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Medicare has several enrollment periods beneficiaries need to be aware of.

Your Initial Eligibility Period (IEP) is a total of 7 months, three months before your birthday month, your birthday month, and three months after your birthday month. For example, if you were born in January, as I was, you have the months of October, November, and December, your birthday month of January, and the three months after, February, March and April, to sign up initially for Medicare. This is an important time to make your Medicare choices otherwise you can incur penalties. The best time to sign up is the beginning of the first month of your initial eligibility period. For me, it would be October, and then, in most cases, your coverage will start the first day of your birthday month. However, if your birthday is on the first day of the month, like mine is, your coverage will start the first day of the prior month.

For every year, you wait to sign up for Part B, you may have to pay a late enrollment penalty for as long as you have Part B. Your monthly premium for Part B may go up 10% for each full 12-month period that you could have had Part B, but didn’t sign up for it. For example, Mr. Smith’s initial enrollment period ended September 30, 2011. He waited to sign up for Part B until March 2014 during the general enrollment period. His Part B premium penalty is 20%. Even though Mr. Smith waited a total of 30 months to sign up, this included only 2 full 12-month periods. He’ll have to pay this penalty for as long as he has Part B.

General Enrollment Period

If you didn’t sign up for Part A and/or Part B (for which you must pay a premium) during your initial enrollment period, and you aren’t eligible for a special enrollment period, you can sign up between January-March 31 each year. Your coverage will begin July 1 of that year.

Special Enrollment Period (SEP)

We talked about this last time, and it occurs if you move out of the plan’s service area, your employer plan ends, or the carrier drops the plan. After your employer plan ends you have an 8-month period of time to sign up for a new plan. If you decide to drop the plan, always check with your plan administrator as usually you cannot get it back. This time period begins the month after your employment ends or the coverage begins, whichever happens first. COBRA(Consolidated Omnibus Budget Reconciliation Act), the insurance often offered to you when you leave a company, and retiree health plans, are not considered current employment.

Part D, prescription drug coverage, has a LEP(late enrollment penalty) also. This is an amount that is added to your Part D premium. You may owe a late enrollment penalty, if at any time, after your initial enrollment period is over there is a period of 63 or more days in a row when you don’t have Part D or other creditable prescription drug coverage. Creditable prescription drug coverage (for example, from an employer or union) is expected to pay, on average, at least as much as Medicare’s standard prescription drug coverage.

The late enrollment penalty is calculated by multiplying 1% of the “national base beneficiary premium” ($32.42 in 2014) by the number of full, uncovered months that you were eligible but didn’t join a Medicare drug plan and went without other creditable prescription drug coverage. The final amount is rounded to the nearest $.10 and added to your monthly premium. Since the “national base beneficiary premium” may increase each year, the penalty amount may also increase each year. You may have to pay this penalty for as long as you have a Medicare drug plan. After you join a Medicare drug plan, the plan will tell you if you owe a penalty and what your premium will be.

Here’s an example: Mrs. Martin didn’t join a drug plan when she was first eligible, by June 2011. She had no other drug coverage from any other source. She joined a Medicare drug plan during the Open Enrollment Period, and her coverage began January 1, 2014. She was without coverage from July 2011- December 2013. Her penalty in 2014 is 30% (1% for each of the 30 months) of $32.42 (the national base beneficiary premium for 2014) which is $9.73. The monthly penalty is rounded to the nearest $0.10, so she will be charged $9.70 each month in addition to her plan’s month premium in 2014.

Here’s the math:

$.30 (30% penalty) plus $32.42 (2014 base beneficiary premium) = $9.73

$9.73 (rounded to the nearest $0.10) = $9.70

$9.70 = Mrs. Martin’s monthly late enrollment penalty for 2014

I do hope these explanations are helping you to unravel the confusion of Medicare. Remember it is like a puzzle (Part A, B, C, D and Supplemental Plans) and when you put the pieces together, they hopefully, make sense and you solve the puzzle.

Again, it is my pleasure to help you with your Medicare concerns and questions. I am a Medicare certified agent with several carriers and am available at Marty Pay (Farmers)Insurance Agency, located at 121 East F Street in Tehachapi. I may be reached by the office phone (661) 822-3737 or by cell phone (661) 304-4695, or drop me an email at sue.wonacott@sbcglobal.net.

I look forward to meeting you and will serve you with integrity and compassion for your piece of mind.