Medicare Part D - also known as the Medicare prescription drug benefit - is an optional U.S. federal-government program that is designed to help seniors on Medicare pay for their prescription drugs. Despite the fact that it is optional, seniors can end up paying a Part D Late Enrollment Penalty (LEP) if they do not sign up for Part D benefits or have other creditable drug coverage* for any period of 63 consecutive days or more after the end their Medicare Initial Enrollment Period (IEP)**. The only exception to this rule is for seniors who qualify for Extra Help under Part D.
*Creditable prescription drug coverage, or “creditable coverage”, is prescription drug coverage that on average pays at least as much as Medicare’s standard prescription drug coverage.
**The Medicare Initial Enrollment Period is the seven-month period of time that a senior has to sign up for Medicare Part A and Medicare Part B. Since seniors become eligible for Medicare when we turn 65, the seven-month period begins three months before the month we turn 65, includes the month we turn 65 and then continues for three months after.
Can I dispute a Medicare Part D Late Enrollment Penalty?
If you were assessed a Medicare Part D LEP because the Medicare system found that you went 63 or more consecutive days without prescription drug coverage after the end of your IEP, then you may be wondering how you can dispute the decision by providing proof that you did have coverage.
The first thing to understand is that when Medicare finds this gap in prescription drug coverage, they send a notice asking for information about past prescription drug coverage that may not be showing up in Medicare’s systems. This is your best chance to avoid the LEP so it is extremely important to complete the form and return it by the date listed. This is also an opportunity to send proof of prior drug coverage such as a copy of the notice of creditable prescription drug coverage from an employer or union health plan. Some plans allow seniors to provide this information over the phone as long as the call is made by the date listed on the notice.
If the plan does not receive any information proving prescription drug coverage by the date on the form, the plan moves forward with identifying how many full, uncovered months the person was eligible to join a Medicare drug plan but didn’t, based on the information in Medicare’s systems. From there, Medicare calculates the LEP using a standard formula.
Is there a way to pay my Part D premium and avoid the penalty?
No. According to Medicare Law, the LEP is part of the Medicare Part D premium so the fee must be paid with the premium. The penalty must be paid even if the enrollee is waiting for a review of their penalty. Medicare members can be dropped from their plans for failing to pay their premiums, including the LEP part of their premium.
What if I don’t agree with the late enrollment penalty?
If you are paying a LEP but don’t believe that it is correct, you may be able to ask Medicare to review the decision through a process called “reconsideration.” Contact your drug plan for information about how to request a “reconsideration.” There will be a form to fill out and return along with any relevant evidence. This information must be submitted within 60 days from the date on the letter indicating that a late enrollment penalty has been assessed.
How long does it take for Medicare to reconsider the penalty?
Usually, Medicare’s contractor will make a reconsideration decision within 90 days.
What happens if Medicare’s contractor determines that the LEP was wrong?
If the Medicare contractor determines that the penalty was wrong, it will send a letter to the person and their drug plan explaining the decision. It is then up to the Medicare drug plan to remove or reduce the late enrollment penalty and send a letter showing the new, correct monthly premium and explain whether a refund will be issued.
What happens if Medicare’s contractor determines that the LEP was right?
If Medicare’s contractor determines that the penalty was assessed correctly, it will send a letter explaining the decision and the person will need to continue paying the late enrollment penalty.
Our independent insurance agents are dedicated to assisting people on Medicare and those who are ready to transition from employer coverage to personal retirement coverage. We help kupuna understand their benefits options and apply for additional coverage, as needed. Because we represent all the major Medicare Advantage and supplement plans in Hawaii, we are able to offer unbiased advice; all at no cost to our clients.
At PBC, our clients are our number one priority and we look forward to getting to know you and your needs. Call us today at (808) 738-4500 to see how we may be of assistance.