At age 65, people know they are eligible for Medicare Part A. Most also know that if they miss their initial enrollment period, they can be subject to extra fees added onto their premiums, sometimes for as long as they have their plan. But what if you do not want to enroll in Medicare Part A right away? Can you delay and enroll later without receiving any penalties?
Read more about the special circumstances where late Medicare enrollments are allowed and how to qualify for them—without any extra fees.
Part A Late Enrollment
Medicare Part A—the Medicare coverage for hospital services—is free for 99% of people. Because of this, most people are automatically enrolled in Part A when they turn 65. Even if they are still covered under an employee plan at age 65, most people will keep Medicare Part A as secondary coverage since it does not cost anything to be enrolled.
While there is typically no premium payment savings in delaying Part A, there may still be situations where it is to the beneficiary’s advantage.
HSA Eligibility
If someone eligible for Medicare is enrolled in a health savings account-eligible employer health plan, enrolling in Part A will end their eligibility to contribute to their HSA. These individuals may be able to delay enrollment in Part A, but only if they are not already receiving Social Security payments. If they are receiving Social Security, they will be enrolled in Part A automatically and lose their HSA-contribution eligibility.
The good news is that if you are one of the 99% of people who do not have to pay a premium for Part A, you will not have to pay a penalty even if you do not enroll when you first become eligible.
Part A Premium Payments
While most people earned enough credits working to qualify for Part A with no premium, a small number did not. Eligibility for Medicare is determined by how many quarters a worker has paid into Social Security. Anyone with 40 quarters of coverage (or a spouse with 40 quarters of coverage) will not pay a premium for Part A. Those with 30 to 39 quarters of coverage will have to pay a Part A premium of $274 per month. Anyone with fewer than 30 credits will need to pay $499 per month. (These figures are the 2022 rates.)
If you are one of the few individuals who do need to pay a premium for your Part A coverage, you may want to defer enrollment if you are still covered under an employer health plan. Only those who are not currently receiving Social Security benefits have the option to enroll late. Others still working can avoid a penalty by submitting documentation of when their employer plan ended.
Late Penalties
People who have to pay Medicare Part A premiums and enroll late without proof of alternate coverage will have to pay a penalty. The penalty is 10% of the premium amount added onto the monthly premium. Unlike Medicare Part B, this is not a lifetime penalty. Instead, you would pay the penalty for twice as long as the number of years you were eligible for Part A, but did not enroll.
Final Thoughts
Many people have circumstances that make delaying Medicare Part A an excellent financial decision. Always be sure to verify whether your situation qualifies for a late enrollment without a penalty, and if it does, make sure you gather and keep all the necessary documentation for when you do enroll. When done successfully, using the exceptions to Medicare’s late enrollment policy can save a lot of time and money.
How Do I Learn More?
For more information about Medicare, Medicare supplements, and Medicare Advantage, visit Senior Resource Services. Our affiliated agents can answer all your questions and make sure you take all the necessary steps for a successful enrollment.
