Pennsylvania retiree slapped with lifetime penalty for delaying Medicare sign-up when she was ‘too poor to afford insurance coverage’ — how one can keep away from this pricey mistake

On the subject of Medicare, one seemingly minor misstep can saddle you with a lifetime of distress. Marian Leonard realized this the arduous means.

When she turned 65, Leonard signed up for Social Security benefits however she delayed her enrollment into Medicare as a result of, on the time, she merely didn’t have the money to cowl the premiums.

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She had simply returned to the U.S. from a four-year stint in Germany and she or he and her husband had been each dwelling off their financial savings and her month-to-month Social Safety advantage of $1,200, whereas they labored on a fixer-upper home in Pennsylvania.

They weren’t poor however they had been money strapped — to the purpose the place they had been “struggling to outlive,” she told Reuters.

Leonard signed up for Medicare 4 years later and was shocked to be taught her premiums will eternally be bumped up by 40% due to her late enrollment. Now, she claims she’s being “penalized for having been too poor to afford Medicare.”

Right here’s what occurred — and how one can keep away from this pricey mistake, even with a decent funds.

Medicare enrollment

Folks generally join Medicare Half A (hospital insurance coverage) and Half B (medical insurance coverage) once they’re first eligible. This preliminary enrollment interval sometimes begins three months earlier than you flip 65 and ends three months after you flip 65.

There are dangers to signing up later, reminiscent of having a spot in well being care protection or having to pay a late enrollment penalty — however in some circumstances, it might probably make sense to enroll later.

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You might think about delaying your enrollment into Medicare you probably have different well being care insurance coverage protection that’s related in worth — for example, via your employer or your partner’s employer in the event you proceed to work past the average retirement age.

However in the event you do that with out assembly Medicare’s strict pointers, you could endure the identical destiny as Leonard and be slapped with a late enrollment penalty, which might be added to your month-to-month premium for so long as you maintain that protection. For a lot of, that’s a lifetime penalty.

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Late enrollment penalties

The late enrollment penalties for Medicare Half A , Half B and Half D (prescription drug) protection all differ. Sometimes, they go up the longer you wait to enroll.

In Leonard’s case, she opted to forego Medicare Part B in 2019 as a result of she didn’t really feel she might afford the $135.50 month-to-month premium at the moment.

In case you delay your enrollment for Half B protection — and you don’t qualify for a special enrollment period — you’ll should pay an additional 10% for every year you might have signed up, however didn’t.

Leonard enrolled into Medicare in 2023 after her husband handed away, in line with Reuters, and she or he began accumulating a Social Security survivor benefit, which allowed her to afford the additional expense.

Nonetheless, that four-year delay left her burdened with a lifetime 40% late enrollment penalty.

In 2024, the usual Half B month-to-month premium is $174.70. With a 40%, or $70.60, surcharge slapped on high of that, Leonard has to pay $245.30 per 30 days for protection — or virtually $850 extra this 12 months than somebody who signed up for Medicare on time.

“In what world does it make sense to penalize any individual who’s already struggling to outlive for no different motive than they had been too poor to afford insurance coverage sooner?” she aked.

Assist is offered

If masking your Medicare premiums is an insurmountable monetary hurdle, you might be able to get assist via a Medicare Savings Program (MSP, administered by Medicaid.

MSPs are federally-funded packages run by every particular person state, that are supposed to assist individuals with little revenue or sources pay for his or her Medicare premiums, deductibles, copayments and coinsurance.

In keeping with the National Council on Aging, enrollment in MSPs places hundreds of {dollars} again into the wallets of older American and adults with disabilities every year.

As well as, in the event you enroll into an MSP, you’ll routinely qualify for the Medicare Half D Low-Revenue Subsidy, also referred to as the Additional Assist program, which helps cowl the price of prescribed drugs — to an annual worth of round $5,300, per Social Security Administration estimates.

Why didn’t Leonard benefit from an MSP? She had a small retirement nest egg in addition to her Social Safety advantages, which means she seemingly didn’t hit the low revenue {qualifications}, per Reuters — regardless of feeling “too poor” to join Medicare in 2019.

This unlucky case serves as a reminder for older Americans approaching retirement to not delay Medicare enrollment when you’ve completed working as you’ll solely should pay extra down the road.

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This text supplies info solely and shouldn’t be construed as recommendation. It’s offered with out guarantee of any sort.