Navigating Late Medicare Enrollment

A new client, who works for an employer that does offer retiree health benefits, may have a common issue: The client did not enroll in Medicare Part B upon retirement.

This oversight often occurs for one of two reasons.

First, the employer might not have tracked retirees' birth dates to inform them of the need to enroll in Parts A and B. That, sadly, is a frequent occurrence. You weren't advising the client at that point, and you weren't there to fill in the information gap.

Alternatively, employers might have provided retiree plans that offered primary coverage without requiring Medicare A and B.

Due to the high costs associated with offering medical coverage as primary, companies are now transitioning to secondary coverage.

As a result, retirees, who believed their employer-sponsored coverage was sufficient, now find themselves needing to enroll in Medicare to avoid additional penalties.

The "general enrollment period," or GEP, for Medicare runs annually from Jan. 1 to March 31.

The Question

How can clients affected by these kinds of problems enroll in Medicare Part A and Part B before the March 31 deadline to circumvent further penalties?

The Answer

Navigating Medicare enrollment, particularly for those who missed their initial signup window, is critical to avoiding penalties that accumulate over time.

For individuals who did not enroll in Medicare A and/or B when initially eligible, the GEP provides a crucial opportunity to correct this oversight.

Here are six things you have to know to help clients in that situation.

1. Understanding enrollment windows and avoiding penalties: To avoid Medicare penalties, your client should enroll in Parts A and B during the initial eligibility period unless the client has active employer-sponsored coverage.

This means working for a company with over 20 employees and physically attending work allows the client to delay Medicare enrollment until retirement without penalties.

In 2024, failing to enroll when first eligible incurs a 10% penalty of the Part B premium ($174.70) for each 12-month period the client is without coverage.

For example, if your client turned 65 in May 2022 but didn't enroll until 2024 using the general enrollment period, your client will pay an extra $17.47 monthly on top of the usual Part B premium.

Penalties are avoidable if your client is covered by employer insurance before retirement.

However, if your client retires and only has the company's retiree plan without enrolling in Medicare due to a misunderstanding of coverage needs, penalties apply unless client was exempted by having active, qualifying employer coverage.

2. General enrollment period (GEP) adjustments: For individuals who missed their initial enrollment period, or IEP, and are not eligible for a special enrollment period, or SEP, the GEP, occurring from Jan. 1 to March 31 annually, serves as the crucial window for enrolling in Medicare Part A and Part B.

Thanks to a 2023 law change, enrollments during the GEP now become effective the month following the submission of the enrollment paperwork.

For example, if your client submits an enrollment form in January during the GEP, your client's coverage begins on Feb. 1. If your client signs up in February, the coverage starts March 1. The new rules provide more immediate access to benefits.

3. Avoiding penalties: To prevent the accrual of further penalties, it is crucial to submit Medicare Part A and Part B enrollment applications before the March 31 deadline.

This ensures coverage April 1 or earlier, mitigating the risk of penalty increases for that year.

4. Assistance and education: For your client's retirees, the first step is an educational campaign to inform them of the urgency and importance of enrolling during the GEP.

This includes clarifying the financial implications of delayed enrollment and providing step-by-step guidance on the enrollment process.

5. Streamlining enrollment processes: The employer can help by simplifying the enrollment process for Medicare A and B.

This involved gathering necessary documents, filling out the application forms, and submitting them on behalf of the retirees before the end of the GEP.

By providing hands-on support, the employer can ensure that none of the retirees missed the critical deadline.

6. Ongoing education: Beyond immediate enrollment, the employer emphasized the importance of understanding Medicare's enrollment periods and penalties for late enrollment.

This ongoing education aims to empower beneficiaries with the knowledge to make informed health care decisions in the future.

Bethany Cissell is director of business development and a Medicare expert at Allsup, a national disability representation provider based in Belleville, Illinois.