Q: “Dan, I just received a letter stating I will have to pay a Part D late enrollment penalty next year for not having a drug plan during the months of February through December, 2017. What’s this all about?”
A: “Sam, after you turned 65 in October 2016 you had individual coverage with prescription drug benefits through January 2017. Now you’re enrolling in a Medicare Advantage plan with Part D coverage, effective January 2018. For those 11 months, February through December, that you went without drug coverage Medicare will impose a penalty for the late enrollment.”
Again, why do I owe a late enrollment penalty?
If, for any continuous period of 63 days or more after your Initial Enrollment Period is over you go without one of the following, you will have a penalty added to your Medicare Part D premium:
- A Medicare Prescription Drug Plan (Part D)
- A Medicare Advantage Plan (Part C) (HMO or PPO) with prescription drug coverage.
- Creditable prescription drug coverage (a drug plan that pays at least as much as the Medicare standard – most often provided through an employer or the individual insurance exchange.)
How does Medicare calculate the late enrollment penalty?
The penalty is based on multiplying two factors.
- Medicare calculates 1% of the “national base beneficiary premium” ($35.63 in 2017; $35.02 in 2018) which for 2018 will be $.35
- Medicare determines the number of full, uncovered months you didn’t have Part D or creditable coverage. In the above instance, that was 11 months.
- The $.35 is then multiplied by the number of months. In our example of 11, that equals $3.85
- The monthly penalty is rounded to the nearest $.10 (the example would then be rounded to $3.90) and added to your monthly Part D premium.
Will the late enrollment penalty change?
Yes, annually. When Medicare determines the national base beneficiary premium has changed, as in $35.63 in 2017 to $35.02 in 2018, the late enrollment penalty amount will be recalculated.
Do I pay the late enrollment penalty through Social Security?
No. The penalty, rounded to the nearest $.10 is added to your Part D premium and collected by your private insurance company