Some people are automatically enrolled in Medicare, while other people have to register online, through the mail, or in person.
For the most part, Medicare is an automatic renewal after the initial sign up, although there are exceptions.
This article will focus on the details of initial enrollment and reenrollment for Medicare coverage. It also explains the enrollment periods, costs, and any penalties.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
As a general rule, after a person enrolls in Medicare, they do not have to reenroll annually. This is true for enrollment in original Medicare (Part A and Part B) or a Medicare Advantage plan offered by private insurance companies.
A person does not usually have to reenroll or fill out paperwork annually if they are satisfied with their coverage.
Annual notice of change
All Medicare Advantage companies send an Annual Notice of Change to people enrolled in their plans. The document outlines any potential coverage changes effective from the following January, including costs, coverage level, and service areas.
If a person is not satisfied with the changes to their coverage, they may wish to enroll in a new plan or return to original Medicare. A person can make these changes during the Medicare open enrollment period (OEP), which is from October 15 to December 7. When a person selects a new plan, it will go into effect on January 1 of the following year.
An exception to automatic Medicare reenrollment is when a person’s plan no longer offers services. In that case, a person can switch Medicare plans 2 months before the scheduled end date of their policy or up to 1 full month after the contract ends.
Another exception is if Medicare terminates the plan for poor performance. In this instance, the plan will usually stop offering coverage before the end of the calendar year. In that case, a person can enroll in a new Medicare plan during the period from October 15 until the last day in February.
There are several circumstances when a person may not have Medicare coverage, even when they are eligible. These situations may include when a person has any of the following circumstances:
- private insurance through an employer
- lives outside the United States
- failed to pay premiums
If a person loses private insurance coverage, they can re-instate their Medicare plan during a special enrollment period (SEP).
Similarly, if a person moves back to the United States, they can reinstate their Medicare plan during a SEP.
If a person is disenrolled from their Medicare plan for non-payment of premiums, they must usually wait until the next enrollment period to re-join Medicare. As a general rule, this will be in the open enrollment period (OEP) between October 15 to December 7 each year.
The “good cause” policy is a 2-month grace period that allows a person to explain their reason for non-payment of their plan premiums. Examples of “good cause” qualifications may include an emergency or unexpected financial burden.
The policy allows a person to get their coverage back without waiting for the next enrollment period. However, they will have to pay all their owed premium amounts within 3 months after being disenrolled.
There are several times when a person can enroll in Medicare, including:
- initial enrollment period (IEP)
- general enrollment period (GEP)
- open enrollment period (OEP)
- special enrollment period (SEP)
Enrollment periods offer a person the opportunity to take various actions relating to Medicare, such as enrolling in original Medicare (Part A and Part B), enrolling in new plans, or switching plans.
Initial enrollment period (IEP)
The IEP lasts for 7 months. It begins 3 months before a person turns 65, includes their birthday month, and continues for an additional 3 months.
General enrollment period (GEP)
The GEP lasts for 3 months, from January 31 to March 31 each year. During this period, a person can enroll in original Medicare if they did not do so during their IEP. A person can also make changes to Medicare Advantage plans during the GEP.
Open enrollment period (OEP)
The OEP, also known as the annual enrollment period (AEP), lasts from October 15 to December 7 each year, and a person can make changes to original Medicare, Advantage, and Medicare Part D prescription plans.
Special enrollment periods
SEPs are periods during which Medicare allows a person to make changes to Medicare plans depending on certain circumstances. This online tool may help a person check if they meet the criteria for a SEP.
Medicare has penalties for failing to enroll or for letting coverage lapse.
Failing to enroll in Medicare Part A when a person is first eligible can result in a late enrollment penalty.
The Medicare Part A penalty is 10% of a person’s monthly premium, which varies depending on the amount of Medicare taxes paid. A person will pay the added premium for two times the number of years they could have signed up for Part A but did not do so.
For example, if a person delayed signing up for Medicare Part A for 2 years, they would pay the 10% premium for 4 years.
A person should note they do not have to pay a penalty if they had private insurance during the time they could have had Medicare Part A.
Failing to enroll in Medicare Part B when a person is first eligible can increase a person’s monthly payment by 10% for each 12-month period they did not sign up. A person is subject to this increase in premium for the entire time they have Medicare Part B.
If a person goes more than 63 days in a row without creditable drug coverage, they may be subject to a Medicare late enrollment penalty.
The late enrollment penalty is not a one-time cost. Instead, a person pays the penalty as long as they continue with their Medicare-based prescription drug coverage. The penalty depends upon the number of months a person goes without Part D coverage.
To calculate this penalty, Medicare will multiply 1% of the national base beneficiary premium ($33.06 in 2021) by the number of full months a person did not have Medicare Part D. Medicare add the cost to a person’s monthly Part D premium.
The penalty is subject to premium changes. Therefore, the penalty could increase every year.
As a general rule, a person does not have to reenroll in their Medicare policy yearly. If they are satisfied with their coverage, they do not have to notify Medicare or their insurance company.
However, a person should pay close attention to enrollment periods to ensure they do not let their coverage lapse as they could be subject to costly late enrollment penalties.