Finance Insurance

Senior Business Owners can Save Money by Avoiding Medicare Penalties

medicare late penalties
Written by Loran Marmes

In today’s economy, baby boomers who are approaching retirement or have recently retired are discovering that giving up working is not as glorious as they’ve been lead to believe. In fact, there are substantially more small businesses owned by retirees than millennials.

More often than not, a baby boomer discovers that not only can they not afford to stop working but the idea of retirement doesn’t even sit well, especially if they are still sharp and healthy. It’s interesting and understandable that baby boomers (born between 1946 and 1964) have become the most powerful entrepreneurial group in the US.

The Kaufman Foundation has published a report for 2015 that reveals that this age group continues to remain active after retirement and are willing to start from scratch to develop an income stream to supplement their retirement income. These statistics are revealed in the foundation’s State of Entrepreneurship Study.

Entrepreneurial baby boomers do have an advantage over entrepreneurs who are younger; they have access to Medicare. Instead of paying $1,200 to $1,500 a month for health insurance when you are between 60 and 64 years old, they will be able to buy insurance for half of that. These savings, however, can be diminished if you are not avoiding Medicare penalties for late enrollment.

What Medicare can mean for the Business Owner

Whether you decide to start a business when you retire or just travel around the country, Medicare can make a world of difference when it comes to health insurance expenses. Being enrolled in Medicare provides low-cost insurance for the majority of a retiree’s healthcare needs. Although there are costs for deductibles, copayments, and coinsurance, Medicare is very inexpensive when compared to traditional health insurance, especially when you are 65 or older.

Fill the Medicare Gap with Medicare Supplement Insurance

The news gets even better for retirees when it comes to health insurance that used to be more than a house payment. Medicare beneficiaries (enrollees) can plug the hole in their Medicare coverage that is created by the deductibles, copayments, and coinsurance using Medicare Supplement Insurance.

Medicare Supplement Insurance (Medigap) typically covers what Medicare doesn’t and in some cases offers additional coverage not found in Original Medicare. The typical premiums for this insurance are inexpensive when compared to traditional health insurance for people who are 65 or older.

In addition to the moderate cost of coverage, is that the insurer offering the Medicare Supplement coverage cannot surcharge the applicant for pre-existing conditions as long as the coverage is purchased during the open enrollment period (OEP).

Avoiding the Penalties for Late Enrollment

Like most other Federal services, there are rules to follow for enrollees. Enrolling in Medicare Part A, B, and D outside of the required enrollment period can lead to significant penalties and surcharges.

Part A

Medicare Part A (hospitalization coverage), is normally free to enrollees who have worked for the minimum required time period because the coverage was paid by the FICA taxes that you paid while you were working. If you did not work long enough to meet the Medicare requirements, you can still get Part A but you’ll be charged a monthly premium.

If you don’t enroll in Part A during the Initial Enrollment Period, there will be a late penalty charged when you finally are enrolled. The current penalty for late enrollment is 10% of the current Part A premium and will be charged for twice the number of years you failed to enroll.

Part B

The penalty for late enrollment in Part B is more significant. If you enroll late, your monthly premium will be surcharged for the rest of your life. Your monthly premium will be increased by 10%  for every 12-month period that you should have had Part B. Fortunately, you be able to avoid the Part B penalty, but only if you qualify for a Special Enrollment Period.

Part D (Prescription Drug Plan)

Medicare also charges a late penalty for enrollees who do not enroll in Part D within 3 months after your Part A or Part B became effective. Late enrollees may get a waiver of the penalty if they qualify for a Special Enrollment Period because they had other prescription drug coverage.


Just like most other government-sponsored programs, Medicare coverages and penalties can be confusing for most people. You can read about Medicare coverage and the requirements associated with enrollment at Medicare.Gov or speak with a qualified insurance professional.

About the author

Loran Marmes

My name is Loran Marmes, I am the owner of Medicare Solutions team, and I would like to take a moment to explain why we are your best option when it comes to Medicare Supplements and Medicare Advantage Plans. We are an Independent Agency and contracted with all of the top rated carriers in the state to offer you products and pricing tailored to your needs and budget. We believe in education before the applying for coverage, that process includes me learning about your needs and circumstances as well as educating you on the various products and companies.

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