According to the U.S. Census, during the next five years, approximately 15,000 residents of Oneida County will turn age 65 and become eligible to sign up for Medicare coverage.
The majority of these residents will not have what is known as creditable Medicare Part D drug coverage from their former employer and will need to enroll in a plan. There is a penalty for not enrolling in a Part D plan in a timely manner.
In this column we will focus on what can happen if you choose not to enroll in a Part D plan or are late in enrolling.
Next month we will look at your right to appeal the assessment of a penalty, as well as the numerous exceptions to the general penalty rule.
• How do I know that I need to enroll in a Medicare Part D prescription drug plan?
If you are eligible to enroll in Medicare you must have prescription drug coverage. If you decide not to enroll in a plan you will have to pay a penalty unless you meet one of the following criteria:
You have what is known as “creditable prescription drug coverage.” As defined by the Centers for Medicare and Medicaid Services (CMS), creditable coverage means that you have coverage which is expected to pay on average as much as the standard Medicare prescription drug plan.
Creditable coverage is generally acquired by having an employee retirement plan that provides such coverage in retirement. You may also have creditable coverage if you receive your Medicare benefits through a Medicare Advantage (Part C) plan that includes prescription drug coverage.
AARP points out that “your current or former employer or union must tell you if your present drug coverage will change when you become eligible for Medicare.” This also applies to your spouse.
Your employer or union may offer you several options including simply allowing you to continue your coverage, providing you coverage through a specific drug plan, offering you coverage by paying some of your out-of-pocket costs of a new plan or by having you drop your coverage, with or without financial support in acquiring a new plan.
You enroll in one of the Extra Help programs to assist in paying for your premiums.
• What if I do not take any medications?
This is probably the reason most widely cited by those who fail to sign up for a Part D plan. “Well, I don’t take any medications so I didn’t see why I should have to sign up for a drug plan that I don’t need.”
There are a number of problems with this line of thinking. The major fallacy is just because you are not taking any medications at present, that does not mean that you will not need medications in the near future.
We are all only one accident or diagnosis of an illness away from some potentially major medical expenses which could result in significant drug costs.
• What is the penalty for not signing up for Part D?
According to CMS, the amount of the penalty for late enrollment will depend on how long you went without a Part D plan or some creditable drug coverage. “Medicare calculates the penalty by multiplying 1 percent of the national base beneficiary premium ($35.02 in 2018) times the number of full, uncovered months you didn’t have Part D or creditable coverage.
The monthly premium is rounded to the nearest 10 cents and added to your monthly Part D premium. This last part of the definition is key.
Once you incur a penalty, it results in higher premium costs from that point forward. This is not a one-time fine but a permanent increase in the cost of Part D premium. And, because the national base beneficiary premium may increase each year, your penalty amount may also increase each year.
For some specific examples and calculations go to the Medicare.gov website https://www.medicare.gov/part-d/costs/penalty
How do you know if you owe a penalty and what can you do?
After you join a drug plan, the plan will inform you if you owe a penalty and how much your premium will be.
As noted above, as a general rule you will have to pay this penalty for as long as you have a Medicare drug plan.
If you do not agree with this assessed late enrollment penalty, you may ask your drug plan for a reconsideration form.
You will be required to complete the form and mail or fax it to the address or number provided. You have 60 days from the date you are informed of the late enrollment penalty to return the form.
Next month’s article will discuss the possible reasons why you might be able to launch an appeal.
Even if you do not agree with the assessment of the penalty, by law this penalty is now part of the premium.
So, you must pay the penalty along with your premium even while your appeal for reconsideration is under review.
Remember, Medicare Part D plans have the right to disenroll members who refuse to pay their premiums including the late enrollment penalty portion.
• 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.
Consumers are seen on a “first come, first served” basis, so 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, 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.
• About the author:
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.