Medicare Part D Enrollment Penalty
How much is the Part D penalty?
The cost of the Medicare part D enrollment penalty depends on how long you go without Medicare Part D or creditable prescription drug coverage.
Medicare calculates the penalty by multiplying 1% of the “national base beneficiary premium” ($35.63 in 2017) by the number of uncovered months you didn’t have Part D or creditable coverage. The monthly premium is rounded to the nearest 10 cents of your Medicare Part D monthly premium. The national base plan premium usually increase each year, so your penalty amount may also increase each year.
Mrs. Jones is now eligible for Medicare, and her Initial Enrollment Period ended on May 31, 2013. She doesn’t have prescription drug coverage from any other credible source. She decided to join a drug plan during the open enrollment period for a 1-1-16 start date. Her drug coverage was effective January 1, 2016.
Since Mrs. Jones was without creditable prescription coverage from June 2013–December 2015, her penalty in 2016 was 31% (1% for each of the 31 months) of $34.10 (the national benchmark premium for 2016) or $10.57. The penalty is rounded to the nearest 10 cents so she would pay $10.60 a month for a penalty. Her current prescription rx plan would include the penalty premium amount with her regular plan premium.
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 Jones monthly late enrollment penalty for 2016
Keep in mind, Mrs. Jones may pay a higher penalty the following year if they raise the benchmark premium for 2017
How do I know if there will be a Medicare part D enrollment penalty?
After you join a Medicare drug plan, the plan will tell you if you owe a penalty and what your premium will be. Most people will have to pay this penalty for as long as you have a Medicare drug plan. The exceptions would be for those that drop coverage or are approved for a drug help program such as MSP.
What if I don’t agree that I have a penalty?
You may be able to ask for a “reconsideration.” Your drug plan will send you a letter explaining how to appeal. All appeals will be sent to a company called Maximus that will review appeals. Maximus is the only company that can review them. As a result, you will need to wait until they make a decision. 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 documentation that supports your case.
Do I have to pay the penalty even if I think it is wrong?
You must pay the penalty until a decision has been made on the appeal. Failure to pay the penalty could result in termination of your enrollment.
How long does it take to decide on the appeal?
In general, Maximus (Medicare contractor) has 90 days to make a decision.
What happens if Maximus decides the penalty is wrong?
If Maximus decides you should not have a penalty, they will send you a letter stating that fact. Your drug plan will then stop charging you the penalty and will send details regarding a refund of the penalty amount you already paid.
What happens if Maximus decides the penalty is correct?
They will send you a letter stating the penalty is correct. You will be forced to continue paying the penalty if you want to maintain you drug coverage.