The Truth About Late Enrollment Penalties

By RetireMEDiQ

What is a Late Enrollment Penalty?

One of the biggest concerns retirees have when enrolling in Medicare is making sure they are not “penalized.” There are a lot of misconceptions about the Late Enrollment Penalty. But what exactly is the Late Enrollment Penalty?

A Late Enrollment Penalty (LEP) is issued when you have a lapse in coverage. You pay a penalty for the amount of time you have gone without coverage. The penalty is added to your Medicare plan’s monthly premium for the remainder of the time you are on a Medicare plan. There are two kinds of LEPs.

  1. Part D LEP for going without creditable prescription coverage (more common). Read more.
  2. Part B LEP for going without creditable medical coverage (less common). Read more.

Creditable Coverage: Creditable coverage is health plan coverage as good as or better than Medicare’s minimum standards for prescription or medical coverage.

How Do I Know if My Coverage is Creditable?

If you are on an employer group health plan, you should check with your HR department to find out if your coverage is creditable. If your coverage is not creditable, RetireMEDiQ can assist you in choosing a creditable Medicare plan!

If you are on a Medicare plan that includes drug coverage, your plan is creditable. All Medicare plans are creditable.

What Causes Someone to Get a Late Enrollment Penalty?

The most common cause of an LEP is when a person does not obtain creditable prescription coverage when they first become eligible for Medicare. For most people, this is when you turn 65.

Many people continue working past the age of 65 and stay on their group health insurance. It is a common misconception that, because a person has coverage through an employer, they should not have to notify Medicare. As it turns out, most group plans are creditable for medical coverage, but that does not mean they are creditable for prescription coverage as well. If you go more than 63 days without creditable prescription coverage, you will be assigned an LEP.

A Common Misconception: Having health insurance through an employer does not mean that you have creditable coverage. The coverage must meet specific Medicare guidelines in order to be considered creditable.

What to Do if You Receive a Late Enrollment Penalty

If there was a gap in your coverage and you owe the LEP, you must continue to pay it as a part of your plan’s premium.

But if there was no gap in your coverage, you may have been assigned the LEP in error. Usually, this is because Medicare’s records simply need to be updated. But whether the LEP is correct or not, you must pay the LEP until it is resolved. The LEP becomes a part of your plan’s monthly premium and if you do not pay it, your plan may be canceled. When the LEP is corrected, you will be reimbursed by your insurance company. We can help you correct an LEP if it was assigned to you in error.

Reach out to us at 1-877-222-1942 or client@retiremediq.com if you need assistance regarding Late Enrollment Penalties!

If you are not a RetireMEDiQ client yet and have questions about transitioning into retirement, Medicare or how we can serve you, please contact us at 1-866-600-5638 or advice@retiremediq.com to get started on your Medicare journey.

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