If you’re new to Medicare, then you might be a tad uncertain about when to sign up, when you can change your plan and what the various enrollment periods are. There are quite a few of them, actually, and they mean different things for different people.
Right now, there are two enrollment periods for Medicare happening simultaneously: the Medicare General Enrollment Period and the Medicare Advantage Open Enrollment Period.
We’ve talked about the latter before, so feel free to hop over to that article if you need more info on Medicare Advantage. The former, the Medicare General Enrollment Period, may not be as familiar to you.
That’s because the Medicare General Enrollment Period (GEP) applies to a specific set of people, which we’ll talk about below. It runs every year from January 1st through March 31st.
What You Can (And Can’t) Do During Medicare GEP
First, some background.
When you’re new to Medicare, you have an Initial Enrollment Period (IEP) that runs for a total of 7 months: 3 months before the month you turn 65, the month you turn 65 and the 3 months following that month.
Example: If your birthday is December 3rd, your IEP starts on September 1st and ends on March 31st.
This is the best time to enroll in Original Medicare (Parts A and B together) because you’ll avoid potential penalty fees and delays in healthcare coverage.
But if you miss your IEP for whatever reason, you do have an annual chance to enroll in Part A and/or Part B, depending on what you missed. This is the General Enrollment Period. It’s designed for people who missed their initial signup window and now need to enroll in one or both parts of Original Medicare.
During the GEP, you can enroll in Medicare Part A and/or Part B. That’s it.
- Enroll in a prescription drug plan (Part D)
- Buy a Medicare Advantage plan (Part C)
- Change any existing coverage you might have (like going from one Advantage plan to another or dropping Part D)
- Make any other changes to your coverage
General enrollment is just for people who need to enroll in Original Medicare because they missed their initial signup window.
Now, you may qualify for a special enrollment period. If that’s the case, you might delay enrollment into Original Medicare. You can read more about that on Medicare’s website. But if you don’t qualify for a special signup period and you miss your IEP, then you’ll use the general window to get coverage.
No matter when you enroll during the General Enrollment Period, your coverage will start on July 1st.
Penalties for Signing Up Late
If you use the General Enrollment Period to get Parts A and/or B, you may have to pay a penalty on top of your regular premiums. There’s a penalty fee for signing up late. This is one good reason to make sure you enroll during your IEP.
Penalty fees vary. Here’s how it breaks down:
Medicare Part A
Medicare Part A covers care that you get at a hospital or skilled nursing facility. It also includes inpatient mental health care. Most people get Medicare Part A for free, meaning no monthly premium. If you earn 40 work credits by the time you’re eligible for Medicare, you won’t have a premium for Part A. Nearly everyone does.
For those who haven’t earned the appropriate work credits (as determined by Social Security), there’s a monthly premium for Medicare Part A. In 2021, it’s:
- $259 if you have 30 to 39 work credits
- $471 if you have less than 30 work credits
If you enroll in Medicare Part A late (during the GEP), and you have to pay the premium, then you’ll have a penalty on top of your monthly premium. It’s 10% of the cost and it lasts for twice the number of years you could’ve had Part A but didn’t.
Example: You qualify for Medicare in 2018 but don’t enroll during your IEP. In 2021, you decide to enroll. You could have had Part A for three years but didn’t. You’ll pay an extra 10% on top of whatever your premium is, and the penalty lasts for six years.
Medicare Part B
Medicare Part B covers outpatient care, including preventive services (flu shots, annual cancer screenings, etc.), durable medical equipment and trips to the doctor for acute illness, among other things. Everyone pays a premium for Medicare Part B, though the amount can vary a bit.
The standard premium for Part B in 2021 is $148.50 a month. If you have a higher income (above $88,000), you’ll pay more.
As with Medicare Part A, Medicare Part B comes with a penalty if you don’t sign up when you’re first eligible and don’t qualify for a special enrollment period. But the Part B penalty works differently.
- You’ll pay an extra 10% for each full 12-month period you could have had Part B but didn’t.
- This penalty lasts for as long as you have Part B (essentially, forever).
Example: You can enroll in Original Medicare in 2018 but choose not to. Your IEP ended in April that year. This year, you decide you want Part B, so you enroll during the General Enrollment Period in February. You’ve gone 34 months without coverage.
Since that’s only two full 12-month periods, your penalty is 20% on top of whatever your Part B premium is. You’ll pay that fine for as long as you have Part B — and it’ll likely increase, since the Part B premium tends to go up every year.
What about prescription drugs?
Original Medicare doesn’t cover prescription drugs, with one exception. Medicare Part B will cover certain kinds, typically ones that get administered in a doctor’s office or at the hospital, such as chemotherapy drugs.
Outside of this limited set of medications, Original Medicare doesn’t cover prescriptions. If you need this kind of coverage, you’ll need to buy a standalone Medicare Part D plan or a Medicare Advantage plan with drug coverage.
The best time to add Part D coverage is during your initial enrollment period. (That’s true of any Medicare coverage, by the way, including Medicare Advantage and Medigap.)
You have to have Medicare Part A and/or Part B to enroll in a Part D plan.
So if you missed your IEP and wait until general enrollment to sign up, you’ll have to wait another month to buy drug coverage.
That’s because Part D can only be bought during:
- Your initial enrollment period,
- A special signup window following general enrollment or
- Medicare Open Enrollment (October 15th through December 7th)
That special signup window for Part D following general enrollment runs from April 1st through June 30th. During this period, you can enroll in a Part D drug plan.
But because you waited to enroll outside your initial signup window, you might have to pay a penalty for late enrollment. And the Part D late enrollment penalty is even trickier.
- For every full month that you don’t have creditable drug coverage when you could have, you’ll pay 1% of the “national base beneficiary premium.”
- The base premium changes every year. In 2021, it’s $33.06.
- The penalty is rounded to the nearest ten cents.
Example: You miss your IEP and go without drug coverage from April 2018 to February 2021. That’s a total of 34 months. Medicare math says your penalty should be $11.20:
- 34 months x 1% for each month = 34%
- .34 x $33.06 = $11.24
- The penalty is rounded to the nearest .10, so that makes it $11.20.
And as with the Part B premium, you’ll pay this Part D penalty for as long as you have Part D. Since the base changes each year, your penalty would get recalculated each year, too.
Oh, and also like with Part B, you may have a higher premium if you have a higher income. The income threshold in 2021 is $88,000. If you add a late penalty on top of that, the cost of a Part D plan can add up.
The best option? Sign up when you’re first eligible.
If you’re reading this and you’re still within your initial eligibility period for Medicare, sign up before it ends. Likewise, if you’ll be turning 65 soon, use your IEP to sign up for Medicare as soon as possible. You’ll get uninterrupted healthcare coverage and won’t risk having late penalties.
But if you’re outside of your IEP and you still need Medicare Parts A and/or B, go ahead and use the General Enrollment Period to sign up. You may pay a penalty, and your coverage will be delayed, but you’ll have access to good coverage once it kicks in.
Plus, once Medicare Open Enrollment starts in October, you’ll be able to look at your options for a private Medicare Advantage plan.
The Medicare General Enrollment period runs now through March 31st. If you need Original Medicare coverage, head over to Medicare.gov to learn more, or contact Social Security directly for info on enrollment.