Late Enrollment Penalties
Part B late enrollment penalty
In most cases, if you don’t sign up for Part B when you’re first eligible, you’ll have to pay a late enrollment penalty. You’ll have to pay this penalty for as long as you have Part B. Your monthly premium for Part B may go up 10% for each full 12-month period that you could have had Part B, but didn’t sign up for it. Also, you may have to wait until the General Enrollment Period (from January 1 to March 31) to enroll in Part B. Coverage will start July 1 of that year.
Usually, you don’t pay a late enrollment penalty if you meet certain conditions that allow you to sign up for Part B during a Special Enrollment Period.
If you have limited income and resources, your state may help you pay for Part A, and/or Part B. You may also qualify for Extra Help to pay for your Medicare prescription drug coverage.
Part D late enrollment penalty
The late enrollment penalty is an amount added to your Medicare Part D monthly premium.
You may owe a late enrollment penalty if, for any continuous period of 63 days or more after your Initial Enrollment Period is over, you go without one of these:
- A Medicare Prescription Drug Plan (Part D)
- A Medicare Advantage Plan (Part C) (like an HMO or PPO)
- Another Medicare health plan that offers Medicare prescription drug coverage
- Creditable prescription drug coverage
Note: If you get Extra Help, you 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 you went without Part D or creditable prescription drug coverage.
Medicare calculates the penalty by multiplying 1% of the “national base beneficiary premium” ($35.63 in 2017) 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 and added to your monthly Part D premium.
The national base beneficiary premium may increase each year, so your penalty amount may also increase each year.
Mrs. Martinez is currently eligible for Medicare, and her Initial Enrollment Period ended on May 31, 2013. She doesn’t have prescription drug coverage from any other source. She didn’t join by May 31, 2013, and instead joined during the Open Enrollment Period that ended December 7, 2015. Her drug coverage was effective January 1, 2016.
Since Mrs. Martinez was without creditable prescription drug coverage from June 2013–December 2015, her penalty in 2016 was 31% (1% for each of the 31 months) of $34.10 (the national base beneficiary premium for 2016) or $10.57. Since the monthly penalty is always rounded to the nearest $0.10, she paid $10.60 each month in addition to her plan’s monthly premium in 2016.
Here’s the math:
.31 (31% penalty) × $34.10 (2016 base beneficiary premium) = $10.57
$10.57 rounded to the nearest $0.10 = $10.60
$10.60 = Mrs. Martinez’s monthly late enrollment penalty for 2016
In 2017, Medicare recalculated Mrs. Martinez’s penalty using the 2017 base beneficiary premium ($35.63). So, Mrs. Martinez’s new monthly penalty in 2017 is 31% of $35.63 or $11.05 each month. Since the monthly penalty is always rounded to the nearest $0.10, she pays $11.10 each month in addition to her plan’s monthly premium.
Here’s the math:
.31 (31% penalty) × $35.63 (2017 base beneficiary premium) = $11.05
$11.05 rounded to the nearest $0.10 = $11.10
$11.10 = Mrs. Martinez’s monthly late enrollment penalty for 2017
How do I know if I owe a penalty?
After you join a Medicare drug plan, the plan will tell you if you owe a penalty and what your premium will be. In general, you’ll have to pay this penalty for as long as you have a Medicare drug plan.
What if I don’t agree with the late enrollment penalty?
You may be able to ask for a “reconsideration.” Your drug plan will send information about how to request a reconsideration.
Complete the form, and return it to the address or fax number listed on the form. You must do this within 60 days from the date on the letter telling you that you owe a late enrollment penalty. Also send any proof that supports your case, like a copy of your notice of creditable prescription drug coverage from an employer or union plan.
Do I have to pay the penalty even if I don’t agree with it?
By law, the late enrollment penalty is part of the premium, so you must pay the penalty with the premium. You must also pay the penalty even if you’ve asked for a reconsideration. Medicare drug plans can disenroll members who don’t pay their premiums, including the late enrollment penalty portion of the premium.
How soon will I get a reconsideration decision?
In general, Medicare’s contractor makes reconsideration decisions within 90 days. The contractor will try to make a decision as quickly as possible. However, you may request an extension. Or, for good cause, Medicare’s contractor may take an additional 14 days to resolve your case.
What happens if Medicare’s contractor decides the penalty is wrong?
If Medicare’s contractor decides that all or part of your late enrollment penalty is wrong, the Medicare contractor will send you and your drug plan a letter explaining its decision. Your Medicare drug plan will remove or reduce your late enrollment penalty. The plan will send you a letter that shows the correct premium amount and explains whether you’ll get a refund.
What happens if Medicare’s contractor decides the penalty is correct?
If Medicare’s contractor decides that your late enrollment penalty is correct, the Medicare contractor will send you a letter explaining the decision, and you must pay the penalty.