• Skip to primary navigation
  • Skip to main content
  • Skip to footer
  • Louisville: 555-555-555
  • Charlotte: 555-555-555
  • Why Partner
  • Our Expertise
  • Resources
  • Get Aligned
  • Broker Portal
Plan Advisors

Plan Advisors

Helping you choose the right health plan

  • Why Partner
  • Our Expertise
    • Meet Your Team
    • Success Stories
  • Resources
    • Blog
    • Broker Connect
    • Medicare Marketing Support
    • Promotional Collateral
  • Let’s Talk
  • Broker Portal

Calculating the Medicare Part D Late Enrollment Penalty

November 22, 2014 by Lance Hoeltke

Help your clients calculate the Medicare Part D late enrollment penaltyOne of the more common questions agents get asked from their Medicare clients is “what is the Medicare Part D late enrollment penalty?”  It is fairly easy to explain that if a Medicare member spends more than 63 consecutive days without having Part D or creditable drug coverage, they will be required to pay a late enrollment penalty should they choose to enroll in a Part D plan in the future.  The typical follow-up question is “will I have a late enrollment penalty?”  This is also usually pretty easy to answer, assuming the agent asks the proper questions of the client and the client responds with accurate answers about prior coverage.

The more difficult answer is the one that usually comes third: “How much is my late enrollment penalty going to cost?”  To properly answer this question, there are a couple assumptions the agent is required to make:

  1. The client is past their Initial Enrollment Period and has gone more than 63 consecutive days without having either a Part D plan or creditable prescription drug coverage.
  2. The client knows how long they’ve gone without having either a Part D plan or creditable prescription drug coverage.

Once an agent has these assumptions in place, the agent can then help the client calculate what the late enrollment penalty should cost.  The late enrollment penalty is calculated by multiplying 1% of the “national base beneficiary premium” times the number of full, uncovered months the client was elgible for, but did not enroll in, a Medicare Part D plan or other creditable drug coverage.

What’s the “national base beneficiary premium?”  It was $32.42 in 2014, it is $33.13 in 2015, and you can find these values at Medicare.gov.  So now that the agent has all of their assumptions in place and knows the “national base beneficiary premium,” the agent can walk their client through a simple calculation to determine what the Part D late enrollment penalty should be.  Here’s an example:

James Senior enrolled in a MA only plan with no Part D drug coverage during his Initial Enrollment Period that went effective July 2014.  During AEP Mr. Senior decided to enroll in a MAPD plan that will be effective January 2015.  Mr. Senior spent six months (July 1 to Dec 31, 2014) with no Part D coverage.  Agent Dan Smith will multiply $33.13 (the “national base beneficiary premium” for 2015) by 6% (1% for every month Mr. Senior went without Part D coverage).  Agent Smith knows that Medicare will round the penalty to the nearest $0.10, so he estimates the penalty for Mr. Senior should be $2.00.  Here are the calculations:

.06 (or 6%) x $33.13 = 1.9878

1.9878 rounded to the nearest $0.10 is $2.00

Agents should be cautious not to tell clients EXACTLY what the late enrollment penalty will be.  The agents are forced to make assumptions about a client’s insurance history oftentimes without having actual facts.  Medicare clients aren’t always aware of what their past coverages consisted of, or they may not be aware that they had creditable drug coverage through a retirement health plan, for example.  Agents should also make the client aware that although Medicare calculated the late enrollment penalty, the invoice will come from the company through whom they are enrolled  for their Part D or MAPD coverage.  Clients often ask why their plans are charging them additional fees, unaware that these charges are being required from Medicare.

If you have any questions about the Medicare Part D late enrollment penalty, feel free to Contact Us.

Filed Under: AEP, CMS, CMS guidelines, Humana MAPD plan, ICEP, ICEP election period, IEP, IEP election period, MAPD, MAPD and PDP membership, MAPD enrollment, Medicare AEP, Medicare Annual Enrollment Period, Medicare Beneficiaries, Medicare election periods, Medicare Part D late enrollment penalty, PDP enrollments, Prescription Drug Plans, Service

Think "Plan Advisors first!"

Get aligned with Plan Advisors for access to these tools, resources, support, and more!

Let's Talk

Footer

STAY UP TO DATE

facebook linkedIn YouTube

CONTACT US

  • Phone: 502.228.1308
  • Fax: 502.470.5746
  • info@myplanadvisors.com
  • Serving all 50 states

QUICK LINKS

  • Why Partner
  • Expertise
  • Resources
  • Talk to Plan Advisors
  • Broker Portal

Copyright © 2021 Kandor II · Website Design by The Marketing Squad

We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
Do not sell my personal information.
Cookie settingsACCEPT
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled

Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

Non-necessary

Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.

SAVE & ACCEPT