Everything You Need to Know About Late Enrollment Penalties (LEPs)

As individuals approach age 65, there are often questions surrounding one’s initial enrollment period and the risk of being “penalized” for not enrolling on time. Whether you are gearing up for retirement or are planning to work past 65, below is everything you need to know about Late Enrollment Penalties.

What is a Late Enrollment Penalty (LEP)?
A Late Enrollment Penalty (LEP) is issued to individuals who are eligible for Medicare if there is a lapse in their health care coverage. The penalty amount depends on how long the person has gone without coverage and is added to their Medicare monthly premium for the duration of their Medicare plan enrollment. There are two types of LEPs:

Creditable coverage is defined as any health care coverage that offers as good of – if not better – coverage than what is available through Medicare for prescription and/or medical coverage.

How Do I Know if My Coverage is Creditable?
If you are eligible for Medicare and are on an employer group health plan, you should check with your HR department to find out if your coverage is creditable. If you are on a Medicare plan that includes prescription drug coverage, your plan is creditable.

When would someone acquire a Late Enrollment Penalty?
The most common cause for someone to be issued an LEP is if they do not obtain creditable prescription coverage when they first become eligible for Medicare. For most people, this is when you turn 65.

Those who continue working past the age of 65 can remain covered under their employer group plan; however, it is still important that they compare their plan to what is available through Medicare to ensure their coverage is creditable. In most cases, employer group plans are creditable for medical coverage, but that does not mean they are creditable for prescription coverage. If you go more than 63 days without creditable prescription coverage, you will be assigned an LEP.

What to Do if You Receive a Late Enrollment Penalty
If there was a gap in your coverage and you are issued an LEP, you must continue to pay the penalty as a part of your plan’s monthly premium for the duration of your Medicare coverage.

If you’ve never had a gap in your coverage and received an LEP, you may have been assigned the penalty in error. This is typically the result of Medicare’s records simply needing to be updated. Unfortunately, whether the LEP is correct or not, you must pay the penalty 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.

How Can We Help?
For more information about Late Enrollment Penalties or to explore you Medicare plan options, give us a call at 1-855-207-9614.

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