Question: I am new to Medicare, and I just retired. I received paperwork telling me I have a Late Enrollment Penalty and have to pay more money for my premiums? What should I do? Do I have to pay this?

Answer: (This is a second part to last week’s question. But this is addressing Part D Benefits).

The steps for getting onto Medicare are different for everyone, and the timeline to join can be different too. Every individual has a different set of variables they bring to the table when discussing Medicare and when to join.

Most individuals become eligible for Medicare when they turn 65. If you are working and carry insurance from an employer group, you can stay on your employer health insurance and decline Medicare as long as your prescription drug coverage is considered ‘creditable coverage’.

Then when you are preparing to retire and drop the employer coverage, you’ll have a Special Enrollment Period (SEP) to sign up for Medicare & Medicare Part D benefits. The process for signing up for Medicare after a delay like this has some unique steps, but you are allowed to use that SEP created upon leaving employer coverage to join Medicare AND pick any additional coverage.

Last week we talked about getting your Medicare benefits started. This week we are talking about Prescription Drug rules.

Once you join Medicare and add your additional plan of choice, your new insurance company will usually send paperwork to complete. This paperwork will ask why you are enrolling at this time (instead of earlier when you turned 65) and what your coverage was before.This letter indicates your Prescription Drug Coverage is in question and you MUST reply right away to the letter. You have a very short window for this reply. You simply call the customer service number of your new insurance plan and tell them you had coverage through your employer and have just retired. They sometimes require proof of that prescription drug coverage.

The Creditable Coverage standard letter is an actual letter that is created by your insurance carrier and employer. It’s usually two pages long and begins with “Important Notice from (Employer’s Name) About Your Prescription Drug Coverage and Medicare.” Most individuals are NOT familiar with this and don’t remember ever receiving it in the mail or from their employer.

The creditable coverage letter indicates your employer provided health insurance met the minimum standards for drug coverage. If you don’t have a copy of that letter (for each year since you turned 65) you will need to reach out to your previous employer and get a copy of that letter. This can then be sent to your new insurance company as proof of your creditable coverage.

If you are not able to prove your creditable coverage, there is an LEP that applies, and it is based on your Prescription Drug Coverage. The LEP is determined by the number of months you were without creditable coverage. That mathematically is 38 cents for each month you didn’t’ have creditable coverage (or cannot prove you had creditable coverage). The longer the period of time, the bigger the penalty.

When your new insurance company tells you that you incurred an LEP, you can certainly work with the insurance company to eliminate the LEP, as long as you can provide proof that you had coverage from your employer plan and that it was deemed Creditable Coverage. Start by trying to find old Creditable Coverage Letters. If you don’t have one, then you can go back to your employer and ask for copies of the letter for the years that you were Medicare-eligible. Once you have those copies of the letter, you must present one for each year to your new insurance carrier. If you resolve the confusion about your prescription drug coverage, you will see your LEP removed and the premium reduced to the usual amount.

If you don’t reply in a timely manner this decision process is moved to a third party and getting the LEP resolved becomes more difficult and takes significantly longer.

More and more we see individuals working beyond 65 years of age with employer health benefits and therefore choosing to defer Medicare enrollment. We also see situations where one spouse turns 65 and the other spouse is still working and carries the insurance for them both, and they can also choose to defer Medicare.

It is important to understand the options available and rules that apply to you when eligible for Medicare at age 65. It is worth talking to professional Medicare experts to be sure you are making the correct enrollment decisions. You need to have accurate and useful information for your individual situation to be sure you are making the correct Medicare choices.

Janell Sluga is a Geriatric Care Manager helping seniors in our community access services and insurance. To reach her, please email editorial@post-journal.com.