Understanding Medicare Part B LEPs: How to Avoid Them and Dispute Errors
Enrolling in Medicare is a crucial step to secure affordable healthcare for those who qualify. However, missing the enrollment window can be a costly mistake. If this happens, a beneficiary will face Medicare Part B LEPs (Late Enrollment Penalties). In this post, we explain what the penalty is, how to avoid it, and how to dispute it if it is applied in error.
Watch a video on OEP, SEPs & late Part B enrollment
What Is a Medicare Part B LEP
Medicare Part B covers outpatient services like doctor visits, preventive care, durable medical equipment, and more. If the beneficiary doesn’t sign up for Part B when they’re first eligible, and they don’t qualify for a Special Enrollment Period (SEP), they may receive a monthly penalty that lasts a lifetime.
Here’s how it works:
- The penalty is 10% of the standard Part B premium for every 12-month period the beneficiary was eligible but didn’t enroll.
- CMS adds it to the monthly premium as long as you have Part B; most likely for the rest of your life.
Example:
If the beneficiary delays Part B for 2 full years without a valid reason, the penalty will be 20% of the standard monthly premium.
When Can You Delay Enrollment Without Penalty
You can delay Part B without a penalty if you have creditable coverage. This generally means you receive coverage under an employer-sponsored plan through your (or your spouse’s) active employment.
You qualify for a Special Enrollment Period (SEP) if:
- You or your spouse are still working past age 65.
- You’re covered under a group health plan from that employment.
- You enroll in Part B within 8 months of losing that coverage or stopping work; whichever comes first.
How to Avoid the Part B LEP
- Know Your Initial Enrollment Period (IEP). The IEP is a 7-month window. It begins 3 months before th emonth you turn 65, includes your birth month , and ends 3 months later.
- Enroll During a Special Enrollment Period (if eligible). Those working past 65 and have employer coverage shoul dkeep proof of coverage. This may qualify them for an SEP.
- Get Written Confirmation of Creditable Coverage. Keep documents from your employer or insurance provider to prove your coverage was creditable.
- Don’t Assume COBRA or Retiree Coverage Counts. These type of coverage do not qualify as creditable to delay Part B enrollment without a penalty.
What If You’re Penalized by Mistake
If you receive a notice of a Part B LEP and believe it’s in error, you have the right to appeal.
Steps to Dispute a Medicare Part B LEP:
- Request a Reconsideration
Contact the Social Security Administration (SSA) and request Form CMS-L564 (Request for Employment Information) and Form CMS-40B (Application for Enrollment in Medicare – Part B). - Gather Proof
Obtain proof of your creditable coverage, such as:- Employer letters
- Pay stubs showing active health coverage
- Group health insurance policy documents
- Submit Documentation Promptly
Include a letter explaining your situation and attach your documentation. Send it to your local Social Security office or follow instructions provided with the reconsideration request. - Follow Up
Appeals can take several weeks. Keep a record of all communication and follow up regularly.
Medicare Part B LEPs are more than just a financial nuisance; they’re a lifelong burden if not handled correctly. Fortunately, with proper planning and awareness of enrollment timelines, they are entirely avoidable. If a mistake does occur, don’t panic. There is a clear process in place for disputes, and with strong documentation, many errors can be successfully overturned.
If you’re approaching Medicare eligibility or navigating coverage options, consider consulting with a licensed Medicare agent to help guide you through the process.