Reviewing the Medicare Part D Late Enrollment penalty

Published Apr 29, 2018 at 9:00am

In last month’s article we looked at the process of enrolling in a Medicare Part D drug plan and the penalties for not enrolling in a timely manner.

Before concluding our discussion of this topic, I want to mention two important Medicare related issues.

First, new Medicare cards have begun to be issued to the residents of 13 states and territories. New York is listed as part of a group of states, including Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, Rhode Island, and Vermont, that are scheduled to receive cards “after June 2018.”

We do not yet know the exact date but we now know how the states have been grouped together. Second, starting April 1, Medicare began to offer additional coverage related to prediabetes prevention and care.

Next month’s article will be devoted to this topic. Now, to the second part or discussion on the penalty for enrolling late in a Part D drug plan.

What if I don’t agree with the late enrollment penalty? If you have been assessed a late enrollment penalty, you can ask for “reconsideration.”

Your drug plan will send information about how to request reconsideration, which consists of completing a form and mailing or faxing it to the number listed on the form. You have 60 days from the date that you receive a penalty notice to submit this form. If you have any evidence to support your case, such as proof of creditable prescription drug coverage from an employer or union plan, you should send that along with this form.

All appeals are reviewed by independent contractors under contract with Medicare. As a general rule, decisions are made within 90 days. Most contractors try to make decisions as soon as possible. Remember, that while you have launched an appeal you still have to pay the disputed penalty.  

If the Medicare contractor rules in your favor they will inform you and send a letter to your drug plan explaining their decision. Upon receipt your plan will either reduce or remove the penalty entirely depending upon the contractor’s decision.

You should receive a letter from the plan showing the corrected premium and granting you a refund if that has been found to be appropriate.

But, what happens if the contractor decides that the penalty is correct? If Medicare’s contractor decides that you do owe the late enrollment penalty, the contractor will send you a letter explaining their decision and that you will need to continue to pay the penalty.

Remember that this is not a one-time penalty but one that will be added to all your future monthly premiums.

How can I make sure I do not incur a late enrollment penalty? Avoiding the late penalty means signing up at the “right time.” This “right time” will vary depending upon your circumstances. But, as a general rule, the right time to sign up is when you turn age 65. If you have no other drug coverage at age 65, you must do so during the seven-month initial Medicare Parts A and B enrollment period. Your drug coverage will begin on the first day of the month after you enroll. If you do this, and you never let your drug coverage lapse, you should never incur an enrollment penalty. Here are some specific situations that might affect you:

You become eligible for Medicare through disability. If you have no other drug coverage when you become disabled, you have a seven-month period to enroll in a Part D plan along with Medicare Parts A and B.

You lose your employer/union drug coverage. If you lose this type coverage you have 63 days to enroll in a new plan. If you go beyond this 63-day marker you will probably incur a penalty. An example of this would be if you retire at/or over age 65 and you are no longer being covered by an employer or union provided drug plan.

Many workers who continue to work past age 65 sign up for Medicare Parts A and B while maintaining their employer-based insurance as a supplemental policy. The employer coverage is deemed creditable. But, if you lose this coverage you must enroll in a new plan that begins covering you within 63 days in order avoid a premium penalty. 

You lose drug coverage under COBRA. In this case you would not pay a late penalty if you enroll in a Medicare drug plan and begin receiving Part D coverage within 63 days of your COBRA drug benefits ending.

You return to the United States after living abroad. While living abroad you cannot receive Medicare drug coverage. But, if you are age 65 or over you should join a Part D plan within seven-months after your return to live in this country permanently. If you turned 65 before leaving the United States to live abroad, you get a special Part D enrollment period on your return. However, you must enroll so that you begin receiving coverage within 63 days of the date of your return. 

Avoid the Late Enrollment Penalty, enroll on time. The Medicare.gov website suggests that you may enroll in Part D plan using the Medicare Plan Finder, complete a paper enrollment form, call the plan you are interested in or call 1-800-MEDICARE (1-800-633-4227). However, if you are a resident of Oneida County, the Oneida County Office for the Aging/Continuing Care/NY Connects Health Insurance Information, Counseling and Assistance program (HIICAP) offices can assist you.

HIICAP is not connected to, or funded by, any insurance plan and provides you with unbiased enrollment assistance at no cost to all Medicare beneficiaries. They can answer all of your questions. HIICAP offices are found at the following locations:

Ava Dorfman Senior Citizens Civic Center, 305 E. Locust St., with hours of operation on Tuesday and Thursday from 10 a.m. to 2 p.m. Again, while consumers are seen on a “first come, first served” basis, you may call the Dorfman Center at 315-337-1648 to see if there are long wait times.

North Utica Senior Citizens Community Center, 50 Riverside Drive, Utica, with hours of operation on Monday, Wednesday and Friday from 10 a.m. to 2 p.m. Consumers are counseled on a “first come, first served” basis. However, if you want to call ahead to see how busy the office is, you may call the center’s HIICAP program at 315-724-8680.

HIICAP services are provided by Oneida County Office for Aging and Continuing Care/NY Connects. Anyone with questions about your new MPI or any other Medicare related questions can call the HIICAP program directly at 315-798-5456 and press 4 in the choice list. It will direct you to someone who can assist you.

Dr. William Lane is the owner of William Lane Associates, a gerontological consulting firm based in Homer, NY. He does not sell insurance, work for any insurance company or recommend any insurance products.