Why are there premium penalties for not enrolling when eligible?

[OneMorePolicy]

Looks like a beneficiary's Medicare Part B premium is increased 10% for each full 12-month period the beneficiary could have had Part B but didn't enroll &
a permanent premium penalty of 1% of the national standard premium for every month that a beneficiary could have had Part D coverage and chose not to enroll.

Why the penalties? Seems counter-intuitive, after all, the beneficiary isn't using benefits and thus isn't costing the system for that period of time. What is the rationale for the penalties?

 

[Winter_123]

Looks like a beneficiary's Medicare Part B premium is increased 10% for each full 12-month period the beneficiary could have had Part B but didn't enroll &
a permanent premium penalty of 1% of the national standard premium for every month that a beneficiary could have had Part D coverage and chose not to enroll.

Why the penalties? Seems counter-intuitive, after all, the beneficiary isn't using benefits and thus isn't costing the system for that period of time. What is the rationale for the penalties?

Because, in part, it is an insurance program and insurance programs whether private or public sector need to attract healthy people into the system and not have them just hold out until they become sick and want to sign up.

Winter

 

[GreenSky]

Because, in part, it is an insurance program and insurance programs whether private or public sector need to attract healthy people into the system and not have them just hold out until they become sick and want to sign up.

Winter

Winter:

If I wasn't so busy with people calling me asking "when will I get my new card so I can get drugs" and I wasn't telling them that "if you didn't wait until 12/30 to change you'd have it by now," YOU would never have beaten me to answering this post.

You are, of course, correct. Medicare receives basically the same money for young and old, healthy or sick. The younger the person, the less likely Medicare has to spend any money on claims.

Rick

 

[retread]

Simply put: They are penalized for skewing the risk pool.

 

[Agent Jeff]

Otherwise you can wait until you are sick until you start contributing. That obviously sucks money out of the system.