The Medicare Part B Late Enrollment Penalty

What is the Medicare Part B Late Enrollment Penalty?

Medicare Beneficiaries may be subject to a late enrollment penalty if their enrollment in Medicare Part B is delayed from when they first became eligible to enroll. Unless the beneficiary has insurance coverage through their spouse’s job-based insurance or is eligible for a Medicare Savings Program (MSP), they will need to pay a 10% Medicare Part B premium penalty for every 12 months the enrollment in Medicare Part B is delayed. The penalty amount will change yearly based on the base part B premium, and the cost will depend on how long the beneficiary went without coverage. A Part B late enrollment penalty will be calculated and then added to the actual premium amount. This is separate from the Medicare Part D Prescription Drug Plan Late Enrollment Penalty.

Generally, a beneficiary will have to pay the Part B late enrollment penalty every month as long as they continue to have Medicare coverage. However, there is a way the Part B late enrollment penalty can be avoided. If a Medicare beneficiary intends to work past their 65th birthday and receives creditable coverage through an employer and the company has more than 20 employees, their Part B enrollment can be delayed with no penalty.

Creditable coverage is comparable coverage to Medicare, meaning that, on average. it will pay at least as much as Medicare’s standard coverage will pay.

How is the Medicare Part B Late Enrollment Penalty Calculated?

To help clients figure out what their Part B late enrollment penalty will be, an Insurance agent will first need to know the Part B base premium for the plan year. For example, the Part B base premium for 2022 is $170.10.

Next, Insurance agents must determine how long their client delayed enrollment in Part B and did not have creditable coverage. For each 12-month period enrollment in Part B was delayed, a penalty of 10% of the Part B premium will be added to the monthly premium.

The late enrollment penalty is calculated by multiplying 10% of the national base beneficiary premium (or “base beneficiary premium”) by the number of 12-month periods the individual did not have any Medicare Part B coverage or other creditable coverage. The monthly penalty will then be added to the monthly premium.

2022 Penalty Calculation Example

The national base beneficiary premium for 2022 is $170.10.

If someone were to go without coverage for five years after becoming eligible for Medicare Part B, you would multiply 5 by 10% of the $170.10 (2022 Part B base premium) to determine the penalty amount added to the beneficiary’s monthly premium.

( 10% x $170.10 Part B base premium) x 5 Years = $85.05 penalty

If someone were to have an $190.10 monthly premium in this scenario, with the penalty, it would be $275.15.

Remember, Medicare Part B and Medicare Part D Prescription Drug Plan Penalties are separate. Would you like to learn how to Calculate the Part D Late Enrollment Penalty? Click here.

Avoid facing costly penalties by enrolling in Medicare when first eligible or having creditable coverage through an employer. Learn more about the Initial Enrollment period with our IEP Enrollment Chart.

If you are looking for more information on Medicare Part B or the Part B late enrollment penalty, Agent Pipeline is here to assist you. Give us a call at 866.562.8318 to discover new opportunities and unlock your full potential.