Selecting a Medicare Part D plan tailored to your patients’ needs is a great opportunity to confirm they are receiving ideal benefits with the lowest out-of-pocket costs. Additionally, helping them enroll in a plan on time can save patients money, make your pharmacy money in reimbursements, and save you both frustrations in the future!

Did any of your patients miss the Open Enrollment sign up window? Or did anyone turn 65 this past September and forget to sign up for a plan during their newly-eligible enrollment opportunity? Unfortunately, if these patients did miss the Medicare Open Enrollment sign up window (which runs from October 15th to December 7th) they will have to wait until next year to change plans or enroll in a Part D plan in most cases. Moreover, a penalty will be added onto their monthly premium for years to come.

First, let’s start by understanding how this Late Enrollment Penalty is calculated:

  • The penalty amount is rounded to the nearest .1.
  • The 2016 Base Beneficiary Premium is $34.10.
  • This penalty will be added onto your patient’s monthly premium for the rest of their life! And may be adjusted from one year to the next based on changes to the Base Beneficiary Premium amount.

So, how do you know how many months without coverage your patient will be penalized for? The way you calculate this number would be one of two ways:

  1. The first is based off of the initial eligibility period for Part D coverage. If the patient’s birthday is in February, they have 3 months after that (until May 31st) to enroll in a Part D plan. If they do not enroll by then, their penalty will be calculated starting with June as the first month without credible coverage.
  2. The second is if the patient has gone without creditable prescription drug coverage for more than 63 days in a row. Creditable coverage is coverage -- often through an employer or union -- which meets Medicare’s minimum standards, since this coverage is expected to pay at least as much as Medicare’s standard Part D coverage would. It’s advisable to contact the patient’s plan provider if they are not sure that their current prescription drug coverage is deemed creditable by Medicare’s standards.

If your patients think their penalty is un-justified, they have the opportunity to ask Medicare to reassess the fee. They will need to fill out a reconsideration request form, which they can get from the Medicare plan provider in order to appeal the penalty.

The resolution of the decisions is typically made in about 90 days, but patients can expect to wait a little longer due to the large number of requests being filed. If the decision to waive the penalty is favorable, Medicare will send the patient and plan a letter notifying them of this. If Medicare denies the request, they will also receive a letter detailing this.

Here are a few examples on how to calculate your patients Part D penalty:

Example 1:

Jack’s initial enrollment period ended April 30, 2006. He wanted coverage, but forgot to enroll in a plan! Now, Jack has to wait to enroll until later that year during the Open Enrollment Period, which starts Oct 15. Then, his coverage will begin in January of 2007. This means that Jack will spend 8 months (May-December) without coverage. The Part D base beneficiary premium in 2007 is $27.35. So let’s figure out what his penalty will be:

8 months X 1% X $27.35 = 2.19 (rounded to the nearest $.10) = $2.20

Remember, this $2.20 penalty will be added onto the monthly premium for the rest of the patient’s life. So, this number certainly can add up over the course of a few years depending on how long they went without coverage!

Now, let’s look at another potential situation:

Example 2:

Jill has always been generally healthy and didn’t need many prescriptions, so she decided not to enroll in a Part D plan once she turned 65. Her initial enrollment period ended in September of 2008. By 2011, she had been prescribed several pricey meds, and decided she needed a plan. She ended up enrolling in a plan during Open Enrollment for the 2012 year. The Part D base beneficiary premium in 2012 was $31.08. Here’s how we find out what will be added onto Jill’s premium:

39 months X 1% X $31.08 = 12.12 (rounded to the nearest $.10) = $12.10

So in 2012, Jill will pay $145.20 extra because of this added penalty. After 25 years, Jill will have paid an estimated $3,630 in penalties!

This goes to show how quickly these penalties add up, and how important it is for patients to enroll in a Part D plan, regardless of the prescriptions they’re taking.

Do late enrollment penalties also apply to Dual Eligible beneficiaries (Medicare and Medicaid)?

Things for Dual Eligibles work a little differently. They won’t need to worry about these late enrollment penalties in most cases. Dual Eligibles receiving Extra Help can enroll in a plan at any time throughout the year, and sign up for a plan past the three-month window after their birthday, without receiving a penalty. However, if they then disenroll from a plan and go without coverage for more than 63 days, then decide to enroll again, people could receive a penalty if their Dual Eligible status has changed.

Is there any situation when a patient can switch plans outside of Open Enrollment?

While a patient’s current Part D plan may have met prescription needs in the past, there are some cases when certain drugs may no longer be covered by their plan for the new year. If they haven’t re-evaluated their plan for this year, there are a few situations where they can still switch plans outside of the Open Enrollment window.

If a patient is enrolled in a Medicare Advantage Plan:

  • In 2010, The Health Care Reform law implemented a new ratings system for Medicare Advantage plans. If a patient is on a MA-PDP plan, they do have the option to switch to a Medicare Advantage Plan, Medicare Cost Plan, or Medicare Prescription Drug Plan with a 5 star rating once, at any time from December 8th through November 30th of the following year.
  • Medicare Annual Disenrollment Period (MADP) starts on January 1st and ends February 14th. Medicare allows patients to disenroll from their current Medicare Advantage plan if it does not meet their current needs. If the patient does decide to drop their MA-PDP plan, they will have the option to enroll in a stand-alone Part D plan. If they are considering disenrolling from a plan, they will want to make sure they'll still be receiving the coverage they need, as they will be giving up benefits like the network of providers who participate in that plan, and cap on your out-of-pocket spending for medical bills.

Medicare Special Enrollment Periods (SEPs) are available for patients to switch plans under certain circumstances. They may qualify if:

  • Move permanently outside of their current plan’s service area
  • Become eligible for a low-income subsidy due to a loss of income
  • Receive incomplete information about what qualifies as creditable prescription drug coverage or lose that coverage through no action of their own
  • Become eligible for Medicare and Medicaid, then lose their dual-eligibility status
  • They live in, are moving into, or moving out of certain types of skilled nursing facilities
  • Receive a retroactive Medicare entitlement determination
  • The patient qualifies for other special enrollment periods that may be authorized by the federal government

Ideally, your patients should enroll in a Part D plan during the 6-month window surrounding their 65th birthday and remember to re-evaluate their plan options yearly during Open Enrollment. But, if a patient is left without a plan or enrolled in the wrong one, remember these scenarios that may give them the option to switch plans, or calculate and keep track of their late enrollment penalty if they do need to wait until the next Open Enrollment period.