Keeping with the general topic of enrollment periods for different Medicare plans, you must know how they work. The topic we discuss in this section includes the enrollment periods for Medicare Part D prescription drug coverage and the Late Enrollment Penalty if you don’t sign up for a Medicare Part D timely. Just like there are specific enrollment periods to sign up for Original Medicare and Medicare Advantage, you also have to sign up during specified and limited enrollment periods, to enroll in a Medicare Part D plan, for its prescription drug coverage. While each type of coverage has its unique requirements used to enter into the coverage, these enrollment times will depend on which benefit you are attempting to enroll into. In this blog, we will focus on everything that goes into each enrollment period and the late enrollment penalty if you fail to register. If you wish to learn more about Medicare Part D, its enrollment periods, and the late enrollment penalty, please read on!
Just as the other types of Medicare have unique and specific enrollment period types, Medicare Part D prescription drug coverage has its unique and specific enrollment periods required to use to enroll in a plan. These enrollment periods are set in stone and are as follows.
Medicare Part D Initial Enrollment Period
If you didn’t already know, before signing up for any Medicare Part D prescription drug plans, you must be currently be enrolled in Medicare Part A and/or Part B. If you wish to enter into a Medicare Advantage plan that includes Medicare Part D prescription drug coverage, you have to be enrolled in Medicare Parts A and B as well.
You’re first eligible to sign up for Medicare Part D coverage during your Initial Enrollment Period for Part D. This typically takes place during the same seven-month period as the Initial Enrollment Period for Original Medicare. These are the seven months that starts up three months before you are entitled to Medicare either because you are turning 65, or because you are entitled due to a disability. It includes the month of entitlement and ends three after the month of your entitlement month. An ideal time to sign up for Medicare prescription drug coverage is typically as soon as you’re enrolled in Original Medicare.
The Annual Election Period
You can also register for Medicare Part D coverage during the Annual Election Period, or otherwise known as the Fall Open Enrollment or Open Enrollment Period for Medicare Advantage and Medicare prescription drug coverage. This usually takes place from October 15 and lasts until December 7 of each year. During this enrollment period, you can:
– Sign up for a Medicare Part D program or change from one prescription drug plan to a different one
– Disenroll from your Medicare Prescription Drug Plan if you’re already enrolled in one.
– Enroll in or switch your Medicare Advantage Prescription Drug plans
– Disenroll from your current Medicare Advantage plan and return to an Original Medicare plan
The Open Enrollment Period
After the Annual Election Period is over, you will have one more opportunity to make changes to your Medicare Part D coverage. Medicare Advantage has an Open Enrollment period that runs from January 1 to March 31 of each year. If you are currently enrolled within a Medicare Advantage plan, you will have another one-time chance to:
– Enroll in a stand-alone Medicare Part D Prescription Drug plan, if you decide to switch back to original Medicare. Most Medicare Advantage plans already include prescription drug coverage. Typically, you can’t enroll in a stand-alone Medicare Prescription Drug plan if you’re already in a Medicare Advantage plan. However, there’s a few situations where you can, depending on different circumstances.
Special Election Period
Generally, you can only enroll in Medicare Part D prescription drug plans or make changes to Part D coverage during one of the above periods. However, in certain instances, you can qualify for a Special Election Period, where you can enroll in a Medicare Part D drug plan outside of the typical Annual Election and Open Enrollment periods. Some examples of situations that might qualify you for a Special Election Period include:
– Moving outside of your plan’s usual service area
– Qualifying for state Medicaid or prescription drug help
A special enrollment period can occur at just about any time of the year that you’ve got a qualifying situation. If you’re unsure whether you have an applicable situation, give Healthcare American a call today!
The Late-Enrollment Penalty
In an attempt to educate Medicare beneficiaries of the very complex and misunderstood concept of the requirements of enrolling in Medicare Part D, promptly, we are going to explain the Late Enrollment Penalty.
Medicare beneficiaries are not required to obtain Medicare Part D coverage. Still, before you decide that you don’t want or need one, we will explain why it is essential to understand the importance of having a Medicare Part D plan, and obtaining one in a timely fashion.
If you do not sign up for Medicare Part D coverage when you are first eligible during the initial enrollment period or during the enrollment periods, or if you go without a Medicare Part D plan for a certain period, you may have to pay a late-enrollment penalty. Many already enrolled in Original Medicare do not realize that all of their desired prescription drug coverage may not be covered with their standard plan, which is why it is strongly advised that they look into Medicare Part D’s enrollment periods and coverage’s available while signing up initially or during an enrollment period.
If you do wish to enroll in a Medicare Part D plan later on or go 63 days or more without a drug coverage plan, you might have to pay the late-enrollment penalty. This penalty is charged against you unless you show that you had a creditable drug coverage plan during the time you were not enrolled in a Part D plan. An example of creditable prescription drug coverage would be your health coverage that is provided by your employer. Your insurance coverage should let you know every year whether your current coverage is credible. If you are unsure, be sure to ask them to see if you are still eligible, according to the credible drug coverage rules that Medicare establishes.
If you do have to pay the late-enrollment penalty, it’s typically a price penalty added to your monthly Part D premium for as long as you are enrolled in a Medicare Part D. The amount or price also depends on how long you went without Part D or other creditable drug coverage before enrolling.
Late Enrollment Penalty Costs
The Part D plan that you are enrolled into at any given time, is required to collect the penalty for late enrollment. No matter which Part D plan you are a part of, if you are assessed a penalty because of late enrollment, the penalty follows you and is collected by any Part D plan you are enrolled into. Even a Medicare Advantage plan that has a Part D benefit, is required to collect the penalty. If you enroll in a new plan, the penalty will follow to the new plan.
The average penalty in 2020 is calculated at 1% of the going rate of the average Part D plan cost established by Medicare. It is an average of the going rate nationwide of a Medicare Part D plan. This average is set on a monthly reoccurring penalty that does not go away unless you are eligible for the Social Security Low Income Subsidy, also referred to as Extra Help. If you qualify for Extra Help, the penalty is not collected.
An example of the way to calculate the penalty is as follows:
The average rate stated by The Centers for Medicare and Medicaid Services for Medicare Part D coverage in 2020 is $32.74. Rounding this up to the nearest dollar amount will make it $33.00.
The Late Enrollment Penalty in 2020 is calculated at 1% of the average rate for a Medicare Part D per month. This number is $0.33 per month in 2020.
Remembering that the cost is for however many months a Medicare beneficiary did not have the coverage, the rate is calculated for those amounts of months. It is added to the premium of the Medicare Part D or Medicare Advantage plan if the plan has a built-in Part D coverage.
Example: If Brian Thomas was entitled to enroll in Medicare in January 2018, enrolled in Parts A and B, but did not realize that he needed to also enroll in Medicare Part D coverage to not be charged a penalty, but in October 2019 during Open Enrollment, Brian enrolled in a Medicare Part D plan that was to begin on January 1, 2020. Brian will have 24 months that he was supposed to have Medicare Part D coverage, and will be responsible for the late enrollment penalty unless he qualifies for Extra Help. His penalty will be calculated in 2020 as follow:
24 months X $0.33 per month = $7.92 per month. This $7.92 will be added to the premium of a Medicare Part D or Medicare Advantage plan if the plan includes Medicare Part D coverage. The penalty will stay with Brian until he is not enrolled in a Medicare Part D plan, or is entitled to Extra Help.
This means that a Medicare beneficiary may have a penalty for the rest of their life for failing to enroll in a Part D timely.
As you can see, the decision to enroll in Medicare Part D coverage is an essential element of the Medicare process. This important decision should be reviewed in detail before deciding what coverage you require and what period is the proper time to enroll in the coverage you are seeking to enroll.
We at Healthcare American can help you find the proper enrollment period for your situation and help you enroll in the proper coverage, all while considering your unique situations and all of the Medicare rules and guidelines.
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