Late enrollment in Medicare Part D plan will incur penalty

I am 82 years old. My wife is 69 years old. We just enrolled into Medicare Part D for the very first time. The plans begin Jan. 1, 2017. The Part D plan representative mentioned that we would have to pay a penalty since we never carried a drug plan. How is this penalty calculated?

A Medicare Part D late enrollment penalty applies if a person delays enrollment into a Part D plan and that person did not carry "creditable" prescription drug coverage.

Creditable prescription coverage simply means a prescription insurance that is "as good, or better, than the standard Medicare Part D benefit."

You state that you and your wife have not carried any drug coverage prior to your Part D enrollment; therefore, penalties will apply. The calculation of the penalty will be determined in the following manner: "Medicare calculates the penalty by multiplying 1 percent of the national base beneficiary premium ($35.63 for 2017) times the number of full, uncovered months, you did not have Part D or creditable coverage." Simply put: .356 multiplied by the number of months not having Medicare Part D or creditable drug insurance.

With that being said, it must be noted that since Part D did not come into existence until 2006, the penalty calculation for people who were age 65 prior to 2006 will be calculated on the number of months from 2006 until present. On a historical note, when Medicare Part D made its debut in 2006, the enrollment period was extended until May 2006. Therefore, 2006 only counts for six months of penalty.

You state you are 82. This means you were born in 1934. You turned 65 in 1999. Your penalty will not go back to the month you turned 65. Rather, it will be calculated back to the 2006 premiere Medicare Part D open enrollment period until the present: .365 x 126 months = $45.99.

Your wife is 69. She turned 65 after the year 2006. Her penalty will be calculated on her initial eligibility period for Medicare. Since I do not know her exact age, here is a hypothetical example: Let's say her initial enrollment period required enrollment prior to Jan. 1, 2012. Sixty months have passed from January 2012 until Jan. 1, 2017 (effective date for her new Part D drug plan). Her penalty is .365 x 60 months, approximately $22 a month.

The penalty will be recalculated every year based on the annual national base premium. Historically, the national base premium has not increased dramatically. You will be required to pay a late enrollment penalty for every year you remain in the Part D benefit.

There are subsidy programs to help with the cost of the yearly premium (not for the penalty). If you enroll in a subsidy program, you could reduce your monthly out of pocket costs.

For information on these programs, you may call your local State Health Insurance Assistance Program at 410-222-4257.

Amy Rubino is the director of the Senior Health Insurance Assistance Program and the Senior Medicare Patrol for the Anne Arundel County Department of Aging and Disabilities. You may contact either program at 410-222-4257 or [email protected].

Credit: Amy Rubino