Question:
I have really low prescription drug needs and did not enroll into a Medicare Part D prescription drug plan during my initial enrollment period.  However, I now have decided to join a Part D plan.  Who decides whether I receive a late penalty?  If I do have to pay a penalty, how much will it be next year?

Answer:
The Late Enrollment Penalty did not go away as some people predicted and Medicare beneficiaries who went without creditable prescription drug coverage for more than 63 continuous days are will  receive letters from their Medicare Part D plans about the cost of their premium penalty - unless the Medicare beneficiairy is exempt from the penatly based on finacial status or other reason.

As background, your late enrollment premium penalty is determined by the Centers for Medicare and Medicaid Services (CMS).  If you did not enroll into a Medicare Part D prescription drug plan during your initial enrollment period (IEP) and you did not have other creditable prescription coverage (like VA or employer benefits), you could be subject to a penalty that is added to your monthly Part D premiums.

You will also receive a premium penalty if you drop your Medicare Part D prescription drug coverage and do not have any other form of creditable prescription coverage for more than 63 days.

For every month that you were without creditable coverage, you will pay 1% of the average annual base Part D premium - which is calculated every year.

So if you were without coverage after your initial enrollment period (or IEP) for 6 months, you pay an additional monthly penalty of 6% of the annual base Medicare Part D premium (the Part D base beneficiary premium for 2007 is $27.35) - that is, you will pay an additional (.06)*($27.35) = $1.66 each month in addition to your normal Medicare Part D plan premium for as long as you have a Medicare Part D plan.

(The Medicare Part D base beneficiary premium used to calculate the late enrollment penalty changes each year and here are some example from past years.)

The Part D base beneficiary premium for 2006 was $32.20
The Part D base beneficiary premium for 2007 was $27.35
The Part D base beneficiary premium for 2008 was $27.93
The Part D base beneficiary premium for 2009 was $30.36
The Part D base beneficiary premium for 2010 was $31.94
The Part D base beneficiary premium for 2011 was $32.34
The Part D base beneficiary premium for 2012 was $31.08

This above example is only an estimate.  The exact amount of the Part D late-enrollment premium penalty is calculated by CMS (not your Part D plan), and then reported by CMS to your Part D plan.

Your Part D plan will then send you a letter regarding the amount of your penalty.  Click here for the CMS Tip Sheet on Calculating the Late Enrollment Penalty.  The letter from your Part D plan will also detail how the penalty was calculated and explain how you can ask for a review of your the Late Enrollment Penalty (or LIS).

Remember, not everyone is subject to the Late Enrollment Penalty.  CMS provides that there will be no Late Enrollment Penalty “for any beneficiary eligible for the low income subsidy “. (Click here to read the CMS Press Release).  However, this CMS exception will only continue through 2007.

(Please note that some Medicare Advocacy groups are reporting that some Medicare beneficiaries have received 2007 Late Enrollment Penalty letters with mistaken information.  For an example please see: http://www.medicareadvocacy.org/ PartD_07_09.27.PotpourriOfInfo.htm)

See also:

★ ★ TIP SHEET ★ ★
Information Partners Can Use on:
Calculating the Late Enrollment Penalty
Medicare Prescription Drug Coverage
April 2009 revision: https://Q1News.com/151.html