A bipartisan bill introduced in the Senate in March 2022 hopes to help eliminate Medicare Part B penalties for late enrollment for Americans. If passed, the bill would require the federal government to notify people about Medicare enrollment rules starting at age 60. Generally, when someone signs up to start receiving their Social Security retirement benefits, they automatically enroll in Medicare Parts A and B.
Medicare has roughly 63.3 million beneficiaries, with most aged 65 or older. Through this government-sponsored insurance program, most people don't pay a premium for Part A (hospital coverage) but pay a standard monthly premium for Part B, which covers outpatient care. There are no late-enrollment penalties for Part A. However, Part B has a 10% premium penalty for each month of the twelve months of missed enrollment. To avoid the penalty, Americans must sign up for Medicare Parts A and B three months before they turn age 65 until three months after the month they turn age 65.
Now, with more people working past age 65, they delay Social Security, risk missing their Medicare Part A and B enrollment period, and face a 10% premium penalty. According to the Medicare Rights Center, in 2020, the average Medicare Part B penalty increased the premium by 27% for those who enrolled late, costing them $45.93 each month.
What else should Americans know about Medicare and penalties?
- The penalty goes up the longer you wait to enroll.
- If you continue working full-time past age 65, you can delay Part B enrollment if you have insurance through your employer.
- If you quit working or your employer's coverage ends, you have eight months to enroll in Medicare without facing penalties.
- Part D (prescription drug coverage) also comes with a late-enrollment penalty of 1%
In addition, the Senate bill includes notifying Americans about their anticipated Social Security retirement benefits by sending statements beginning at age 60. Both the Medicare and Social Security notices hope to help eliminate confusion that Many Americans have over these two programs.
A financial professional can help.
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Content in this material is for educational and general information only.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by Fresh Finance.
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