What are Medicare penalties for late enrollment?

LATE ENROLLMENT PENALTY:

If a beneficiary does not buy Part A when they first become eligible, they may have to pay a monthly premium penalty.

The premium is subject to a 10% increase payable for twice the number of full twelve-month periods a beneficiary could have been enrolled in Part A but was not.

The 10% premium surcharge will apply only after 12 months have elapsed from the last day of the Initial Election Period (IEP) to the last date of the enrollment period that was used to enroll. In other words, if it has been less than 12 months, the penalty will not apply.

This penalty will not apply to beneficiaries who are working and covered by a group health plan through their employer or union, or during the 8-month period that begins the month after the employment ends or the group health coverage ends, whichever happens first.

MEDICARE PART B LATE ENROLLMENT PENALTY:

If a Medicare beneficiary doesn’t sign up for Medicare Part B when they are first eligible, they may have to pay a late enrollment penalty for as long as they have Medicare.

The beneficiary’s Medicare Part B monthly premium may go up 10% for each full 12-month period that they could have had Medicare Part B but did not sign up for it.

Usually, Medicare beneficiaries don’t pay a late enrollment penalty if they sign up for Part B during a special enrollment period (SEP).

MEDICARE PRESCRIPTION DRUG COVERAGE (PART D) LATE ENROLLMENT PENALTY

If a beneficiary chooses not to join a Medicare prescription drug plan at their initial opportunity, a beneficiary may have to pay a higher monthly premium (penalty) if they decide to enroll later.

The penalty is added to the premium amount set by the plan.  The penalty is calculated by multiplying 1% of the national base beneficiary premium by the number of months the person was eligible but not enrolled in a plan and did not have credible coverage.

The penalty calculation is not based on the premium of the plan the individual is enrolled in.

The base beneficiary premium in 2021 is $33.06 and can change every year.

Beneficiaries who have another source of drug coverage through a former or current employer may choose to stay in that plan and not enroll in Medicare prescription drug coverage. These beneficiaries will not be penalized a Part D late enrollment penalty when they choose to join a Medicare prescription drug plan at a later date.

Some examples of coverage that may be considered creditable include:

• Group Health Plans
• State Pharmaceutical Assistance Programs (SPAPs)
• VA coverage and Military coverage including TRICARE

If a beneficiary is penalized a Part D LEP and they do not agree with the penalty, they are eligible to ask Medicare for a review or reconsideration. They will need to fill out a reconsideration request form and submit it to Medicare.

Social Security assesses if a beneficiary is subject to a Part D late enrollment penalty and informs the Medicare prescription drug plan of the amount the beneficiary owes.  The amount the beneficiary owes is paid by the beneficiary directly to the Medicare prescription drug plan.

If a beneficiary changes plans, the Part D late enrollment penalty will follow them and they will pay the late enrollment penalty to the new Medicare prescription drug carrier.