What is the Part D Penalty for Late Enrollment?
What is the Medicare Part D Penalty for late enrollment? A part D late enrollment is when a beneficiary is without Medicare part d prescription drug coverage or other creditable prescription and medication coverage for a period of 63 days or more. It is a penalty fee for those who are uninsured. Generally, the policyholder will have to pay the penalty for as long as they hold the prescription drug coverage.
The cost of the part D late enrollment penalty changes yearly because it is calculated based on national averages. Medicare calculates the fee by multiplying 1% of the “national base beneficiary premium” by the number of months that the policyholder did not have Part D of Medicare (or other creditable coverage). In 2023, the national base beneficiary premium was $32.74.
How Does a Policyholder Know If They Have to Pay?
Once the beneficiary joins a Medicare part D drug coverage plan, the plan will then calculate their late enrollment penalty.
Sometimes, insurance companies can make mistakes. If the policyholder does not agree with the application of this penalty, then the drug plan can send information on how to request what is known as a “reconsideration.” However, by law, the late enrollment penalty is considered part of the beneficiary’s Medicare premium. The premium must be paid (including the penalty). Otherwise, the beneficiary runs the risk being unenrolled from their coverage.
If the reconsideration ends up being decided in the policyholder’s favor, meaning that the late enrollment penalty is not valid, then the Medicare drug plan can and will remove the late enrollment penalty fee. The plan will then send documentation to the policyholder explaining what happened and whether or not they are eligible to receive a refund. On the other hand, if the Medicare Part D contractor evaluates the reconsideration and finds that the late enrollment penalty is valid, then they will instead send the beneficiary documentation explaining why they must pay the penalty as part of their Medicare premium.
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