At the age of 65, patients become eligible for Medicare coverage, and with this eligibility comes pages upon pages of paperwork describing plan options, how to sign up, and rules and restrictions related to coverage. This can be particularly confusing for elderly patients with low health literacy, or those who are not tech savvy or do not have access to electronic versions of plan information to begin with. Vital pieces of information can easily be missed.
For patients turning 65 who are in good general health and take only over-the-counter medications along with one or two prescription medications daily, they may have opted out of Medicare Part D prescription drug coverage when they enrolled in a Medicare Part A and B plan. If the patient’s prescription medications are all on the $4 drug list at their retail pharmacy, their yearly out of pocket costs may have been significantly lower than the premium for a Medicare Part D plan.
What these patients may not have realized is when Part D drug coverage began in 2006, a penalty for late enrollment was initiated as well. This penalty is applicable if at any time after their initial enrollment period ends there is a span of 63 or more days in a row when the patient does not have Medicare Part D or any other creditable prescription drug coverage. The cost of this penalty depends on how long creditable prescription drug coverage was absent, and once calculated, it is then added to the patient’s Medicare Part D premium. For patients who are part of the Extra Help program, the late enrollment penalty does not apply. Extra Help is a Medicare program for those with limited income and resources; this program provides patients with assistance paying drug program costs including premiums, deductibles, and coinsurance.1
Creditable prescription drug coverage refers to coverage from a current or former employer or union that is expected to pay an average of at least as much as Medicare’s standard prescription drug coverage. If the patient has this kind of coverage at the time they become eligible for Medicare, they can keep their coverage without having to pay a penalty upon deciding to switch to Medicare Part D later. Patients already enrolled in Medicare had until the end of their Part D initial enrollment period in 2006 to sign up for a Part D program without incurring a penalty. Plans should update patients yearly in a letter or newsletter informing them whether or not their coverage is considered creditable. Patients should be advised to keep this correspondence because they may need it if they try to join a Medicare drug plan down the road. When patients newly join a Medicare drug plan, they will received a letter if it is believed they went 63 days in a row without drug coverage. This letter will provide them with an opportunity to inform Medicare about their past creditable drug coverage, avoiding penalty fees if criteria are successfully met.1-3
The cost of the penalty is calculated by multiplying 1 percent of the “national base beneficiary premium,” or the average of all Part D plans nationwide in any given year ($32.42 in 2014 and $33.13 in 2015), by the number of full, uncovered months the patient was eligible but did not join a Medicare Prescription Drug Plan or did not have creditable coverage. After rounding to the nearest $0.10, the penalty is added to the patient’s monthly premium. After joining a Part D plan, the plan will tell the patient if they owe a penalty and what their premium will be. Patients will pay this premium for as long as they have a Medicare drug plan.1-3
For patients who do not agree with their late enrollment penalty, an appeal process exists. A reconsideration request form will be sent to the patient by their Medicare drug plan. Proof that supports their case, such as information about previous creditable prescription drug coverage, can be submitted to ratify the appeal.
It is impossible to predict exactly when taking out prescription drug coverage will be more cost-effective for patients over the age of 65 versus paying cash for generic medications, as each patient’s healthcare needs are unique. Nevertheless, it is important to consider the longer patients wait to enroll in a prescription plan after they become eligible for Medicare, the higher the penalty, as the national base beneficiary premium is trending upward each year.
Pharmacist awareness of the late enrollment penalty is beneficial because retail pharmacists who see patients over the age of 65 paying cash for their monthly medications have the perfect opportunity to make an intervention. Oftentimes these patients will be asking for price-matching and closely watching how much they are charged each month. Pharmacists can ask these patients about their healthcare coverage, specifically if they have Medicare Part A and B, and then they can educate these patients on prescription coverage options, explain the late enrollment penalty, and direct patients to Medicare.gov for more information on ways to avoid penalties and maximize the use of their money. Affordable medication leads to increased adherence, improved chronic disease state management, a healthier patient population, and an opportunity for pharmacists to achieve their goal of providing optimal patient-centered care.
Melissa Luechtefeld, Doctor of Pharmacy Candidate Class of 2015
University of Missouri-Kansas City School of Pharmacy at MU
- Centers for Medicare & Medicaid Services. What’s the Part D late enrollment penalty? http://www.medicare.gov/part-d/costs/penalty/part-d-late-enrollment-penalty.html. Accessed October 2, 2014.
- Centers for Medicare & Medicaid Services. The Part D Late Enrollment Penalty. http://www.cms.gov/Outreach-and-Education/Outreach/Partnerships/downloads/11222-P.pdf. January 1, 2014. Accessed October 2, 2014.
- Barry P. (2008). Paying for the Part D Late Penalty. AARP Bulletin. Retrieved from http://www.aarp.org/health/medicare-insurance/info-12-2008/ask_ms_medicare_paying_for_the_part_d_late_penalty.html.