayed.

Medicare Part D Late Enrollment Penalty

• If you go 63 days or more without Medicare drug coverage or other creditable prescription coverage after you’re first eligible, you’ll pay a penalty of 1% of the national base beneficiary premium for each month you delayed enrollment.

Why It’s Especially Important for Small Company Employees

• For companies with fewer than 20 employees, Medicare becomes the primary payer once you turn 65. Your employer’s plan becomes secondary.

• If you do not enroll in Medicare Parts A and B, your employer’s plan may deny claims for services that Medicare would have covered, leaving you with large out-of-pocket costs.

• Unlike large employers (20+ employees), small employer plans are not required to act as primary insurance for those over 65.

Special Enrollment Periods

• Special Enrollment Periods (SEPs) that allow you to delay Medicare enrollment without penalty typically only apply if you have coverage from a current employer with 20 or more employees.

• If you work for a small company, you generally do not qualify for an SEP to avoid penalties.

Summary Table

Key Takeaway

If you work for a small company (fewer than 20 employees) and do not enroll in Medicare at 65, you risk:

• Permanent late enrollment penalties on Part B (and possibly Part A and D)

• Your employer’s plan denying claims, leaving you without primary insurance coverage37.

To avoid these penalties and coverage gaps, enroll in Medicare Parts A and B when you turn 65 if your employer has fewer than 20 employees.

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