Medicare Open Enrollment is Here – How to Avoid Late Enrollment Penalties

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25 Oct Medicare Open Enrollment is Here – How to Avoid Late Enrollment Penalties

Posted at 08:00h in Health Insurance, Medicare by Triage Cancer

Medicare’s annual open enrollment period runs from October 15 until December 7. Open enrollment is when people with Medicare can make changes to their coverage. Any changes will start on January 1, 2023, for the 2023 plan year.

What can you do during Medicare open enrollment?

Open enrollment is when you can switch from Original Medicare to a Medicare Advantage plan or from a Medicare Advantage plan to Original Medicare. You can also change Part D prescription drug plans or change from one Medicare Advantage plan to another.

For details about open enrollment, see our Quick Guide to Medicare Enrollment. For details about Medicare coverage options, see our Quick Guide to Health Insurance: Medicare.

Generally, you should enroll in Medicare when you are first eligible to do so. This is usually during your initial enrollment period (IEP). Enrolling when first eligible prevents gaps in health insurance coverage and allows you to avoid late enrollment penalties (LEPs).

What is a late enrollment penalty?

If you don’t enroll in Medicare (or a particular “part” of Medicare like Part B or Part D) when you are first eligible, and you aren’t eligible for a special enrollment period, Medicare may impose a late enrollment penalty (LEP).

Medicare will add the LEP amount to your monthly premium(s) for the part(s) of Medicare in which you failed to enroll in. The LEP is calculated based on how long Medicare believes you should have been enrolled, but weren’t.

How are late enrollment penalties calculated and how long do they last?

Part A LEP: If you do not pay a premium for Medicare Part A, you will not have a Part A LEP. If you pay a premium for Medicare Part A and didn’t enroll in Part A when first eligible to buy it, your monthly premium may increase by 10% for each 12-month period that you could have bought it, but didn’t. You will pay this higher premium for twice the number of years you could have enrolled in Part A, but didn’t.
Part B LEP: If you didn’t enroll in Part B when first eligible, your monthly premium may increase by 10% for each full 12-month period that you could have had Part B, but didn’t sign up for it. You may pay this higher premium for as long as you have Medicare.
Part D LEP: After the end of your IEP, if there is a period of time when you don’t have Medicare drug coverage or other creditable coverage (at least as good as Medicare drug coverage), you may face a LEP. Medicare calculates the LEP by multiplying 1% of the “national base beneficiary premium” ($33.37 in 2022, $32.74 in 2023) by the number of months you did not have Part D or creditable coverage. Then, Medicare rounds this penalty to the nearest $.10. That amount gets added to the premium for whichever Part D plan you choose for as long as you have Medicare.

Are there ways to avoid late enrollment penalties?

Special Enrollment Periods: If you don’t enroll in Medicare during your IEP, you can avoid the Part B LEP by making sure you can use the Part B Special Enrollment Period (i.e., you have health insurance through your own or your spouse’s active employment). If you don’t enroll in Medicare Part D when first eligible, you can avoid the Part D LEP by making sure you have creditable drug coverage and not waiting to enroll in Part D if and when that coverage ends.
Help for certain people with low incomes: Enrollment in a Medicare Savings Program may eliminate a Part A and/or Part B LEP. Enrollment in Extra Help may eliminate a Part D LEP. For more information about Medicare Savings Programs and Extra Help, see our Quick Guide to Medicare Savings Programs.
Elimination of LEP for people who first had Medicare under age 65 and are now turning 65: If you have a Part B and/or Part D LEP and you are under age 65 (e.g., Medicare-eligible due to having received at least 24 months of Social Security Disability Insurance payments), the LEP(s) will be removed when you turn 65 and are again eligible for Medicare.
Appeals: If you disagree with an LEP, you can appeal. The process for doing so depends on which LEP you have. For information about Medicare appeals, visit our Cancer Finances Module on Appeals.

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