People warned they could get a penalty if they don't enroll in Medicare Part D

Staff and wire report

With Medicare open enrollment underway, people are being warned that if they skip enrolling in the prescription drug coverage, Medicare Part D, enrolling in it later can cause significant penalty fees.

The Medicare website says the late enrollment penalty is an amount added to someone’s Medicare Part D monthly premium.

People may owe a late enrollment penalty if, for any continuous period of 63 days or more after the Initial Enrollment Period is over, they go without one of these:

• A Medicare Prescription Drug Plan — Part D

• A Medicare Advantage Plan— Part C — which is like an HMO or PPO, or another Medicare health plan that offers Medicare prescription drug coverage

• Creditable prescription drug coverage

Learn how to avoid the late enrollment penalty

If people use the Medicar Extra Help program, they don’t pay the late enrollment penalty.

How much is the Part D penalty?

The cost of the late enrollment penalty depends on how long someone went without Part D or creditable prescription drug coverage.

Medicare calculates the penalty by multiplying 1 percent of the “national base beneficiary premium” — $33.19 in 2019 and $32.74 in 2020 — times the number of full, uncovered months they didn’t have Part D or creditable coverage. The monthly premium is rounded to the nearest 10 cents and added to the person’s monthly Part D premium.

The national base beneficiary premium may increase each year, so the penalty amount may also increase each year.

For example, Mrs. Martinez is currently eligible for Medicare, and her Initial Enrollment Period ended May 31, 2015. She doesn’t have prescription drug coverage from any other source. She didn’t join by May 31, 2015, and instead joined during the Open Enrollment Period that ended Dec. 7, 2017. Her drug coverage was effective Jan. 1, 2018.

Since Mrs. Martinez was without creditable prescription drug coverage from June 2015–December 2017, her penalty in 2018 was 31 percent — 1 percent for each of the 31 months — of $35.02 — the national base beneficiary premium for 2018 — or $10.86. Since the monthly penalty is always rounded to the nearest 10 cents she paid $10.90 each month in addition to her plan’s monthly premium.

In 2019, Medicare recalculated Mrs. Martinez’s penalty using the 2019 base beneficiary premium, $33.19. So, Mrs. Martinez’s new monthly penalty in 2019 is 31 percent of $33.19 or $10.29 each month. Since the monthly penalty is always rounded to the nearest 10 cents, she pays $10.30 each month in addition to her plan’s monthly premium.

After people join a Medicare drug plan, the plan will tell them if they owe a penalty and what their premium will be. In general, they will have to pay this penalty for as long as they have a Medicare drug plan.

People may be able to ask for a “reconsideration.” The drug plan will send information about how to request a reconsideration.

The three ways people can avoid the Part D late enrollment penalty are;

1. Join a Medicare drug plan when first eligible.

The person won’t have to pay a Part D late enrollment penalty, even if they have never had prescription drug coverage before.

2. Don’t go 63 days or more in a row without Medicare prescription drug coverage or other creditable drug coverage.

 3. Keep records showing when they had creditable drug coverage, and tell the plan about it.