Medicare Part B is optional coverage, but most people will choose to enroll during their initial enrollment period. This can be when you turn 65, or under the age of 65 if you’ve been receiving disability payments from Social Security or the Railroad Retirement Board for 24 months.  If you don’t enroll in Part B when you first qualify for Medicare, and you do not have other creditable coverage, you may incur a late enrollment penalty that will last during your entire time on Medicare.

Part B late enrollment fee
If you sign up for Part B after the initial enrollment period and you’re not eligible for a Special Enrollment Period, you may be subject to a late enrollment penalty. The penalty may be imposed for the duration of Part B coverage. The amount may be as much as 10% more than the monthly premium you would normally pay, cumulative for every 12-month period in which you were eligible but had not joined.

Following is a scenario for illustration purposes: Your initial enrollment period closed December 2017, and you are not eligible for a Special Enrollment Period. The application for coverage was submitted March 2020 during general enrollment. In this example, no coverage was in effect for two 12-month periods. This results in a 20% penalty, to reflect 10% for each 12-month cycle. The result is a monthly premium 20% higher than you would have paid had you signed up during initial enrollment. If you would have paid the standard Part B premium of $144.60 per month, the premium with the penalty included amounts to $173.52. This would be in effect for as long as you have Part B coverage.

Sign-up requirements
Anyone approaching age 65 who is not collecting Social Security or Railroad Retirement Board benefits must enroll in Parts A and/or B when they are first eligible for Medicare or risk incurring Part B late enrollment fees. For some Medicare recipients, a Special Enrollment Period may apply. This may be the situation for someone who elected not to sign up for Part B when first becoming eligible because of existing coverage under an employer’s group health plan.

For most people eligible for Medicare coverage, Part A is premium-free. Part B, on the other hand, will require you to pay a monthly premium. The 2020 Part B premium begins at $144.60 per month and may increase based on an individual’s modified adjusted gross income and tax filing status.

Types of enrollment periods
Enrollment periods fall into three categories:

  • Initial enrollment: This begins three months in advance of the month you become 65, includes the month in which the birthday falls, and ends three months following the end of that month. If you are qualifying for Medicare due to a disability, you will get coverage that starts in your 25th month of disability.
  • Special enrollment: If you choose to delay enrollment in Part B because you have creditable coverage through an employer or union, you may enroll without a penalty during a Part B Special Enrollment Period when your employment ends.
  • General enrollment: From January 1 through March 31 of each year, you can enroll in Part B and your benefits will go into effect on July 1 of the same year. Unless you had creditable coverage, you’ll have to pay the late enrollment fee.

Related articles:

How Does Medicare Work When You Turn 65?(Opens in a new browser tab)

How Does Medicare Work in California?(Opens in a new browser tab)