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Ask Ms. Medicare

What if I don't sign up at 65?

Q. What happens if I don’t sign up for Medicare when I’m 65?

A.  Joining Medicare is voluntary.  But there may be consequences—in the form of a late penalty—if you don’t enroll at the “right” time, depending on your circumstances.

Part A (hospital insurance):  There is no penalty for delaying to enroll in Part A if you qualify for it automatically on the basis of you or your spouse’s work record.  But in most circumstances, there’s no reason not to sign up as soon as you’re eligible. It costs nothing to enroll and you don’t pay monthly premiums—you or your spouse has already paid to participate in Part A through payroll taxes at work. Also, having your name in the system makes you eligible for benefits such as prescription drug insurance (Part D) if you need it. (However, if you have employer insurance in the form of a high deductible health plan plus a Health Savings Account, be aware that under current law, you cannot use an HSA if you’re enrolled in, or have even applied for, Medicare. You need to carefully consider your rights and options.)

Part B (doctors and outpatient services): If you delay signing up for Part B beyond the time when you’re first eligible for it, you could incur a late penalty. (The exception is if you’re still working and have “primary” health insurance from your employer.) The penalty permanently adds to the cost of your Part B premiums—at a rate of 10 percent for each year that you could have been in Part B but were not.  For example, if you delay five years, you’ll pay an extra 50 percent of the cost of that year’s premium. The penalty amount grows larger over time because it’s pegged to the cost of each year’s Part B premiums, which generally rise every year.

Part D (prescription drugs): If you delay signing up for Part D beyond the time you’re first eligible for it, you could incur a late penalty that adds to your Part D premiums—12 percent for each year that you could have had Part D but did not. There are exceptions. You would not risk a late penalty for as long as you have other insurance for prescription drugs (such as coverage under an employer health plan or retiree benefits) that is considered at least as good as Part D.  If this is the case, you won’t need Part D unless you lose or drop such coverage. Otherwise, to avoid a penalty, you need to sign up for Part D at the same time as for Part B.

Patricia Barry is a senior editor at the AARP Bulletin.

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