The late enrollment penalty of Part D Medicare is an amount that is added to the Part D premium. After the initial enrollment period ends, if there is a period of 63 or more days in a row when an individual doesn't have Part D coverage, there may be a late penalty charge. However, there are ways to avoid this enrollment penalty charge.

How to Avoid the Late Enrollment Charge.

The first way to avoid the penalty is to join a Medicare drug plan. It's important to do this as soon as eligibility exists. Once enrollment is confirmed in one of these plans, there is no need to pay a penalty in Part D Medicare. This is true even if the individual has never had coverage for prescription drugs before.

Another way to avoid the penalty is to avoid exceeding 63 days in a row without a Medicare prescription plan. Some other forms of creditable prescription plans may also qualify in place of Medicare. Creditable plans include coverage from former or current employers, unions, Indian Health Service, TRICARE, the Department of Veterans Affairs or private health insurance coverage. Plans sponsors must notify individuals if their coverage is creditable or not each year. This news usually arrives in the form of a newsletter or letter from the plan. Since it will be required to join a Medicare drug plan in the future, be sure to keep this information when it arrives.

The last way to avoid the penalty fee is to tell the plan about any current or previous prescription drug coverage. Most companies will ask for this information. After joining a Medicare drug plan, individuals receive a letter if the plan company believes they have gone more than 63 consecutive days without a creditable prescription plan. The letter is usually accompanied by a form inquiring about previous coverage. Be sure to complete the form quickly to avoid missing the mailing deadline. If the plan company doesn't receive information about a creditable plan, the individual who fails to provide the data may have to pay the penalty fee.

How Expensive Is the Part D Penalty?

There is no fixed price for the penalty. The amount depends on how long an individual goes without creditable coverage for prescription drugs. The late fee is calculated by multiplying the number of full months without coverage by 1% of the national base beneficiary premium. The national base beneficiary premium is $32.34. When deciding how many months to figure into the calculation, keep in mind that it's necessary to include all months where there was no creditable coverage despite eligibility for Medicare drug coverage. Round the final amount to the nearest $.10, add it to the monthly premium and calculate the total.

The base beneficiary premium may increase every year. This means the penalty may do the same each year. Individual plans always let people know if they owe a penalty. In addition to this, they'll also specify the premium amount. Unfortunately, individuals may have to pay this penalty for the entire length of their Medicare drug plan. However, once a person reaches the age of 65, the fee is waived if that individual paid an enrollment penalty before turning 65.

For example, Anne failed to join when she was first eligible, which was March 12, 2007. If she joined a Medicare drug plan after the middle of October of 2008, her effective date would be January 1, 2009. She would have to count the entire amount of days from the time she was eligible until the effective date. That amount would be multiplied by the national base rate premium and penalty rate to determine how much she owes. Anne would also have to pay her regular premium amount on top of this.

Not everyone agrees with their late enrollment penalty imposed by Medicare. Sometimes Medicare makes a mistake, so it's best to ask for a review if a mistake is suspected. To do this, fill out a reconsideration request form. Medicare will send these upon request. Be sure to provide all of the required documents for proving proof of prior creditable prescription coverage. To obtain help with this process, contact the State Health Insurance Assistance Program.
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