Q: Do I understand correctly that Medicare beneficiares will be penalized 1% of the monthly premium per month for every month they are late in signing up for the Part "D" drug plan?
A: Yes. Unlike Medicare Part A (hospital) and Medicare Part B (doctor's and outpatient) in which most beneficiaries are automatically enrolled — to be covered by the new Medicare Part D drug benefit, you must select a private plan and enroll during Medicare's Initial Enrollment Period, November 15, 2005 — May 15, 2006. In addition, Medicare beneficiaries who don't sign up for the new Medicare Part D drug benefit by May 15, 2006, will face a premium penalty of 12% of the premium per year (or 1% per month for each month enrollment was delayed) should they decide to enroll later. This rule is similar to the delayed enrollment penalty for Medicare Part B which covers doctors and hospital outpatient services.
Not only will penalties accrue for each month that enrollment is delayed, but you will be forced to wait until Medicare's next Open Enrollment period, which is November 15th through December 31st. Thus penalties will continue to climb, and you will have to pay 100% of your drug costs out-of-pocket until enrollment and coverage become effective.
For example, say that you don't use any prescription medications now. You find coverage that will cost a monthly premium of $32 in 2006. You decide to wait to see how the plans work. In May of 2007 you discover that you have high blood pressure and you decide to go ahead and enroll. But the next Medicare Open Enrollment period won't start until November 15, 2007. Your coverage won't begin until January 1, 2008.
Your premium penalty for not enrolling by May 15, 2006 would be about 18%. In addition, the penalty would be applied to the premium applicable for the new coverage period starting in 2008. That premium is likely to be much higher than the first year premium of $32— perhaps by as much as 18% or more.
If you are considering delaying enrollment in Medicare Part D because you don't currently use prescriptions or already have coverage, or for any other reason, TSCL strongly recommends that you contact Medicare first. For more information call 1-800-633-4227 or visit online at www.medicare.gov.
November 2005
