All Medicare beneficiaries must prepare to face a late enrollment penalty if they miss enrolling in Part A, B, or D when they are supposed to. However, late enrollment penalties cannot be removed.
Medicare beneficiaries need to follow certain rules and regulations regarding enrollment, and failure to comply during enrollment dates can result in penalties. In general, an eligible individual is required to enroll in Medicare during Initial Enrollment Period, which starts 3 months before the 65th birthday and lasts for seven months. If the Initial period was missed, and the individual is not eligible for Special Enrollment, then will be exposed to a late enrollment penalty. It applies to every current plan you own. To give you a perspective, we have discussed the penalties below that an individual might incur due to negligence.
The Medicare Part A Penalty
A 10% charge will be added to the monthly premium of Medicare Part A. An individual will be required to pay this penalty for double the amount of time they went without Part A coverage. But, if an individual is eligible for a Special Enrollment Period, they can avoid the penalty. Special Enrollment is for those who had job-based insurance through their employment, and that period begins in the month when the coverage is lost, and it lasts for 8 months. Those who enroll in Medicare during Special Enrollment will not be subject to a late enrollment penalty.
If an individual has worked and paid taxes into Medicare for ten years or more, they are entitled to Part A for free. However, if there is not enough employment history, then out-of-pocket or external premiums shall be applied.
The Medicare Part B Penalty
A 10% increase will be added to the current Part B monthly premium as part of the penalty. This means for every 12-month period you went without Part B coverage, your premium can go up every 12 months. This is a lifelong penalty. However, if an individual is eligible for a Special Enrollment Period, they can avoid the penalty. Those who enroll in Medicare during Special Enrollment will not be subject to a late enrollment penalty.
The Medicare Part D Penalty
Medicare Part D is a prescription drug plan and it can be a stand-alone Part D plan as well as part of the Medicare Advantage plan. It has its monthly premium, which will be around $43 in 2023. The drug premium comes with a penalty of 1% of the average monthly prescription. The amount is rounded off to 10 cents depending on the months missed. If the enrollment has not occurred within three months, the penalty applies right away. It is important to note that the penalty is permanent, and the beneficiary must pay it.
However, if you happen to have health insurance through your employer or as part of your spouse’s employment, and you qualify for Special enrollment, you might not incur any penalty fees.
What can be done if you disagree with the penalty?
You are free to request a “reconsideration.” The drug plan you are part of will send all the required information about how you can request reconsideration when a need arises.
You will be required to complete a form and post it to the address or fax number mentioned on the form. It is important to mention that you must do all this within 60 days from the date you received a letter stating that you owe an LEP.
If you have any more questions regarding enrollment periods and avoiding late enrollment periods, reach out to one of our experts.