Medicare is optional. You don’t have to sign up for it if you don’t want to. But when you are eligible, it’s important to consider your present and future situation carefully, because it’s not wise to postpone enrolling as you may incur penalties.
Medicare Part A- Hospital Coverage
Normally there is no penalty if you sign up late for Part A, which is hospital coverage, because there is no premium involved. On the other hand, if you don’t have to pay for it why not enroll as soon as you can so you are able to avail yourself of its benefits? However, if you need to buy Part A and you do not do so when you are eligible, as a penalty you have to pay 10% more for twice the number of years you could have signed up but didn’t.
Medicare Part B- Physician Services
Part B covers doctor visits and other preventive services. Everyone pays a premium for Part B coverage. If you don’t buy it during your Initial Enrollment Period, or your Special Enrollment Period if you are eligible for one due to your current employer health insurance, you must pay a penalty of 10% for every year you could have enrolled but didn’t. This penalty lasts as long as you have Part B insurance.
Medicare Part C- Medicare Advantage Plans
Medicare Advantage Plans are offered by private insurance companies as an alternative to Original Medicare. These plans cover Medicare A and B, so if you enroll on time in one of these plans you will incur no penalties. If your Advantage plan also includes prescription drug coverage, there is no Plan D penalty either.
Medicare Part D- Prescription Drug Plans
Medicare Part D covers prescription drugs. If you don’t sign up for Plan D when you are eligible and you don’t qualify for a Special Enrollment Period, you pay a penalty of 1% a month, or 12% a year, for as long as you don’t sign up but could have. This will last as long as you are enrolled in a Medicare Part D plan.
In conclusion, seniors, eventually you will need medical insurance, so in order to avoid penalties it makes great sense to enroll in these plans when you are first eligible.