How Medicare Works
When you turn 65 or after being disabled to two years you should qualify for Medicare. About 3 months before your 65th Birthday you should receive your Medicare Card in the mail. You have a 7 month window to decide on what other Medicare options that you will need. Normally there are two different routes you can go. You can go either a Medicare Supplement with a separate prescription plan (Medicare Supplements do not offer built-in prescription plans) or you can go with a Medicare Advantage plan that most often includes prescription coverage. Image a diesel or a gasoline engine. They both do the same thing, but they are also very different. That how Supplements and Advantage plans are. Both are really good plans; it just depends on your situation to see which Medicare plan fits you best.
How to Avoid Medicare Penalties
There two most common Medicare penalties are the Part B penalty and the Part D penalty. The Part B penalty is for not enrolling into Medicare Part B when you are eligible. If you are already drawing your social security, then most often you will automatically be enrolled in Medicare Part B. In 2021, Part B has a premium of $148.50 a month. This will automatically be taken out of your social security. If you are not drawing your social security, then you can pay the premium straight to the social security office. The penalty for not taking Part B is 10% of the Part B Premium for each 12-month period you went without it. So if you went 3 year without Part B, then your penalty would be 148.50 x 30% = $44.55 a month penalty. Your Medicare premium would be $193.05 instead of $148.50. If you have credible coverage through your employer or from a spouse's employer, then you will not be subject to the Medicare Part B penalty. However, if you have credible coverage are not working (or through a spouse that is not working) then you WILL be subject to the Medicare Part B penalty. Example: You worked 30 years at a furniture factory and retired at age 62. They offer a retiree health insurance plan for you. When you turn 65 and become eligible for Medicare, if you do not enroll in Medicare Part B, you would be subject to the Part B penalty if you ever enroll in Medicare Part B.
Understanding the Medicare Part D Penalty. When you become eligible for Medicare and you do not enroll in a Medicare Part D plan you will incur a 1% penalty for every month you didn't carry a Part D plan. We always recommend carrying a Part D plan even if you are not taking any prescriptions. Veterans that are able to get prescriptions at the VA are not subject to the Part D penalty. Also, if you have employer coverage that includes credible prescription coverage, then you are not subject to the Part D penalty as well. The penalty is 1% of the national average cost of a prescription plan for every month you went without one. In 2021, the national average for a Part D plan is $33.06. For example, if you went 20 months without a Part D plan you penalty would be $33.06 x 20% = $6.61. This penalty would be added to your Part D penalty. So if your Part D premium was $24.90, Medicare would add $6.61 making the premium $31.51.
Our goal is to make your Medicare decision process as easy as possible. Sign up now for a free Medicare planning meeting to figure out which plan fits you!