Helping your clients avoid Medicare penalties is an important aspect of guiding and educating them. Below are some tips to help your clients enroll on time to avoid paying more.
Part A Penalties
Most Medicare eligibles receive Part A for free however, if you have a client who has to buy Part A, and they don't buy it when they're first eligible for Medicare (age 65), their monthly premium may go up by 10%.
Your clients won't have to pay for Part A at age 65 if:
If your client has limited income and resources, their state may help pay for Part A.
Part B Penalties
If your client doesn't sign up for Part B when they're first eligible, their monthly premium may go up 10% for each 12-month period that they could've had Part B. In most cases, they'll have to pay this penalty each time they pay their premiums, for as long as they have Part B.
There is typically no late enrollment penalty if your client meets certain conditions that allows them to sign up for Part B during a Special Enrollment Period. As with Part A, if your client has limited income and resources, their state may help pay for Part B.
If your client has other creditable coverage, they can delay Part B and postpone paying the premium. They can sign up later without a penalty, as long as they do it within eight months after their other coverage ends. There are directions on the back of their Medicare card if they want to refuse Part B.
Part D Penalties
In order to avoid any Part D penalties make sure your client enrolls in drug coverage when they're first eligible. Even if they don’t take drugs they should consider joining a Part D Plan or a Medicare Advantage Plan that includes drug coverage. If they don't they may pay a late enrollment penalty if (at any time after their Initial Enrollment Period is over) there's a period of 63 days or more when they don't have Medicare drug coverage - or other creditable prescription drug coverage.
Additionally, make sure they enroll in drug coverage if they lose other creditable coverage (from an employer, union, TriCare, Dept. of Affairs, etc.) that's expected to pay at least as much as Medicare's standard prescription drug coverage. You'll want to advise your clients to keep records showing when they have other creditable drug coverage in order to avoid possible penalties in the future. If your client disagrees with a penalty, they can request a review by completing a 'reconsideration request form'.
Avoiding Medicare penalties doesn't have to be tricky as long as you advise your clients accordingly. Review their specific situation to determine when they should enroll in the different parts of Medicare to avoid any issues.
If you'd like to review the different enrollment periods, request our Medicare Enrollment Periods guide which goes over the following:
Carolyn Portanova is the Director of Marketing at The Brokerage Resource and has been with the firm since 2012.