If you or your spouse has earned at least 40 credits through paying Medicare payroll taxes at work, essentially 10 years of work, you are entitled to Part A benefits without having to pay premiums for them. So you won’t have to pay Part A late penalties even if you sign up later than you should.
If you aren’t eligible for premium-free Part A, you may have to pay a late enrollment penalty, except in certain circumstances. That’s why it’s important to sign up for Medicare when you are first eligible.
If you have paid Medicare taxes for fewer than 40 quarters and your spouse doesn’t have 40 quarters either, you will have to pay premiums to receive Medicare Part A coverage. In 2023, if you or your spouse paid Medicare taxes for 30 to 39 quarters, you’ll pay $278 a month for Part A. If you or your spouse paid Medicare taxes for fewer than 30 quarters, you’ll pay $506 a month for Part A.
How is the Part A late enrollment penalty calculated?
If you do have to pay premiums for Part A, the late enrollment penalty is 10 percent of either $278 or $506, added to that monthly premium. Unlike Part B penalties, it doesn’t last forever.
Instead, you will pay Part A penalties for twice the number of years that you could have paid premiums for Part A but didn’t. For example, if you delayed enrollment for three years, you would pay penalties for six years.
So if you worked for fewer than 7½ years total, or 30 quarters, you would have to pay more than $50 more a month, 10 percent of $506, as your premium penalty in 2023. If you delayed your enrollment for three years and weren’t eligible for a special enrollment period, then you would have to pay the penalty for six years. Because Part A premiums usually rise each year, your penalty will generally rise each year, too.
What are exceptions to the Part A late enrollment penalty?
If you don’t qualify for premium-free Part A, you may have to pay a late enrollment penalty if you don’t enroll in Part A during your seven-month initial enrollment period, which starts three months before the month you turn 65 and ends three months after your birthday month. Here are the exceptions:
- Employer coverage. If you or your spouse actively works and you have health insurance from that employer, you have the right to delay Part A as well as Part B enrollment until the employment ends. If you or your spouse has earned 40 work credits by that time, you can sign up for Part A without paying premiums or incurring late penalties.