Before you enroll in Medicare, what to know about new rules that eliminate coverage gaps

As of this year, people new to Medicare won’t face big delays in coverage — an unenviable situation that some beneficiaries used to find themselves in.

Thanks to legislation passed in late 2020, months-long delays in certain Medicare enrollment circumstances are now eliminated. Additionally, individuals who missed signing up when they were supposed to due to “exceptional circumstances” may qualify for a special enrollment period.

“It’s really about having access to pretty essential health services,” said Casey Schwarz, senior counsel for education and federal policy at the Medicare Rights Center.

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Delays in coverage meant possibly facing a gap in health insurance — which in turn could have translated into either being unable to get needed care due to financial constraints or paying out of pocket for care, whether planned or an emergency.

Medicare’s enrollment rules can be confusing. People who are already receiving Social Security benefits before the reach age 65 — which is when you become eligible for Medicare — are automatically enrolled in Part A (hospital coverage) and Part B (outpatient care coverage).

Otherwise, you are required to sign up during your “initial enrollment period” when you hit age 65 unless you meet an exception, such as having qualifying health insurance through a large employer (20 or more workers).

Part D (prescription drug coverage) also comes with rules around signing up, which vary depending on your enrollment circumstances, as does Part C (Medicare Advantage Plans).

And, of course, you will pay premiums and face deductibles, as well as cost-sharing such as copays — the details of which depend on your specific coverage. Additionally, higher earners pay more for Parts B and D.

Your initial enrollment period starts three months before your 65th birthday and ends three months after it (seven months total). The new rule makes it so coverage takes effect the month after you sign up if you do so in the latter part of that enrollment window. In the past, some beneficiaries waited up to three months for coverage to take effect.

If you enroll before the month you turn 65, coverage starts the first of your birthday month (that hasn’t changed).

If you miss your initial enrollment period and don’t qualify for a special enrollment period, you generally can only sign up during the first three months of the year during a “general enrollment period.”

Going that route also has meant waiting until July 1 for coverage to take effect. Starting this year, it will be effective the month after you sign up.

However, in that situation, there may still be a late-enrollment penalty. For Part B, it’s 10% of the standard premium ($164.90 for 2023) for each 12-month period you should have been enrolled but were not.

Part D also comes with a late-enrollment fee. It’s 1% of the “national base premium” — $32.74 in 2023 — multiplied by the number of months that you went without Part D since your enrollment period (if you didn’t have qualifying coverage in place of it). 

In both cases, late-enrollment penalties are generally life-lasting.

Starting this year, individuals may be able to sign up outside of current enrollment periods if they have “exceptional circumstances.” This is already a flexibility available with Part D, as well as Medicare Advantage Plans (which deliver Parts A and B and usually D), Schwarz said.

“It’s really designed to provide relief for people who are impacted by exceptional situations and need access to health insurance,” she said.

Additionally, beneficiaries who qualify for the special enrollment period will not face Part B late enrollment penalties.

Until this rule change, the only way to qualify was if a government official provided bad information or made a mistake that caused you not to enroll.

“There are situations where … people make mistakes,” Schwarz said. “So these rules allow some flexibility.”

Some qualifying circumstances could include an employer providing inaccurate information about Medicare enrollment, or they were in a situation where it was impossible or impractical to enroll, such as being in a natural disaster or incarcerated.