| Tue, May 08, 2018 @ 09:00 AM

Unintended Part D “Gotcha” Could “Getcha” If You Enroll after Age 65

Posted by Medicare Made Clear

Meet Mike. He’s enrolling in Medicare after retiring at age 68.

Mike sensibly signed up for just premium-free Medicare Part A (hospital insurance) when he first became eligible at age 65. He didn’t need full Medicare coverage yet – or the costs that come with it – because he was still working and had employer health coverage.

Mike’s plan benefits manager at work confirmed that Mike would qualify for a Medicare Special Enrollment Period when he retired and his employer coverage ended. He could make additional Medicare coverage decisions then.

Fast forward 3 years to Mike’s retirement at age 68 and the start of his 8-month Special Enrollment Period. Mike has to complete his Medicare enrollment during this time or else he could face late enrollment penalties.

Mike enrolls in Medicare Part B (medical insurance) right away and then sets about shopping for a Part D prescription drug plan. He does some comparisons, chooses a plan and enrolls about 5 months after retiring – well within the 8-month time frame.

Mike is shocked to hear that he will be charged a Part D late enrollment penalty and that he will have to pay it every month for as long as he has Part D.

Mike isn’t a real person but his story is not uncommon. What happened?

Medicare Part D has its own enrollment rules.

Medicare offers qualified individuals who work past age 65 an 8-month Special Enrollment Period for Part B – and for Part A if not already enrolled – but Part D has its own rules. This is a detail you need to pay attention to if, like Mike, you’re enrolling in a Part D plan or a Medicare Advantage plan (Part C) that includes drug coverage after your Initial Enrollment Period ends.

Rather than 8 months, Mike actually had 2 months to secure drug coverage after retiring. The short timeframe is due to a Medicare rule that says you can’t go more than 63 days without Part D or creditable drug coverage after you are enrolled in Part A and/or Part B.

Special Enrollment Period timeline

Mike’s employer plan satisfied the creditable coverage requirement. He would have avoided the late enrollment penalty if he had joined a Part D plan and had active coverage within the 63-day timeframe.

Plan ahead and avoid the Part D late enrollment penalty.

There’s a lot to think about when planning for retirement. Timing your Medicare Part D enrollment is just one consideration – but it’s one that can have a long-lasting effect. The Part D late enrollment penalty is 1% of the national average premium for each month you’re late. It’s added to your monthly premium payment for as long as you have Part D.

  • Make sure you have creditable drug coverage if you plan to delay Part D enrollment past your Initial Enrollment Period.
  • Plan to have active Part D drug coverage, through either a Part D plan or a Medicare Advantage plan, within 63 days of retiring or losing your employer or other creditable coverage.

Employer and union health plans are required to provide a notice of creditable drug coverage each fall to plan members who are working and eligible for Medicare. Ask your plan administrator for a copy if you did not get a notice in the mail. Keep the document with your important papers. You may need it if you decide to enroll in a Part D plan when you retire.

The bottom line

Don’t be like Mike. Learn the details of Part D enrollment timing and plan accordingly.

Related Content

Working Past 65
What is Creditable Drug Coverage?
Turn 65, Retire, Sign Up for Medicare… or Not

For more information, explore MedicareMadeClear.com or contact the Medicare helpline 24 hours a day, seven days a week at 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048.

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